Who has INCOME over 40K and is still in serious Debt????

PasturesNew

One of those superscrimpers programmes had a man who'd been earning £120k and lost his job .... and they were still spending £5,000/MONTH on living!!

Pennysmakepounds

I guess it really comes down to OVERSPENDING....in most cases...

I the 'more you have the more you spend' is in some cases true....Peoples desires and the NEED for 'Things' seems the common theme.....

From having worked in financial institutions (Bank Counters) and speaking to people i get the feeling that certain people see CREDIT limits as 'THEIR' money….like savings.....and this is the root cause of have 10/15/20K of credit card debt..

In times of plenty....credit card companies were happy to give 'Stupid' limits of credit to people.....all you had to do was ask for more and it was approved without a second thought.....

ALLOT of people are now paying the price for this…..:(

StumpyPumpy

It isn't as easy as setting an arbitrary figure like £40k earnings. What is important is more the amount of disposable income people have. Quite often people on a higher wage also spend a lot more and often live in a more expensive area.

For instance, someone on £20k might have more disposable income because while they can't afford a mortgage, their rent payments may leave more cash for them at the end of the month than someone who has £40k and has maxed out their mortgage payments. They also don't need to pay for the maintenance of their home, so the central heating breaking down could easily lead a home owner into debt where a tenant would not have to pay. They may also have bought a house in a "desirable" area with higher council tax, etc. And these areas are less likely to have so much public transport (because everyone has cars and doesn't use it) So it becomes "essential" to have a car.

Basically, anyone can have debt, regardless of earnings, just as just about everyone can not have debt.
Michael Jackson was said to have annual earnings around $100m at the time of his death, but it has just been reported that he also had debts of $500m.

SP

Pennysmakepounds

Weird_Nev wrote: »

As a personal example, we moved overseas and my wife more than doubled our family income on her own, nearly tripled it in fact. We got our first ever loan, at 33, to by a car because they're so expensive here. That is something we'd never entertained, even for a moment, back in the UK.
It's less than 5% of her income to pay it back, and the cost of the loan was fully calculated, and we felt it was the right thing to do to get a safe, reliable car sooner and get on with our lives. We don't regret it for a moment, but it shows how "striking it lucky" can alter your perception of finances.

Sounds like you moved to the Middle East...:rotfl::rotfl:

Yes - Income is a big factor....on Spend.....

I have personal exp. of that......I too was on a relatively average wage for many MANY years.....then i had the fortune to find a much better paid job and like your wife, I managed to increase my earnings substantially overnight....

This has changed my way of thinking about material things…..and money….
:o

EDIT:- Having said that....i have to also add that...'Once frugal..always Frugal'....is also true....I still wouldn't dream of spending.....for the sake of spending/....But that just me.... Others might might not agree.

You only live once....so be happy.....

quantic

Gross income is lately irrelevant in a lot of situations... In my experience it comes down to poor household accounting a lot of the time (not always).

Having learned from my previous financial blunders we try to do things a little bit different to before and other people we know. We get paid on the last day of the month, all our bills come out on the 3rd of the month (allowing for late payments from our employers etc.) Once the fixed bills have all come out we then transfer money to a separate account for Food and Petrol, at this point all bills are now paid or accounted for and we can relax immediately.

Once this is done we think about what we are going to be doing that month and divide the rest between overpaying/ISA/disposable income (this varies from month to month). I notice a lot of my friends leave all their money in their current account, their bills come out sporadically throughout the month. This does two things:

a) It makes your finances very difficult to manage

b) Gives a false sense of wealth, which is weighted towards the start of the month. Buying loads of treats in the first week after payday (ring any bells?)

The result of this is that when an essential bills comes out later on in the month, the money that should have been saved for it from their income has now been spent and they cannot afford their household bills - they then moan that they have had an unexpected bill which in fact is a bill they get every month (puzzles me).

Further to this, they actually trick themselves into believing that they are only going into debt to pay the essential bill, (which mentally justifies the behavior) because its what they cant afford to pay when the bill comes along, which is of course not true. Had they worked out their finances at the start of the month and paid all the essentials first they would realise that they cannot afford the items they are buying and the reason they are in debt is nothing to do with household bills.

Obviously, its up to everyone to choose how they manage their household and I'm not saying my way is the best but I just don't understand why people put themselves through the stress a lot of the time.

Bertrum

Slightly different take on this.

Having parents who always had alot of money, not rediculous but enough for new cars big family holidays to the US and so on screwed myself and my sister over.

We both got jobs and started working but continued to try and live that lifestyle, not helped by my parents propping us up. I dread to think how much they have given us over the years but were talking 50+ each. So through our 20's we both overspent with no regard for the consequences.

So along comes my 28th birthday and I get struck off the gravy trian. Which is fair enough, but a bit of a shock. I've managed to increase my earnings by a good 10k since then taking me over the magic number and have been paying down the debt. About 20k at it's peak. Now 8k. (i'm 32). So I haven't exactly gone hell for leather. I wish I had the ability to knuckle down and get rid, but there are certain things I won't give up.

Now I wish my parents hadn't been so generous as I failed to learn the value of money and the ability to wait for something I wanted.

Anyhoo, my point is there are loads of reasons for getting into debt some not too obvious.

Maybe this is a kick in the bits self admission post to try harder.

asmwp

To be honest, in my opinion, everyone will live UPTO their income, the more you earn, themore credit you can get, the more credit you get then the greater the risk if all goes wrong employment wise. So in my conclusion credit is prevelent in all walks of life and the same rules apply, credit management is the same issue for everyone regardless. You must live within your means. Easy to say, hard to do. And before anyone thinks I am preaching I have been in the same trap until it all went wrong!

michaels

Wierd - I opted to give up 25% of my income this year for tax/benfits reasons but this just means I am not paying as much of my IO mortgage as I did last year. Surely everyone should be 'saving' 25% of their income to pay for their retirement by what ever means (pension, isa, mortgage capital payments)?

But then I am very lucky in that I judge neither myself or others by 'what they have' in terms of house, car, bling or whatever.

Pennysmakepounds

michaels wrote: »

Wierd - I opted to give up 25% of my income this year for tax/benfits reasons but this just means I am not paying as much of my IO mortgage as I did last year. Surely everyone should be 'saving' 25% of their income to pay for their retirement by what ever means (pension, isa, mortgage capital payments)?

But then I am very lucky in that I judge neither myself or others by 'what they have' in terms of house, car, bling or whatever.

Retirement – is a good talking point to be honest.

Too many people don’t save enough for their retirement. We spend our lives in the ‘Acquisition of Wealth’…..working all hours, sacrificing family at times, neglecting ourselves…and so forth to get more money…

Most people don’t think about what will happen when they are no longer able to earn……We all will retire one day (If we live) and we NEED to make provision for that..

Everyone NEEDS to have a provision in place for when they are no longer working....Unless you intend to live on what little handouts you get for the government.:(

jules888

asmwp wrote: »

To be honest, in my opinion, everyone will live UPTO their income, the more you earn, themore credit you can get, the more credit you get then the greater the risk if all goes wrong employment wise. So in my conclusion credit is prevelent in all walks of life and the same rules apply, credit management is the same issue for everyone regardless. You must live within your means. Easy to say, hard to do. And before anyone thinks I am preaching I have been in the same trap until it all went wrong!

Yes the more you earn the more credit you can get but you dont have to get it.I grew up in a family with not much money who never borrowed,hubby and i have never had a loan,apart from a mortgage.We"ve only got what we can afford.
Hubbys parents getting repossessed twice made us even more determined not to let it happen to us so paid mortgage off asap.