'normal' amounts of debt in this day and age

FBaby

Normality make anything alright and the more people do it, the more it becomes the norm. We compare ourselves to people we look up to. If they do something, and even more, show no anxiety or concerns over it, then we are likely to think it is ok for us to do the same.

phillw

FBaby wrote: »

Normality make anything alright and the more people do it, the more it becomes the norm. We compare ourselves to people we look up to. If they do something, and even more, show no anxiety or concerns over it, then we are likely to think it is ok for us to do the same.

Yeah. Roughly 5% of the UK population has been diagnosed with type 2 diabetes. If this figures ever rose above 50% then I don't think it should change how you deal with having type 2 diabetes, or trying to avoid it in the first place.

The same goes for debt.

Just because a whole bunch of your peers has decided that they want it all now and have borrowed the money to do it, doesn't mean it's not an absolutely terrible idea. You may be one of the lucky ones that manages to pay off your debts after landing a dream job, but equally you may not be. The way things are going right now you can expect to earn less in real terms year on year.

[Deleted User]

Primrose wrote: »

I'm shocked by the amount of debt many people have these days and wonder whether it worries them. If I had debts I simply wouldn't be able to sleep at night until every last penny had been laid off.

Not really, over the last year I had my electric supplier drop the monthly DD to rock bottom £13 per month to eventually brew up a debt of £527.00 I'm sure as it turned out the very accommodating and polite agent at the DCA yesterday didn't mind my call as it keeps her in a job. I even did a 4 month stint in Accounts Receivable which I'm sure wouldn't have existed if everyone paid up on time or didn't need to spend out in first place.

During 2016 I surported myself during 12 weeks of unemployment during the course of the year.
I pay my debts in cleared funds (no robbing Peter to pay Paul which use to happen)

Anyway Keep Calm has now worked out it's around £2,557.00 owed on a single income of 16.5k much better then 6 years ago, I don't feel so bad anymore.

chrisw99

Primrose wrote: »

I'm shocked by the amount of debt many people have these days and wonder whether it worries them. If I had debts I simply wouldn't be able to sleep at night until every last penny had been laid off.
Excluding a mortgage which many people have, we have never had any debts. We simply went without something until we had saved up the money for it. Yes it was sometimes hard doing without, but having twice suffered unexpected redundancy during times of recession, I'm so glad we always kept our finances in good order and had emergency savings put by.

People seem to have different priorities these days. Expensive weddings, a mandatory overseas holiday every year, the latest gadgets, etc. One just hopes that all these things won't one day come back to haunt people. Recessions and unemployment have a nasty habit of coming round again at regular intervals.

It's interesting how you say excluding a mortgage, as you really need to take that into account.

An example

I have 50K debts, my friend has none. Who is worse off, excluding mortgages?

Taking mortgages into account...

I had 50K of debt and a 50K mortgage, but my friend on similar wage has 150K mortgage and no debt. I am really really struggling compared to him due to all the various payments, etc.

I shift the debt to the mortgage, I now have a 100K mortgage compared to my friends 150K and now find myself in a much much better position as I find myself £500 a month better off than I was before so even managed to reduce the mortage a couple of years in the process.

Happier_Me

chrisw99 wrote: »

It's interesting how you say excluding a mortgage, as you really need to take that into account.

An example

I have 50K debts, my friend has none. Who is worse off, excluding mortgages?

Taking mortgages into account...

I had 50K of debt and a 50K mortgage, but my friend on similar wage has 150K mortgage and no debt. I am really really struggling compared to him due to all the various payments, etc.

I shift the debt to the mortgage, I now have a 100K mortgage compared to my friends 150K and now find myself in a much much better position as I find myself £500 a month better off than I was before so even managed to reduce the mortgage a couple of years in the process.

Transferring unsecured debt to secured debt is not considered to be a good move generally on this forum. That's because your home is at risk if things go wrong and this is a form of debt consolidation...many people go on to build up more unsecured debt after consolidation, increasing debt levels even more. Just bear in mind that you may be saving £500 each month but if you don't overpay, you could end up paying far more in interest over a lengthy mortgage term. However, if you are sensible this can work well, I've increased my mortgage several times over the years simply because it is a cheap form of finance.

davidsdesire

OneLife_OneShot wrote: »

. I'd love to know how to get a wedding that cheap mind!

my wedding cost approx $400USD. My friend officiated for free...it was me and my husband with 2 friends on a cliff overlooking the ocean. $250 for the hotel we stayed in, $16 for my dress, $16 for a bouquet of flowers, $20 for my headpiece and about $20 for gas to the small seaside town.

We've had 2 weddings and this tiny one was the best by far!

phillw

Happier_Me wrote: »

many people go on to build up more unsecured debt after consolidation, increasing debt levels even more.

"now we've consolidated our debts into one easy payment, we can afford to go on holiday".

Clearing debt is the same as losing weight. All the time you're focused on it then you can crash diet & it's easy, whatever the problem was that got you into the mess is likely to raise it's head again when you relax.

chrisw99

Happier_Me wrote: »

Transferring unsecured debt to secured debt is not considered to be a good move generally on this forum. That's because your home is at risk if things go wrong and this is a form of debt consolidation...many people go on to build up more unsecured debt after consolidation, increasing debt levels even more. Just bear in mind that you may be saving £500 each month but if you don't overpay, you could end up paying far more in interest over a lengthy mortgage term. However, if you are sensible this can work well, I've increased my mortgage several times over the years simply because it is a cheap form of finance.

It works at the moment because the rates are so low. It will cost about £5000 in interest over the next 10 years to borrow the amount we needed.

Considering the existing interest was approaching £1500 a year and rising, it's probably saved us at least £10000 in interest over the next 10 years, as well as having >£500 a month extra in pocket now each month.

dktreesea

chrisw99 wrote: »

It works at the moment because the rates are so low. It will cost about £5000 in interest over the next 10 years to borrow the amount we needed.

Considering the existing interest was approaching £1500 a year and rising, it's probably saved us at least £10000 in interest over the next 10 years, as well as having >£500 a month extra in pocket now each month.

Fortunately I don't see the base rate going up any time soon, in spite of the continuing growth in unsecured debt, because people are already becoming too squeezed by the inflationary impact of a dwindling pound. So on the mortgage front, even if now on a variable rate rather than a fixed rate, you're probably going to be safe from interest rates for quite a while.


I've never seen the sense of paying off a credit card at 20% per annum or thereabouts when one has plenty of equity in one's home and can just transfer the debt onto the mortgage at a much reduced rate. I know in principle transferring unsecured debt to secured debt is frowned upon, but surely £20 a week is worth saving?

backontrack83

Me - 34 (next month) - Earn £26k - Debt £635
DH - 40 (just turned) - Earm average £30k - Debt £0

We have just paid our final £750 a month off our debts of which 4 years ago we had £36k between us.

We do not have a mortgage and we will now be saving a hefty sum each month in order to try and get on the property ladder.