My sisters debts

don78

Interesting thread for me as this is a similar amount of debt to what I have. I am definitely not as chilled about it as your sister seems to be. That said, I know that we can pay it back over 4 years ish so I suppose there is a difference between being in 60K of manageable debt and 60K of debt that is unaffordable.

I spoke to SC a couple of weeks ago and one of the things that really stuck with me is that the total amount of debt is not necessarily the issue - it's all relative to income. I know lots of people who would not be able to service 10K of debt as their incomes would not support it. I also know someone who could probably quite easily manage 200K of debt due to his income.

Your sisters situation will be far from unique. Lots of us owe those amounts and many many people owe a lot more!

Mojisola

don78 wrote: »

I spoke to SC a couple of weeks ago and one of the things that really stuck with me is that the total amount of debt is not necessarily the issue - it's all relative to income. I know lots of people who would not be able to service 10K of debt as their incomes would not support it. I also know someone who could probably quite easily manage 200K of debt due to his income.

But there's no guarantee that the higher income will always be there. Life can change and income can drastically reduce - don't be complacent about a high level of debt.

thickasabrick

Absolutely spot on.
I had my light bulb moment and had cut all my credit cards up and was well into a debt cleardown plan when my well paid "secure" job had the funding pulled and the company shut down.

Happened just a year after I had seperated so I was already running with the additional expense of that slowing down the debt cleardown.

Cheap credit can become very expensive debt if there is a disruption to the income which is servicing it.

In terms of explaining the credit, this article from Monevator is really quite spectacular.
monevator.com/the-really-obvious-thing-we-all-forget-when-borrowing-money/

Mojisola wrote: »

But there's no guarantee that the higher income will always be there. Life can change and income can drastically reduce - don't be complacent about a high level of debt.

zippygeorgeandben

Thanks for linking to that article thickasabrick.

fiisch

Similar situation to us - with both cars taken into account and a loan, somewhere in the region of £60k "debt", but it's well managed. Can easily afford repayments and our bills, and have disposable income to go on holiday etc.

I've recently had a bit of a lightbulb moment that maybe it is better to earn rather than pay interest, so in the process of getting them paid down. However, I think my previous attitude is fairly common - where debt is against assets (albeit in the case of cars a depreciating one) and payments can be easily met from regular monthly income, it's nothing to be scared of...

chelseablue

Our joint income is £65,000. I think I would be ill if I owed £60k :eek:

Currently we owe
Credit card 1 £4,000
credit card 2 £4,000
Car loan £5,000

From this month I have set the direct debit to card 1 at £1,000 a month, then it will be clear in 4 months. Then I'll move to credit card 2 and do the same, then the loan.

When all that's paid off I'll start overpaying the £218,000 mortgage (I could be there a while!)

secondtoughest

Plus... a caravan is a great investment - low cost holidays once that's paid off. Having the caravan might stop her booking expensive overseas holidays as she has an option in the UK.

don78

As someone who owes a similar amount to your sister on a similar income, I can see why your sister is not overly concerned. I am less relaxed about our debt and want it gone, but I can’t say that it’s unaffordable.

System

This thread has made me laugh, I am horrified that I owe just short of £4K on a £22k salary . I guess it's all about affordability and mindset.

tallyhoh

don78 wrote: »

As someone who owes a similar amount to your sister on a similar income, I can see why your sister is not overly concerned. I am less relaxed about our debt and want it gone, but I can’t say that it’s unaffordable.

As long as its 0% interest & you have enough capital to cover if the income is suddenly not there - its affordable.

My friend was suddenly made redundant after 25 years & due to his age was only entitled to just over £14,000. It paid for his car with nothing left :eek: