'normal' amounts of debt in this day and age

Teacher2

BBH123 wrote: »

Having read this thread what is very noticaeable is that most of you are on huge salaries be it sole or joint income where levels of debt are really down to poor money managment . Anyone on large salaries has no reason to be in debt.

This thread would be do much more useful and interesting if it was contributed to by those earning median salaries of about 25 / 26k.

Yes, I noticed that some people on this thread were on very high salaries. Before I retired my DH's salary and mine were jointly very high too but then we joined the 'mad club' and paid school fees for junior education so our outgoings were high too.

Now I have retired early on an actuarily reduced pension and my husband's job and salary have been changed and reduced so he is only bringing home half what he used to. Together we are still over median earnings but our outgoings are still pretty enormous.

I am rather nervous about how we will manage financially in the six year gap before we collect our state pensions and I am relieved beyond measure that we had a 'zero sum' attitude to debt.

Martinslovechild

This is a very interesting thread. For a long time, I've lived by the principle "I want it.. but do I need it?" - and if the answer is "No" then I don't purchase it. Martin Lewis himself has said the same thing to many people over the years.

During my twenties, like many other people, I got into debt; but during my thirties I was hellbent on paying it all off - including the mortgage. It's really not about high salaries as the last poster has intimated, it's simply about living within your means.

jarshay

Just reading this thread and seeing how little debt everyone is in makes me worried and feel a little irresponsible even though we manage our debt - here goes:-

Me (30)
DW (30)
2 DS (9m and 2years)

Annual Household Income : £85k
Mortgage : £210k @ £675pm
My Car Loan £48k @ £875pm (Only because I wanted a Tesla and commute 200 miles a day)
Wife Car Loan £3000 @ £300pm (finishing in 3 months)
Personal Loan £10000 (For house renovations) @ £200pm
CCs £12000 (0%) pay off about £250pm

a_silver_lining

We have lower salaries.

I earn 18k. I've never had a salary over 23k. Drop in salary is due to a career change at 30.

I saved 45k over my 20's and bought my flat alone when 27. I borrowed 10k from family towards buying and now have 5k left to repay. Since buying I've saved rather then take credit to do up the flat to a total of about 4K.

I've also overpaid the mortgage by 1k. I've saved about 1.5k.

Age: 31
Debt: Just over 5k left of 10k, which was lent by family towards buying
Own: Property 94kish mortgage and flat nextdoor sold for 195k last year so I'd say about 100k equity.
Salary: 18k (1270 takehome, 400 from partner towards bills etc. I save £300pm and pay towards debt £350pm.)

My partner has no debt and owns her car outright. She was on a great salary but also changed career at 30! She must be on 20kish and rising. She has just hit 5k savings and is aiming for 20k when we hopefully sell and buy together in 2/3 years.

Lauralou79

I probably fit in the lower pay end. I earn £22,000 in the NHS.
Currently the only debt I have is my £84,000 (left to pay) mortgage.
Other half earns £30,000 and no debt apart from the mortgage

I had small debt years ago I paid it off and now save to pay for things. I never want to go down that route We have a low mortgage which we are overpaying currently and no children, so manage to have a good lifestyle ( I don't need expensive items) but if I want a new top or a meal out for example I can without feeling guilty as it's my money not credit.

teameffort

My OH and I are 32 and 34 respectively and earn approx 49k between us. We have worked very hard to get this and this has only been achieved in the 12 months. (used to much lower incomes and still live off the lower amount, saving any increases in pay for our future).

We decided when we brought our house a few years ago that we wanted to overpay as soon as we could. This means we are now in a good position, have no debt (other than the mortgage) and have a decent emergency fund.

All of this planning means neither of us have to remain in jobs we hate just to pay the bills. An unexpected benefit of this is that we both actually enjoy work more because we aren't worried or stressed by money.

I think the biggest single thing we did was decide a long time ago, not to compete. We share a 15 year old car, and I don't care what people think about it. Unlike many of our peers, who are in debt.

nrsql

Think of it as a cost.
Everything you buy with a loan other than interest free increases the cost.
Paying it back later reduces (probably) the cost due to inflation.
Buying it later may increase or reduce the cost as prices change.
There may be an improved product if you delay purchase.
Taking on debt increases risk.
Something might happen in the future to prevent you enjoying the item if you delay.

Look at how much you want the item now, how much it will cost given the above and especially consider the risk.
I try to buy everything with a cashback card to reduce the cost and always pay off in full to prevent interest.
Only debt is mortgages - which I would deal with except they track the boe rate so are cheap and relatively risk free.

The concept of a normal amount of debt doesn't really make sense - should be what you are willing to take on and whether you think it benefits you.
Taking on debt early in your working life might be sensible as it can improve your lifestyle when you can benefit and hopefully will end up insignificant as earnings increase. Just don't keep escalating the debt in line with earnings and consider the risk if earnings don't increase.

First property - £35k flat, £32.5k mortgage (endowment). Looking back would have been better as interest only as I could have done with the extra money at the time and now it would be insignificant. Still have the flat but larger btl mortgage, interest only and have funds to pay it off if things change.

Chandelier.

I now have zero debt after paying off my car loan and the cost of having veneers done. I only now use a credit card which I pay off in full each month and use it for rewards and cashback. I have no intentions to ever get into any sort of debt again, instead I'll save for what I want or need.

I earn around 20k per year and still live at home, I've no plans to move out any time soon and I'm saving as much money as possible whilst also doing things I want to do and living the lifestyle I choose.

enjoyyourshoes

If you have a large amount of debt, there is a good chance that you are suffering from compound interest (and paying for it) , especially if the debt is on high interest CC , loans etc.

Many people on these board often don't have anything to show for the debt that will be with them for many years.

So it seem counterintuitive to spend then pay for the 'stuff' over many years.

Its a bit old fashioned, but why not save then get the experiences that mean a lot to yourselves?

The process of saving will make the experience be more memorable and last longer in your consciousness.

All I can remember is at the age of 6 saving for 'The World of Pooh' , getting all my book tokens, pennies together and asking my Mum to take me to the shop to buy it. Treasured memories and a long lasting well read book.

Spending is often psychological, so you have to go too some processes to identify the real reason you spend and get in debt, then solve that problem as the priority.

saving also benefits from positive compound interest, the corollary to debt.

A4445

I’m 35 and have £1500 debt 0% but I have money in savings to cover if needed. Was very foolish with debt in my early 20s. I try and save for what I need.