'normal' amounts of debt in this day and age

OneLife_OneShot

The reason people get in debt is because of spending more than you earn. I am as guilty of anyone of this before.

Its not until you realize how much you are losing per month/year in interest in credit card companies and padding their wallets that was what it took for me to wake up!

I am almost debt free and will never take up another CC as long as I live.

Debt should not be normalized, financial planning should be in place in schools as far as I am concerned. It is far too easy with high interest CCS and Payday loans to get into a vicious circle and get into debt and become depressed.

collychopps

Interesting post is this, Define debt.... We have contantly gone in debt to invest, without debt and using numbers that exsist in cyber space we wouldnt have got what we have today.

I am 30, Mrs is 31, incomes of respectively 43k and 76k, live in Warwickshire
Mortgage outstanding 205k, property worth 390k
Our Rental Property- Mortgage outstanding 70k, property worth 105k
owed on credit cards- 19k- interest free till 2018

Exerbusi2

I earn £45k-£50k (self employed so it fluctuates) and have debt of £4,500 at the moment, so 10% of my annual income.

My mortgage is £178k on a house worth around £315k.

I also have a cash buffer of £3k and stocks and shares of £3,500.

jlaw4

I'm 24 OH 28. Currently earning £50K between us. Used to be a lot more before i had a mini stroke and had to reduce hours.
CC Debt is £6K from holidays and stupid spending but 0% until 2018. However, when i was ill, we really had little choice. We are also saving for our first house and have £10K saved up so far. Which wasn't easy when my health just won't go back to normal!
Reading this thread has made me realise that 'debt' is becoming so normal. Nobody wants to wait for anything anymore, and its made me wake up and realise we should be focusing on getting debt free.
& if i can offer anyone any advice, get a little Emergency fund for unexpected as i had no idea i would get so sick so quickly and had a few grand saved up that got us through!

dktreesea

collychopps wrote: »

Interesting post is this, Define debt.... We have contantly gone in debt to invest, without debt and using numbers that exsist in cyber space we wouldnt have got what we have today.

I am 30, Mrs is 31, incomes of respectively 43k and 76k, live in Warwickshire
Mortgage outstanding 205k, property worth 390k
Our Rental Property- Mortgage outstanding 70k, property worth 105k
owed on credit cards- 19k- interest free till 2018

Provided housing continues to appreciate at more than the annual net interest cost to you (so taking into account the rental income), this kind of debt makes a lot of sense.


I wouldn't like to be a BTL landlord with a residential lease these days. I have been one before but with a commercial lease, so the tenant was responsible for repairs and maintenance.


I find debt on things like car finance, a new sofa, doing up the kitchen/bathroom less understandable. Yes, it's interest free for a period, but all these things are going to depreciate in value. So not only are you shelling out £200 a month for your brand new car (or £400, or £600...) but if it's HP you don't even own it until the last payment is made, leasing is just as bad, and at the end of the , say, 4 year term, you own a vehicle worth a lot less than the day you bought it.


To me, it makes more sense to buy a car from the auction. They guarantee the title. Skip the middle men car dealers, except to test drive the kind of car you have your eye on, just in case you don't like the drive experience.

amaranthus

I'm in my early 40s, earn £37k pa, and have credit card debt of just under £7,000. I rent so don't have a mortgage, and I make monthly payments on a car which I'm not counting towards my total debt at the moment, as the credit card is the most important thing for me to focus on clearing and the car repayments are more than manageable. This time last year, my credit card debt was closer to £13,000, so I'm really pleased with how things are going. I will have the credit card debt cleared within a year - by the end of THIS year is my overly optimistic goal.

dano17439

Its a very interesting question as others have said. Debt is not a bad thing if you have an asset to cover it.


I.E. people have said I have car finance debt of 5k. Well if your car is worth 12k then you have a net asset of 7k. I would rather have this than no debt, and no asset


Me and my wife are early 40's, our debts are


81K Mortgage
12k personal loan for Car purchase


However we have Gross assets of approx. 585k, less the above debts, meaning NET assets are 492k. joint income is approx. 121k a year

EssexHebridean

collychopps wrote: »

Interesting post is this, Define debt....

That depends:
"Good" debt = money you owe to someone else where you have an asset that covers the value of the amount owed, in the case of debt accrued for education, the asset is the skillset gained
"Bad" debt = money you owe to someone with no real asset to show for it.

Ultimately though, both things are debt, and until the asset - whatever it is - is yours outright, you can't truly consider yourself "Debt free" IMO. The sad thing is now that if you are genuinely "debt free" the majority of people think you're a little bit odd...

gingerdad

It's an interesting one. Not sure any dept is good.

For us we currently earn around £60k and have a dept of £25k but also have £22k in stock for a shop we run jointly. Still trying to pay down the dept as quickly as we can. Also have a 115k mortgage on at )250k house with only 6 years to run.

Money_Rollercoaster

EssexHebridean wrote: »

The sad thing is now that if you are genuinely "debt free" the majority of people think you're a little bit odd...

Are you sure it's the debt-freeness that's making them think that ?