'normal' amounts of debt in this day and age

dktreesea

A household with an income of £25k after tax, household, mind you, has no reason to get into debt. Even with rent of £250 a week and council tax of £30 a week, what's left is plenty to live on and save a bit.


How much do they waste of takeaways, going to the pub, throwing away out of date food? it's not just the £100 plus items that throw people into debt; it's the pennies they waste every day.


The problem is that those with that kind of household income want the lifestyles of those with a £70k after tax household income. People don't want to live within their means because it accentuates how much of a failure they are at earning an income compared to those with much higher incomes.

[Deleted User]

worriedDan wrote: »

I understand your point about people on high salaries not being in debt, however I don't entirely agree. One thing that my own debt journey has taught me is that debt doesn't discriminate. A lot of our debt was accrued when we were earning far less. I agree that we are fortunate now to earn a decent joint salary, however this wasn't always the case.

As my salary increased my available credit increased massively. I am not blaming anyone else - I didn't have to borrow the money, however the law of averages suggests that at if you offer lots of credit to people, some of them will take advantage of it!

It's also worth remembering that not everyone on a high salary has a high disposable income. High mortgage costs, travel expenses, supporting children/grandchildren etc may have a huge effect on how much money they actually have to live on. Someone on a lower income with less commitments could be much better off in real terms.

I do get where you are coming from, having been a high earner the more you earn the more credit you are offered and it becomes tempting. The other thing is that earning big sums makes you feel invincible and that you'll always have money and it only takes for redundancy, illness etc and the rug is pulled from under you.

However earning big money doesnt mean you need to spend big money, high mortgage costs are borne of having a large mortgage to buy a big house or in a nicer area whereas you could have bought a less expensive property. You don't have to over support family to the detriment of your own financial stability etc you could holiday in Spain rather than hike the Inca trail etc.

worriedDan

dktreesea wrote: »

A household with an income of £25k after tax, household, mind you, has no reason to get into debt. Even with rent of £250 a week and council tax of £30 a week, what's left is plenty to live on and save a bit.


How much do they waste of takeaways, going to the pub, throwing away out of date food? it's not just the £100 plus items that throw people into debt; it's the pennies they waste every day.


The problem is that those with that kind of household income want the lifestyles of those with a £70k after tax household income. People don't want to live within their means because it accentuates how much of a failure they are at earning an income compared to those with much higher incomes.

We take home about £54000 after tax etc and we have a high debt level due to poor money management, overspending and generally not thinking about our finances. The fact that we earn decent money hasn't protected us from falling into the same trap as lots of others - spend more than you earn and you are in debt. It doesn't matter is you earn £1000 a month or £10,000 a month. It's just a numbers game.

Thrugelmir

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

That's speculation. Not investment. Leveraging is double edged. Multiplies the upside but also the downside. For many people the downside is something that they find themselves never struggle to recover from. Called the 3 D's. Death, Divorce or Distress (Financial).

If you know the story. The Tortoise beats the Hare in the race to the finish.

FBaby

It's also worth remembering that not everyone on a high salary has a high disposable income.

I think this is a point that many people fail to realise. There is a big difference between a couple on £50K + whose mortgage is paid for, children grown up, and a couple living in the SE, whose mortgage for the same house is £1,000+ a month and whose children childcare costs are about the same amount each month.

However earning big money doesnt mean you need to spend big money, high mortgage costs are borne of having a large mortgage to buy a big house or in a nicer area whereas you could have bought a less expensive property.

This is the dilemma. What is the point of earning more (and taking on more stress, long hours etc...) if it is not to enjoy a more luxurious lifestyle?

My experience of high earners in debts is not so much that they live above their means but that when circumstances change, they are hit a lot more each month. They can only avoid huge debts building up by making significant changes to their life, ie. selling their house which they hold doing because they hope that the circumstances will get better.

This is often as a result of redundancy, or I have seen, people who build a lifestyle based on their income, but forget to take into consideration their intention to have children, and either choose to become a stay at home parent, or have missed factoring the cost of childcare, especially for more than one child into their budget.

dktreesea

BBH123 wrote: »

I do get where you are coming from, having been a high earner the more you earn the more credit you are offered and it becomes tempting. The other thing is that earning big sums makes you feel invincible and that you'll always have money and it only takes for redundancy, illness etc and the rug is pulled from under you.

However earning big money doesnt mean you need to spend big money, high mortgage costs are borne of having a large mortgage to buy a big house or in a nicer area whereas you could have bought a less expensive property. You don't have to over support family to the detriment of your own financial stability etc you could holiday in Spain rather than hike the Inca trail etc.

Yes, debt is all very well while ever you have a job earning enough to comfortably pay it back each month. Future cash flows, whatever the source, are definitely not to be relied on. Look at the number of people made redundant just in the Nov 2016 - Jan 2017 quarter: 117,000.


As for benefits, if there was ever an unreliable source of income, benefits would have to be it. Relying on benefits is like trying to play football on a marsh, with goalposts that are forever moving. Look at the people moving off DLA who have failed to get PiP, for instance. Or people moved off ESA back onto JSA/whatever the UC equivalent is.

Exerbusi2

dktreesea wrote: »

A household with an income of £25k after tax, household, mind you, has no reason to get into debt. Even with rent of £250 a week and council tax of £30 a week, what's left is plenty to live on and save a bit.

I get your point, but it's a tad over-simplistic.

I know people who have had to go into debt despite that level of income because of storm damage to their property which wasn't claimable on insurance.

My cousin also had to go into debt despite a decent salary because someone crashed into her car when it was parked and didn't leave insurance details, so she had to replace her car before she'd saved all of the money.

Life is never black and white.

dktreesea

Exerbusi2 wrote: »

I get your point, but it's a tad over-simplistic.

I know people who have had to go into debt despite that level of income because of storm damage to their property which wasn't claimable on insurance.

My cousin also had to go into debt despite a decent salary because someone crashed into her car when it was parked and didn't leave insurance details, so she had to replace her car before she'd saved all of the money.

Life is never black and white.

I agree people who own houses could find themselves hit with sudden bills at anytime. Owning a house, mortgage aside, can be expensive. But why wasn't the house properly insured? If you can afford to shell out a couple of hundred grand on a house, can't you also insure it properly?


If you could afford to own a car, why wouldn't you have fully comprehensive insurance, no claims bonus protected, including if the other driver can't be found, with a low excess?

A4445

I earn 22k, the only debt I have is for my iPhone that's around £400 on contract. I've got some savings. I've been bankrupt it was a hard lesson learned. I'm glad to say I'm good with money now if I can't afford it I don't buy it :T

David555

Age 28 - as of tomorrow total debt will be just shy of £1300 - my yearly income currently £17,000 soon to be £20,000. Wife's income around £1000 due to health problems being unable to work.

I've grown up poor, brought up by my mum who was a single parent out of work getting just £80 a week on benefits due to health problems. We had to make do with the cheapest food possible, often having no gas, the electric would run out monthly but we were never in debt. Things did improve when I became around 11 but we were still very very poor. As a result I feel I do appreciate money extremely well today. The first thing I do in shops is look at the prices. My shoes are £12, they last just as long if not longer than branded shoes that cost £65. Most my t-shirts average £8, hoodies £15, jeans £20. Socks and boxers I just buy the cheapest I can find. Likewise with food more often than not.

It looks as if the more you earn the more debt you have. I could only dream of having the income of most posters here.

I recently reached £16,500 in savings which I used to buy a property aboard in my wife's country last week, which has resulted in me having my first ever debt. Instead of waiting a few months more to save up enough I borrowed around £1800. I'll be debt free in 6 weeks. Then I need to save up a tad more to carry out a few repairs. Once all done I'll own my first ever property outright at 28 worth around £20,000. It's just a investment property to rent out to increase my monthly income by £160 a month. In 5 years or so I'll sell up, with future savings I should have at least £45,000. Then I will buy my first property in the uk, probably Scotland due to the lower property prices. Sure I'd love to live in London but I can't afford it. Maybe I'll borrow a few grand then to buy a slightly nicer proptery providing it will be paid off within a year max. Debt just isn't in my blood, I hate the feeling of owing money. All in all though I should have a place in Scotland at 33 worth around 45k through pure savings which isn't bad going given my low income :money: if I can do it there's no reason why anyone else can't.

I still enjoy life, I've been aboard at least 20 times in the last 10 years, there's just 3 blank pages left in my passport. Just stay in the cheapest hotels and don't eat out daily, it often works out cheaper than living in the uk (if you rent) I have a iPad, decent enough phone on payg, a nice brand tv, few quid for going every month so it's not like I'm having a worse life style. I still treat myself.

Sure, right now I'd like to upgrade my phone... I'd buy used for around £170 and sell my old iPhone 4s for £50 but that's still a short fall of £120. Instead of going in debt I'll just wait 6 months till I've got a few grand in savings.

Another example is wedding costs, I can't remember exactly how much mine cost but I'm sure it was under £100 in Thailand. Why spend around £15,000 for a day of happiness for the sake of 10 years of misery by being in debt. You're marrying the love of your life which is the only important thing to me, the end result is the same after that day regardless if you spend £100 or 100 grand. You got the love of your life which is by far the best thing about the day.

Granted I am living rent free with a friend so that helps, I give him £100 a month towards bills. But in return I have just one income pretty much to feed 2 mouths.

Sorry for my rant! If I can save somebody a quid even then it's worthwhile