'normal' amounts of debt in this day and age

Arfa__

I'm 38, OH 39: joint income is about £75k, unsecured debt is £30k, Mortgage £95k, but only 11 years left at house is worth around £230k.

Both our parents were never high earners, but we pushed ourselves through Uni, OH in nursing purely for the bursary, myself though, came out in 2001 with £10k debt. Did immediately Get a job for big Jap corp. doing video games in central London, so no Mc'D degree. However starting out in London was tough, needed £2.5k just for first months rent and deposit! So, when you start real life with £13k straight off the bat, it's hard see any life without debt. And kids today start out with way more than this!

Sure we blew a lot of cash on London living and having fun in our twenties, but we did blag one of them crazy 110% mortgages and get on the property ladder, bit risky, but was early enough to ride out 2008 shitstorm and now comfortable have £120k+ equity. However over the years, we never ever ditched the debt, gradually kept piling up more: essentials for house (central heating, kitchen, conservatory, white goods etc), education (OH retrained in law, did 2nd degree, MA and PhD with scholarship but writing up took some time), 2 kids, childcare (£1300/month at peek), car to ferry them about, 2 motorbikes to commute into city on (both commuter hacks <£2k), computers for study etc, but yes way too much frivolous stuff too. There was also a wedding we almost entirely funded ourselves, though very few holidays beyond Butlins over the years.

The job for the Jap corp doing video games wasn't all it was cut out to be, salary barely grew over 11 years, promises of royalties & bonuses - good in the hay day, but all dried up around 2008. Should have jumped ship earlier, didn't realise the pay was quite so crap until I walked into another job earning £15k more! A bad choice to stay and finish the next big project to bring in the bonuses, that had us building up debt just to get by. Not a good position - avoid at all costs.

We've cut corners everywhere, everything is cut price, very little is bought brand new, anything spare of value is flogged on ebay, I do a tonne of blogging on the side, affiliate marketing, freelance web coding, releasing Wordpress plugins etc. Anything for extra cash, even if I lose 40% to HMRC...

Typical debt? Justifiable debt? Doesn't matter, all I know is we're struggling now, paying way too much each month to cover it. I know our wages should allow us to do a hell of a lot more, but can't because we can only just cover the debt. Better choices in the past could have improved matters. Hell, without this debt I'm sure we could move to a damned sight better property fairly easily. We're on the case now, making most of 0% cards & super low % loans etc to try and make some head way, but there's still a long haul ahead, but at least things are on the up now my OH has completed her PhD as is earning again now.

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.