'normal' amounts of debt in this day and age

FTBuyerGlasgow

For me you can't really count Mortgage debt as you need somewhere to live and have an asset there you can sell if you need to.

Novice_investor101

I'm single, 36, Inc about £21k with bonus & a bit of overtime to add on.
I've a £63k mortgage on a £131k house & about £400 on a 0% credit card. A student loan as well, but I ignore that.

I had £50k in savings before I bought my house at age 31, which depleted to £5k after deposit, legals & building work after buying the house.
I'm back up to savings of 12 months expenses in cash, a S&S ISA with 6 months expenses in it & growing (not to be touched unless as a last resort) & a LISA I pay £100 a month into for retirement & another very last resort.

Im lucky that I've never been in debt & I'm not very materialistic. I'm also acutely aware I have no family to fall back on if I hit hard times, so I feel secure having no debts & some savings.

I also overpay my mortgage, despite the oft given advice that I'd earn more in interest in a 5% regular saver - but it's part of my contingency plan. All the years of overpaying a little each month now means I'm about a year ahead of my payments so in the worst case I could take a payment holiday for a year if I needed to. & In the meantime I'm paying less interest & my mortgage would be cleared quicker.

Under a stress test for my finances, I could survive a year without work, or probably much longer. I also get 12 months full sick pay from work, so I feel secure in knowing I've built as big a safety net as I can.

Having a significant amount of debt would leave me feeling very vulnerable, so I avoid it. I save up instead of buying on expensive credit.

takman

Novice_investor101 wrote: »

I'm single, 36, Inc about £21k with bonus & a bit of overtime to add on.
I've a £63k mortgage on a £131k house & about £400 on a 0% credit card. A student loan as well, but I ignore that.

I had £50k in savings before I bought my house at age 31, which depleted to £5k after deposit, legals & building work after buying the house.
I'm back up to savings of 12 months expenses in cash, a S&S ISA with 6 months expenses in it & growing (not to be touched unless as a last resort) & a LISA I pay £100 a month into for retirement & another very last resort.

Im lucky that I've never been in debt & I'm not very materialistic. I'm also acutely aware I have no family to fall back on if I hit hard times, so I feel secure having no debts & some savings.

I also overpay my mortgage, despite the oft given advice that I'd earn more in interest in a 5% regular saver - but it's part of my contingency plan. All the years of overpaying a little each month now means I'm about a year ahead of my payments so in the worst case I could take a payment holiday for a year if I needed to. & In the meantime I'm paying less interest & my mortgage would be cleared quicker.

Under a stress test for my finances, I could survive a year without work, or probably much longer. I also get 12 months full sick pay from work, so I feel secure in knowing I've built as big a safety net as I can.

Having a significant amount of debt would leave me feeling very vulnerable, so I avoid it. I save up instead of buying on expensive credit.

How can you have a £63k mortgage and be in no debt....

sourcrates

takman wrote: »

How can you have a £63k mortgage and be in no debt....

Think the OP meant consumer credit debt, a mortgage is a nessessity isnt it, for those lucky enough to qualify anyway, personally I think he is extremely lucky to be able to afford a mortgage these days, jobs that pay the kind of money you need are few and far between well they are in my area anyway, mainly minimum wage jobs here, and seasonal as well.

We will soon be a generation of renters.

Novice_investor101

@ takman.
I don't class it as a debt, I class it as an asset - it's a house. I can sell it for a lot more than i bought it for & walk away with a nice wad of cash if I wanted.
People who have wasted away thousands on unsecured debts like credit cards & loans & have no asset to show for it, never mind one that has grown by 30% in value in 5 years, usually find themselves in a mess later in life.
Most often, they are stuck renting & cannot afford nor acquire a decent mortgage due to debt & credit history problems.
A mortgage is possibly one of the few "good" debts to be in. Beats renting in retirement.

Potbellypig

sourcrates wrote: »

Think the OP meant consumer credit debt, a mortgage is a nessessity isnt it, for those lucky enough to qualify anyway, personally I think he is extremely lucky to be able to afford a mortgage these days, jobs that pay the kind of money you need are few and far between well they are in my area anyway, mainly minimum wage jobs here, and seasonal as well.

We will soon be a generation of renters.

I don't have a mortgage, and I've definitely still got air in my lungs.

takman

Novice_investor101 wrote: »

@ takman.
I don't class it as a debt, I class it as an asset - it's a house. I can sell it for a lot more than i bought it for & walk away with a nice wad of cash if I wanted.
People who have wasted away thousands on unsecured debts like credit cards & loans & have no asset to show for it, never mind one that has grown by 30% in value in 5 years, usually find themselves in a mess later in life.
Most often, they are stuck renting & cannot afford nor acquire a decent mortgage due to debt & credit history problems.
A mortgage is possibly one of the few "good" debts to be in. Beats renting in retirement.

Yes I agree it's a "good debt" and is much much better than the endless cost and insecurity of renting.

You seem to be in a good financial position and have good financial contingency plans so this doesn't really apply to you, but it can be concerning when people consider themselves "debt free" when they still have some debts but don't consider them debts.

dawyldthing

I'm sure this site is therapy sometimes lol.

So I'm 31. I don't have any debt now. Took out a £24k mortgage over 10 years and cleared in in 2 and a half as I didn't like having it round my neck and it kept me awake (and no, I'm not joking about it keeping me awake).

I've never had a loan (other than my student loan which currently stands at £23k but it's rare I pay any back as only once have I earnt over £17k, but might be due some sleep in back pay so might be giving them a wack if it materialises) only had my mortgage. Have 2 credit cards but clear them if I spend upon them each month.

Mums kept me grounded as we never had a lot but she always gave me what she could. My biggest wake up was after she split up with her husband and I was about 10 she spent around £1k on Chrustmas and it took 3 years to pay back and I thought then debt wasn't for me. Mums always bought second hand too which helps imho.

I've built up a bit of savings but the main reason this is is I don't drive. I spend probably £600 a year on the bus getting to work and I'd guess £500 on transport seeing friends/ leisure/ holidays.

I don't blame folk driving but I do think in a lot of cases it's a needless expense. One of my friends spends I'm sure she said £200 a month on the renting of the car (where they rent it then swap it after 2 years without buying it), so she spends more on the car than what I ever do on transport never mind petrol, road tax, mot, car repairs, any problems. And I really think it's the car and house maintainence that's one of the biggest debt problems. Or the keeping up appearances. I know on the home buyers report it said the kitchen needed renovating. It's still functions 6 years so what's the point in wasting probably several months in getting it done and for what?

Just seen on my timeline someone is selling a 2 day old sofa from dfs for £350 as 'it doesn't fit in the room and they won't take it back' and I honestly think it says it all.

chelseablue

Situation has changed a bit since I last posted on this thread in March last year.
Me (34) and Partner (28) plus one son who is 3.
Joint income of £70,000

Mortgage outstanding £219,000 on a house worth £435,000

Cash savings of £16,000
S&S ISA £5,500

2 credit cards that are 0% until 2020; £3,348 (the monthly direct debits will ensure these are cleared before the 0% runs out)

Barclaycard: £7,000 :eek: This is the one that worries me, I usually pay it off in full each month but we're going on holiday to Australia in December and I had to put the flights on it

Quite a bit of our cash savings is for our wedding next month. I was thinking anything left over afterwards I'll send straight to the Barclaycard.
But then need to save up for spending money in Australia.
So my other plan is to keep the cash savings in the bank and from June pay off the card at £1,000 a month

duskerwho

Potbellypig wrote: »

I don't have a mortgage, and I've definitely still got air in my lungs.

Not wanting to put words in Sourcrates mouth, but I think they meant that it's a necessity to get a mortgage to own property, not that everyone has to have a mortgate.