How much debt do you think is "ok"?? If any!

quantic

Varies from person to person I suppose, I personally hate any debt, and I am of the opinion that (if possible) - waiting around until you have saved up generally means you make a better decision. Half the time once I've saved up for it I decide its a waste of money.

If you can easily afford all your debt and it doesn't keep you up at night I don't really see a problem with it.

Delree

Willing2Learn wrote: »

You totally missed the point by focussing on a six word sentence within my post.

The point I was making was risk. Why expose oneself to financial risk? Why, for example, take out a 20K loan for a new car and home improvements when the repayment plan could be unaffordable should circumstance such as employment or health change (ie worst case scenario)?

What I'm saying is that credit should only be used if there is little or no risk of financial hardship and default should the debtor have their income reduced. The debt should still be within budget on a lower income. If it is not, then there has not been an effective analysis of risk before taking out the credit and entering into an agreement. That would then, in my book, be an example of poor financial and budgetary management.

People get themselves into trouble by not identifying risk. A recipe for disaster.

I agree with the above of course, very sensible.
I just don't see why you take out loans when you don't need them for the purpose of keeping you credit file looking good.
It MUST cost you money to do it that way.

I can see why you would borrow money at 0% for instance to do it whilst always having the cash in reserve to pay back if something bad happened but there aren't many 0% loans out there.

Katzen

I have to say I can not understand the point of taking a car on HP if your current one is running without being totally unreliable. I would only ever take out HP on something in an emergency e.g. car is dead and need one to get to work. Especially something that will lose so much value that you never stand a chance of getting back what what you paid, let alone the interest. I find it unlikely that a new car will save you enough each month to make up for that difference.
My nana (who raised 8kids without ever claiming any benefits) used to save up for items then buy them on HP so she had a bit of emergency cash in the bank if needed but also always had the cash to pay the HP. Not an ideal solution but sensible when there was little/no welfare state to support them if she or grandad lost their jobs

PurpleJay

Interesting to read others opinions on this. I think in ops situation I wouldn't buy a car on HP to 'save money'. The depreciation on a newer car will likely cancel out any savings on running or insurance costs. I would say get rid of the credit card debt and then think about it.

For me a mortgage, student loan and car loan can be acceptable debts but only if you can afford the repayments. If you feel you have to borrow money for a sofa and have 3k on credit cards which you are only paying small amounts off, taking out further debt you don't need is a no no for me.

Years ago when I bought my first house we had a mortgage, car loan and no money and bought carpets and sofas on interest free and curtains, bedding etc from catalogues. As a result of over committing we lived on credit cards. Never again. My last sofa before this one was from eBay. The sofa and chair were from an auction at a fraction of the rrp. This car was paid for cash, my previous one with a loan but I had no other debts apart from the mortgage and could afford the repayments. I use a cc and pay it off every month.

If you can't afford to pay more off the cc now, how can you afford the additional debt of a car loan?