Best way to avoid debts

Jarlawuk

Don't buy rubbish you don't need, and don't spend beyond your means - that was my main downfall.

skintchick

LEarn to recognise the difference between a need and a want, and budget for what you need.

There's not much in life that truly has to be bought now, rather than later when you've saved for it.

One of the most satisfying moments of my life was paying for my new carpets with cash I'd saved up.

studentphil

I think debt is so tempting you think I want a car so I will get a bank loan.
I want a holiday I will borrow another 1000 and before long you are paying more in debt repayments than you spend on basic living.

Frightening!

Sooty0404

Being in debt is not a crime - and maybe the problem starts there.

Reading this thread took me on a journey down memory lane.

When I bought my first car on HP you had to have 1/3rd deposit, repay over 2 years maximum, and have a credit rating on par with the Queen. That was the law.

Then THEY lifted the restrictions. Now there is 0% deposit, 0% finance and the length of the loan outlives the car - in the case of a 3 piece suite this can now be worn out BEFORE you have to make the FIRST payment, never mind the last one. The only pre-requisite to obtaining credit is the having ability to sign your name.

Then comes the peer pressure. Your neighbour gets a widescreen TV and you go home and look at your beat up old box in the corner. Out comes the credit card and its off to Currys or wherever.

My wife once sent me out for a bag of sugar and a loaf of bread. I 'detoured' slightly and arrived home with a new TV complete with matching video recorder. She went loopy, not least because I forgot the bread and sugar. I saw the special offer, popped into the shop 'just to look', came out with the goods and never parted with a penny. It was all too easy.

So it goes on. Modern technology makes the adverts look better and better, the marketing boys are so much better at what they do, and our desire to give the kids what we never had has helped us all to contribute to a £200 billion consumer debt.

But the credit companies are still making more money than ever before. To say I have a poor credit rating is like saying The Hindenberg had a bad landing - a gross understatement. But still the offers flood in. I filled in an application form for a credit card recently 'just to see what would happen'. I was refused (no surprise there). Twenty four hours later I received a call from the company informing me that although I couldn't have the card I applied for I could have an alternative card with a slightly lower limit at a slightly higher interest rate. I admit I was tempted and patted myself on the back when I declined the offer.

I will soon be 50 years old and we are the sensible ones (aren't we?). What will be out there to seduce our kids in a few years time? Buy a TV and get a free car? Take out a mobile phone contract and get a free holiday home? Who knows.

One thing is for sure. Until a way is found to cap unsecured consumer borrowing, DEBT IS HERE TO STAY.

studentphil

You hear mixed things on debt. Some people say don't worry if you can afford to pay it back then it does not matter and it is great.

But I was always brought up by my Parents and Grandparents that any debt other than a Mortgage is very very risky and bad and should be avoided.

lewt

on the carrer delovpment front. if you have a good idea and belive in yourself then it's worth it...

Pobby

It`s the kids that worry me.My 18 year old God son has £24k of debt already{including interest }.!!!!!! is that all about?Spent on a new car ``because it`s better than what any of my mates own``!!!!!!!!!!!!!!!He didn`t quite get it when I explained that in time one of his mates would buy an even better car!!!!!!!

So what is really going on?I have given it a lot of thought but this is a real change from when I was young.Probally because no one would consider lending you even a fraction of this amount.

Another bit of madness,imo,is the interest only mortgage.It is amazing the amount of people who have these and don`t realise that it is a must that some sort of savings vehicle is set up alongside it to bay down the capital.Seeing this is renting from the bank,it amazes me that so many do this and most of the time it is more expensive than renting from a landlord.

With 1.3 trillion ponds of debt owed I really have no idea where this is going to take us.

Damocles

The biggest lesson I have learned since tackling my debts head on is to budget effectively and to make it stick. One thing this has taught me is that my life will not end and the universe will not collapse in on itself if I don't go out this weekend or by that shirt that probably doesn't suit me anyway. Last year I paid back just shy of £1400 in one 3 month stretch. I believe that if I can manage that then equating that to savings means I could probably afford most things I want if I wait. And probably get it cheaper too.

studentphil

lewt wrote:

on the carrer delovpment front. if you have a good idea and belive in yourself then it's worth it...

A 10k MBA does not give you a magic ticket to a well paid job-- so I still think they are a big risk.

betti911

Interest only mortgages are really dangerous. I'm a conveyancing solicitor and the number of young couples who are STILL taking out interest only mortgages and personal loans on top is really scary!!

Someone gave me some good advice about a yr ago re stuff to buy for my wee flat- to buy basic white goods and not to be tempted by fancy, new electrical equipment until I was debt free. So now I have a TV in my flat the size of my computer screen but no £1000 k debt for a TV like my friends. One day I'll have nice stuff but I never want to get into debt again and want to pay for it myself.