What is a dangerous level of debt?

[Deleted User]

Anyone see the poll here about assets v debts ?
http://forums.moneysavingexpert.com/showthread.html?p=29444027#post29444027

Interestingly I come out as C....

[Deleted User]

WASHER wrote: »

Why are you asking about a dangerous level of debt today? Is your level of debt beginning to concern you, if so, post an SOA, and we will see if we can help to reduce your outgoings.

Thinking about your debt level can happen just before your lightbulb moment (where you decide to take action).

WASHER.x.

I'll get an SOA together. But I think I've trimmed it down to the minimum pretty much. I'm good at doing that...

[Deleted User]

DarkConvict wrote: »

I think loss of main income for 6 months could be a good indication. Could you cope?

Personally i plan to be able to make full payments on my debts every month, excluding the mortgage. That is my plan anyway, so i do not have to make the decisions of can i cope, I intend to spend within my limits.

Probably just about. Got income protection insurance and we could struggle by and make minimum payments I guess.

[Deleted User]

GeorgeUK wrote: »

I would suggest that once the debt became more than 4 times the monthly income, that would be the danger area.

I suppose it would depend on the interest rates you were paying too but if it were high street rates then this is where i would put up the warning flags.

Interest rates are pretty much all special life of balance rates ranging from 3.9% to 6.9%

[Deleted User]

MrsTine wrote: »

I really dislike the term "dangerous" debt... I think it's misleading and over dramatic...
There is affordable debt and unaffordable debt
Then there is debt you can deal with even if your income takes a tumble...

We have more debt than you between us (a lot more if you count the cars!) but we also earn considerably more. we have a fab mortgage at the moment (1.1% above base rate... :martin:)
And I have made sure we have PPI in place (independant!) to cover us SHOULD either or both of us be made redundant.

Yeh. I think my mortgage is 1.1% + base too. Great !!!!:D:D:D

[Deleted User]

Dave101t wrote: »

with a net income so high, i wonder why you rely on cards?.
any debt with an additional 130k mortgage would have me crapping myself each and every month....

Dont think the mortgage is that high to be honest. House prices are pretty reasonable where I live but even a 2 bed house costs over £100K. (BTW, ours is a 4 bed detached worth about £240K now)

I know people I work with who've got a £200K mortgage.

BritRael

[quote=[Deleted User];discussion/2248091]...However, taking on board that debt is a fact of life these days....[/QUOTE]

Lots of good comments and advice above.

My attention was drawn to this OP comment.
I'm in my 50's and I can honestly say that taking on debt has never "been a fact of life" for me. In my early career days my income was very low (I was by far the lowest earner in my group of friends) and I was always skint, but it never entered my head to borrow. If I didn't have money to buy something, I didn't get it. Simple.
I was in my late 20's before I got a credit card, but even then I used the same principle; only ever buying with it what I would have normally paid for in cash - always paying it off in full each month.

Billy-no-Money

Lots of good comments there - the biggie being what would happen if you lost your job?

Something else to think about is your future life path - I looked at my debts and saw my 50th birthday looming, realised I didn't want to be in my fifties with debt, and that's become the thing that drives me.

I was in debt at 30, worse at 35, worse still at 40 - but 50 and retirement seemed a long way away. So I just kept making the payments.......... now I'm having to spend five of the best earning years of my life repaying debt.

I don't know how old you are, do you have kids etc, but life has a habit of changing circumstances. You don't want debt to get in the way.

yellowduck_2

it's losing your job that is the cruncher, I was fine till that happneded to me. then factor in ill health and the recession and a debt that was very affordable has become a nightmare that haunts my every waking hour.

Mr.Mulla

From what I've read somewhere, financial experts usually recommend that no more than 15 to 20 percent of income is used to pay for consumer debt. If you pay more than this, you’re in the danger zone and possibly in over your head with debt.