My sisters debts

System

Don't worry. If they WANTED to, they could clear that quickly. I think they are making debt work for them. They can easily afford the payments and are using the money to get nice things now, rather than wait.

In essence, they are paying for time (time to enjoy the caravan, the nice cars) rather than spending time waiting to enjoy them.

The problem with credit is that people are using it to buy things they can't afford, rather than using the credit to shorten the time it takes to own an expensive item.

backinbusiness

The other point to make is that what if "something" cropped up? Life changing stuff - illness, relationship crisis etc - you can not legislate for life. Then what?

fatbelly

katiepkh wrote: »

Hello everyone,

I have browsed this forum for years but have never actually needed to set up my own account until now.
Yesterday I returned from a lovely week away in Devon with my husband, sister and brother in Law. We try to get away together for a week every summer as it gives us the chance to catchup. Despite being very close, we live over 100 miles apart so we never feel as though we spend as much time together as we would like.

I am 46 and my sister is 44. most days during our holiday, our husbands would go off cycling, leaving us to the more fun stuff ( cream teas etc!). This gave us a good chance to catch up. I have noticed in recent years that their lifestyle has become more 'flashy' with them both having brand new cars, more exotic holidays, new caravan and lots of work done to their house. I suppose that they have always been slightly flashier than us, but then they have a better income. She is a deputy head teacher and her husband works as a successful self employed carpenter. She had already told me that their joint take home pay is well over 5k a month. I assumed that she would have a bit of debt, as we do, but I was shocked at the extent of it.

During a conversation, she told me that both of their new cars are on finance ( one on finance and the other paid for with a bank loan) and that they also took advantage of the HSBC 3.3% loan offer to purchase their new caravan last year ( the one that we stayed in last week) They also have around 15-20k in 0% CC debt along with another loan that they took out for their kitchen. She also told me that they have a 'few' BNPL deals of furniture totalling a few grand.

A quick calculation my head told me that their debt was somewhere between 50-70K. I told her that this concerned me ( big sister mentality!). She is totally chilled about it though and explained that they owe around 65k at the moment, but that it is well managed and not an issue as they can easily afford the payments without sacrificing other things. She reckons that after they have paid their mortgage, essential bills and debt payments, they are left with around 2.5K per month which they only have to buy food out of. She also has 20K saved - we both inherited this amount a few years ago, but mine went into the house purchase.

She had her kids in early twenties so they are now in a position where the kids are independent and working full time. She explained that they decided to have the things that they wanted now, as a sort of mid life blowout, whilst they could still afford it. Apparently it will all be paid off within 5 years.

I know that she is an adult, but as her sister I can not help but worry. My husband has told me to forget about it and that if they can manage it then it's not an issue. We were brought up with very sensible parents, and this has stuck with me. I have told her of my concerns and she laughs and tells me to stop worrying and that everything is fine. In fact, she hadn't even thought about the total amount until we started discussing it on holiday!

Am I overreacting?

Ahhh. Devon cream teas. Lovely county, even if they put cream and jam the wrong way around and can't make a pasty to save their lives.

Now, most of the people I see take home less than £1.5k a month and (just about) manage. Your sister probably has about 3.5k to throw at her credit agreements. It's not the way I would choose to live but a rough calculation shows that could support up to 100k of debt.

She'll be OK unless illness or accident or job loss happen.

rob421

Hi,
First of all, can I echo what others have said regarding how nice it is that you care about your sister so much. I actually take a slightly different attitude towards your sisters situation that others.

For me, the level of debt that a person has is not really the most important factor. Income, interest rates and the ability to repay are more important in my opinion. from what you have written, your sister has 25k saved and also some assets that she could sell that would at least pay off a proportion of the debts. It also sounds as though they are fairly securein ltheir jobs. They have 2.5k 'spare' income each month, which is the equivalent of a very good salary. Their spare income would pay my monthly mortgage payments six times over!!!

I have read lots of posts from people on this site where they have a much, much lower income and levels of debt that are virtually taking up every penny that they earn. someone earning minimum wage with 15k of debt is in a far, far worse situation than your sister. I really don't think that you need to worry. For a few years, I worked in mortgage admin for a large bank. This level of debt is actually far more common that you think. New cars, caravans and a couple of exotic holidays later and it's not hard to rack up tens of thousands in debts. I am not saying that it's ideal and I am certainly not making light of it, but it happens and some people manage it well and pay it off.

We got into a lot of debt about 5 years ago. We owed 40k at our worst on a joint salary of 50kish. our disposable income was something like £500 after we had paid all of our bills and debts and yet we managed to sort it and pay it all of ( well, we owe £1200 on a 0% CC at the moment due to a wonky boiler). I know that comparisons are not a good idea, but if we were able to clear our debts then your sister certainly can.

katiepkh

We were together again at the weekend at a family wedding so I took the opportunity to mention it to her one final time. She is bewildered as to why I am so concerned as she really feels that there is no issue. She wasn't annoyed with me, but it was clear that she didn't want to discuss it again.

She said that she would only be worried if it wasn't repayable in a reasonable time scale. I asked her if she had thought about what would happen in a change of circumstances. She explained that the 25k savings that they have, plus the money that they could raise from selling one of the cars and the caravan would cover a massive proportion of the debt.

I feel slightly better about it now that I have spoken to her again. Reading some of the threads on here has also helped me to see that there are many in a much worse situation that her, even though their debts are higher than most. My husband keeps reminding that their spare cash ( 2.5k per month) is more than my take home pay!

norsefox

katiepkh wrote: »

We were together again at the weekend at a family wedding so I took the opportunity to mention it to her one final time. She is bewildered as to why I am so concerned as she really feels that there is no issue. She wasn't annoyed with me, but it was clear that she didn't want to discuss it again.

She said that she would only be worried if it wasn't repayable in a reasonable time scale. I asked her if she had thought about what would happen in a change of circumstances. She explained that the 25k savings that they have, plus the money that they could raise from selling one of the cars and the caravan would cover a massive proportion of the debt.

I feel slightly better about it now that I have spoken to her again. Reading some of the threads on here has also helped me to see that there are many in a much worse situation that her, even though their debts are higher than most. My husband keeps reminding that their spare cash ( 2.5k per month) is more than my take home pay!

This is the fundamental problem with discussion debt in nominal terms.

Your sister and her husband owing £65k may be entirely affordable whilst someone owing £5k may break them completely. Even a cursory glance in these forums highlights these.

Whilst a number of other posters have been right to mention risk regarding illness or the loss of a job, that is true for everyone. Your sister appears to be managing well - 2.5k is a good amount of money!

worriedDan

Your sister's situation is very similar to mine - I started with close to 60k debts.

Whilst it's an incredible amount of money, you sister's situation is not unique and it sounds as though she has everything under control. At least she has some decent things to show for her debt - car, caravan etc. I don't have much to show for mine unfortunately.

We are paying our debts back at a rate of 2k per month and we have less spare cash than your sister. It sounds like you don't need to worry too much, although its great that you are so supportive.

enthusiasticsaver

The higher the earnings the less people seem to worry about debt. Most of us take the view we are always going to be in the same position so your sister is obviously not worried as they are managing payments easily. She has a plan if circumstances change so yes you just have to leave her to it. You can't force a LBM on anyone. I would prefer not to live that way though and focussed on having a balance between saving for a rainy day and the future and enjoying ourselves with holidays, home improvements, new car etc.

katiepkh

Hello!!!

I poster here almost a year ago concerned about my sisters debts. We are just back from our annual week away with her and her husband,

It turns out that she now has the debts below 50K so has paid off 15K ish in a year! She laughed when I told her how relieved i was to hear this!!

Just shows how attitudes to debt can be so varied.

zippygeorgeandben

Thanks so much for letting us know how it's panning out! I remember reading this the first time round!