Money Lesson Single

Pay down the loan, or fund the pension?

A loan at nearly 9 per cent is a guaranteed return you can bank, and every article says clear the expensive debt first. Here is the same salary planned both ways, so you can see what the delay to your debt free date actually buys you.

Employment Personal Loan Expenses ISA Investments

Fund the pension

2 Goals

Divert eight per cent of gross pay into the pension, and put what is left at the loan.

Try this plan

Employment Personal Loan Expenses ISA Investments

Clear the loan first

2 Goals

Leave pay as pay, and throw every spare pound at the loan until it is gone.

Try this plan

Fund the pension Clear the loan first

Clearing the loan first gets you debt free ~2 months sooner, and leaves you ~£260.3k poorer.