Are most people in debt to there eye balls?

lifesuckssometimes

I think the phrase *Debt Rich* would fit many including myself.

computershack

Warning, long post:

nirelandguy wrote: »

So I have come to the conclusion that there are 3 scenarios

A - People are heavily in debt
B - There partners are the big earners
C - Doing something dodgy.

We have a combined income of around £17-18K Before tax, there is no way that can pay a mortgage, and have several holidays and luxuries per year, as I say this is just based entirely on my work colleagues.

Oh thanks. So according to you, I'm either lying or I'm a thief?

My scenario:
Wife, 2 kids.
Total joint income including all tax credits is £20k.

We're on a 10 year mortgage (was 25 but payments were so ridiculously low - would now be £125 a month - we decided to change to a 10 year to get shut of it), own and run two cars (Mine is 4 year old Mondeo Ghia, wifes is a Mitsubishi FTO sports car), have all the latest consoles with at least 10 games for each, 3 good spec laptops, 3x flat screen tellies, internet, Sky HD. We have a family holiday abroad every year and the wife goes with the kids on one as well which we also pay for. We contribute £25 a month to each kids savings accounts as well as the pocket money they get. I have £3k in my ISA (was more but I bought a Capri and funded my new business), no idea what the wife has in hers, the joint account is never less than £500 in credit and the joint credit cards are paid off in full every month. Any big bill that comes along (just had a new uPVC front door a month ago at a cost of £610) is paid for in full in cash.

So according to you either:
A)We're up to our eyeballs in debt (yet the bank and CC balances say otherwise)
My wife is the big earner (yet she only does 20hrs a week at £8.50/hr)
C) We're doing something dodgy (which I take great offence to)

THE REALITY IS:

• We bought our house before the prices went stupid and we've stayed put. Our house is worth five times what we paid for it to give you an idea how much its risen and how cheap it was back then. 2003 was about the last time it was realistically affordable to buy a house. Once a 3x joint income mortgage wasn't sufficient, they were too expensive. I'd not entertain buying one now nor recommend someone does. It gets decorated when it needs to and a new kitchen bought when it needs to, not just because we want to change the colour. When we do buy stuff for it, we buy the best quality we can. We've got carpets that are several years old but still look extremely good because we bought decent ones. Cheap doesn't always work out cost effective in the long run.
• The cars weren't new when bought. They're serviced to the recommended schedules and all repairs done when needed, rather than being left which usually costs more. Things like RAC is paid out of Tesco Clubcard points. We make maximum use of cashback and screen scrapers so we both get insured for under £200 a year. WE WALK when going anywhere in town (its only small) unless its the weekly shop. I manage 55MPG out of mine because I can actually drive properly. I think the wife said she gets 36MPG out of hers which isn't bad for a 2L V6 sports car. Neither of us are slow drivers.
• We repair rather than replace. I've self taught myself to fix a lot of things over the years. It simply requires confidence, some decent guidance (internet is stuffed full) and the right tools. For example, the vacuum cleaner has died three times now. Completely stone cold dead. Every time without fail it has been a break in the mains cable where it enters the vacuum cleaner. So, take it to bits, out with the pliers, cut it back 6 inches, bare the wires and solder them where the originals went and its good to go again. OK, so the mains lead is now 18" shorter than it was originally but its still over 30ft long. What would you do, go buy another?
• Two consoles were bought as presents by family, the PS3 from someone who was skint, although it was far from a giveaway price. Games are bought as presents, in the sales or on Ebay usually a month or two after release when they're cheaper.
• Laptops are ex-display ones I bought at clearance auctions as are the TVs.
• Holidays abroad are paid for with Tesco Clubcard vouchers so we only really have to find spending money. That saves us £1000 a year or more just there.
• Credit card is a cashback one. It means that petrol/diesel, if we get it from a supermarket, is effectively 9p a gallon cheaper than the pump price after the cashback. All spending is done on it so we get around £20-30 a month average cashback. There's only one month in every year (no idea but its been the same month) where it doesn't get paid off in full but the cashback outweighs the interest.
• We don't run our house at 25C in winter. Its well insulated and its not lit up like Blackpool Illuminations unlike my brother who feels the need to have every room lit on a night. As a result, our energy bills combined are just over £700 a year. Boiler is still the original back boiler fitted in 1984. Sure it uses more gas than a new combi-boiler but importantly it has never broken down and the savings in gas are more than outweighed by the cost of replacement or repairs of the replacement.
• Everything that is to be replaced gets sold to partially fund its replacement. Nothing working goes in the tip.
• When it comes to Xmas, nobody in our family buys for adults other than a card. All of us have no idea !!!!!! we want anyway and pretty much have everything that could be deemed to be reasonable to buy so we don't bother. Instead, we get things for the kids in the family. As a result, they get more than they would've.

And thats it or some of it. No real secret. YET NONE OF IT IS VISIBLE TO THE OUTSIDE OBSERVER LIKE YOURSELF. How are you to know my holiday was paid for by Tesco for example? It'd be the same one you're on if you were at the same place but you'd have paid £500 or whatever so automatically assume that I did or a similar amount but I bet you'd never guess FREE as a cost.

Decide if you actually want something eg I saw a lovely Denon Home Theatre amplifier in Richer Sounds yesterday and I'd like to change the one I've got because its run out of inputs but I came home without it because I don't truly really need one yet. When you do buy be careful what you buy, where you buy from and be creative in how you pay (for example using Tesco Clubcard points or a cashback credit card or website). Don't always buy new - all those laptopsand the TVs were under 4 months old, still had all the protective plastics on and cost me half what their retail value was. Learn how things work and fix what you've got instead of paying through the nose to replace or get a trade out to do a simple job. Things like basic plumbing aren't rocket science - anyone can change a tap washer or replace a ballcock.

There's an absolute ton of other stuff the wife and I do but it means that we can make our money stretch just as far as someone who has twice the income but does little or no moneysaving at all. I go back to my brother who is the complete opposite. He and his wife earn £52k between them, over two times what we do. He bought his house just 5 years after we did but paid four times the price for a similar house due to the rises. Not an extravagent lifestyle but incredibly wasteful. All the lights on on a night time, heating up full, the food they bin is incredible. Kids have more clothes than its possible to wear - I swear some of them just don't get used and others a days use before they're thrown out for being too small. Just before Xmas he wrote his car off and needs to get another which apparently I'm going to be helping him find. Because he's done sod all money saving, he's got just £500 to get something taxed and MOT'd that can reliably do a 180 mile motorway round trip 3 times a week and finance is apparently out. I'm good but not that good...

kingfisherblue

When people look at me, they probably see someone on benefits who lives in a decent (if untidy!) house in a reasonable area, driving a newish car. My son is disabled, so the car is a mobility car. His mobility money goes directly on this each month, but I will never own it. It's a bit like a long term lease. Yet it suits me and the needs of my son and other two children. Everything except petrol is included. so when I needed three new tyres after this month's service, I didn't need to budget for them. I no longer have a car loan, as it is not needed.

The house was bought quite cheaply for the area, as it was a reposession. We moved in fifteen years ago, so prices were cheaper anyway. Also, we had sold our first house at a profit and were able to put down a 20% deposit.

Since my ex left, I have had to claim benefits as I cannot work due to my son's needs. I can't even work school hours, as that is often when I catch up on my sleep. My son has complex needs and I am up several times a night, every night.

Most of the furniture in the house is either from before my ex left, or has been bought second hand or fairly cheaply since then (to replace broken furniture).

The kids have plenty of toys and clothes as we have a large family. I buy DVDs cheaply (Morrison's were seslling some great kids DVDs for £1 each before Christmas).

When I was married, our income was more, but we were overdrawn each month. There was usually a balance on the credit card, but always below £1000. My ex earned £12,500. Neither of us were particularly good with money, but there seemed to be enough to pay of the CC every few months and we enjoyed a holiday in a caravan each year. We had savings of about £500 for emergencies, and paid into a Christmas Club so that we didn't go into debt for Christmas each year. I also bought £1 stamps from Morrisons each week, to spend in December.

Since he left, I have become much more careful with money. I haven't used my overdraft once since then. There has always been a minimum of £50 or so in my account. I have a small amount of savings, plus a separate amount for household improvements (much needed!). I have been able to add quite a bit to the savings recently because the CSA have made him start paying the arrears that he owes, so if the kids neeed anything, there will be money there.

We still have a holiday each year, but I'm usually fortunate enough to get a grant to cover most of the cost, due to my son's disabilities. I save up for spending money, petrol, etc.

We still eat well enough, but no longer have to buy such large amounts of meat (my ex was a big meat eater, but the kids and I are happy with much smaller amounts - what he would eat for one meal will easily feed the four of us if we add veg and potatoes!). I am also starting to check out the forums for cheaper ways to eat - this afternoon we are having a go at making a vegetable soup from scratch (our first attempt!).

I still save for Christmas and I rarely put anything on a CC now. I only buy clothes if necessary, but have always been the same.

So in answer to your question, I don't know whether people have large debts, high earning partners, etc, but appearances can be deceptive. Maybe some people cut back in one area so that they can spend in another. On the other hand, credit is so easy to obtain these days, and if someone has a few credit cards and just makes minimum repayments by DD, there are probably some people who are not aware of how much debt they are in.

lamarsi

from a personal point of view myself and my best friend worked together and were on a similar wage ( i earned slightly more than her) we have similar size morgades and went on hols together and went out with each however i mangaged to get myself into thousands of pounds debt whilst she managed on her wage, the more i paid for things on my credit cards the less i had each month and so it went on, it only took a couple of years to end up with alot higher outgoings than her just cause i was so rubbish with money and had those extras that she went without..

rictus123

Great post and motivation computershack! Can i ask how old you are now and how old were you when you realised about true moneysaving?

rictus123

lamarsi wrote: »

from a personal point of view myself and my best friend worked together and were on a similar wage ( i earned slightly more than her) we have similar size morgades and went on hols together and went out with each however i mangaged to get myself into thousands of pounds debt whilst she managed on her wage, the more i paid for things on my credit cards the less i had each month and so it went on, it only took a couple of years to end up with alot higher outgoings than her just cause i was so rubbish with money and had those extras that she went without..

Good post and contribution to the thread, can i ask how you have made over £500 for the 10k thread already?

computershack

Exactly. Not hard but to the outside observer, you'd look as if you were living a more expensive lifestyle, especially as theirs is usually quite wasteful. Several members of my family are quite bad and I've given up trying to help them. My sis-in-law (different one) has £200 a week she simply has no idea what she does with and seems to be permanently skint - thats nearly half our income. Madness.

Oldernotwiser

If you earn £15K and have a combined income of £17K then it sounds as if your wife isn't working a lot. I don't think you can have the lifestyle you describe on one income, unless the breadwinner is on a good salary. Average earners tend to have both partners earning.

rictus123

Oldernotwiser wrote: »

If you earn £15K and have a combined income of £17K then it sounds as if your wife isn't working a lot. I don't think you can have the lifestyle you describe on one income, unless the breadwinner is on a good salary. Average earners tend to have both partners earning.

I assume his kids are young and his wife looks after them most of the time while hes earning?

computershack

rictus123 wrote: »

Great post and motivation computershack! Can i ask how old you are now and how old were you when you realised about true moneysaving?

I'm 38 and should be mortgage free before I'm 45 which is the target. The realisation came just over a decade ago - I think it was 1997 to put a year to it - although that was more being forced into remembering the lessons I'd learned as a child and forgotten when I'd left home. Had a crap upbringing (think parents only being able to afford to feed us egg and chips and all living in one room in winter as we could only afford to heat that much - nowadays Social Services would put you in care) and went a bit silly when I hit adulthood. Then one year the wife lost her job and my income dropped off 50%, although as I was working for an agency it appeared there was more coming in than there was. Looked at my P60 that year and went "Oh Crap". Basically we had a 70% drop in one year. Well fortunately I'd not dug myself that much of a hole that I couldn't get out of it and poverty in childhood had been a great educator on what could be achieved with very little - all my bikes and my first TV were skip raid jobs I'd brought back to life myself -the TV I repaired (OK, was only the internal fuse) at the age of 13 and long before the internet existed.

I actually thanked my parents this Xmas for the crap upbringing. Genuinely thanked them and I meant it. Sure it was real bad at the time but I now understand the lessons that were there to be learned which are far harder to be taught without living through it. I think everyone needs a stint of absolute abject poverty to focus the mind on what you actually need and, just as importantly, what you're actually capable of and how to learn to do things for yourself. There's just too much waste through laziness and lack of self belief/motivation. Too many of us think "I can't possibly do this because people who do this as a living have spent years training and taking exams" which is why, for example, people pay £50 an hour for a guy to come out, turn the water off at the stopcock, undo a screw and a little nut and replace the 2p washer in the tap - something which was "common knowledge" that people did for themselves just a few decades ago. Sadly, I think its only going to get worse as the govt is hell bent on everything having a qualification, thus exacerbating the "can't possibly do it myself" mindset.