Do you owe more than you earn? Poll discussion/results

manicminer1969

Do You Mean Joint Income As If This Is The Case I Am Looking At 16% As I Have A Car Loan Of £7500, If On Just My Salary Then Its Around 21%. I Hate Having Debt Of Any Kind And I Am One Of The Lucky Ones Who Bought My First House When The Market Was Cheap 15 Years Ago So Only Have A Small 50k Mortgage. The Sad Thing Is That At The Time I Bought I Was Only A Bank Clerk Earning Around £12k Per Year But Could Afford To Buy This House At That Time With My Wife Working Part Time, It Was Affordable !!! Now I Am The Branch Manager Of The Bank And My Wife Works Full Time But We Would Find Taking Out The Mortgage On My House Now A Struggle So I Feel So Sorry For The Poor People Who Are Not On The Ladder.
I Spent The Early 90's Working In The Debt Recovery Section Of Barclays Bank And I Think That This Was Probably One Of The Best Things That Could Have Happened To Me As I Dealt Day In Day Out With People Who Had Their Lives Made A Misery Because Of Debts They Could Not Pay And This Has Always Stopped Me From Jumping On The Credit Bandwagon Over The Years.
The Problems That We Have Around The Corner Regarding Debt In This Country Is Huge, I Look At Some Of My Customers And I Am Staggered At What They Owe In Different Places, And For Many Of Them They Will Never Pay Off What They Owe. I Think The Comment About Doing The Vote Accross The Country Would Give A Different Result I Think Is Very True As The People Using This Site In The Main Are Doing Something To Avoid Getting In Trouble. We Have Got A Massive Recession Around The Corner Which Will Be Far Bigger Than Anything We Saw In The 80's And 90's. The Only Difference Will Be That I Dont Think Interest Rates Will Sore Like Then As The House Market Would Crash Totally As Lenders Have Been Allowing People Earning Just £20k To Borrow In Excess Of £100k For Mortage - Where Do They Get The Money To Eat Even At Current Interest Rates.

HappyMJ

manicminer1969 wrote: »

As Lenders Have Been Allowing People Earning Just £20k To Borrow In Excess Of £100k For Mortage - Where Do They Get The Money To Eat Even At Current Interest Rates.

by paying interest only mortgages i suppose

hey you'll never own your house but income will rise. won't it?

now (in your example) if interest rates were at 15% that's only £5k left for food/bills. whoa someone's falling off house ladder soon....

cazziebo

paulj2001 wrote: »

My initial reaction on seeing the vote result chart was that it appears people aren't in as much debt as is commonly thought - if they're being completely honest of course! One of the posters on this thread describes themselves as being 'out of debt by December 1st'; this is great but then they go on to say APART 'from a car loan, which I see as a necessary loan'; surely, a lot of people regard their debts as 'necessary' but is that an excuse not to count it?

I count it as necessary because I changed jobs and switched from a company car now I get a car allowance as part of my salary. I therefore had to buy one and at that point didn't have the money to pay upfront (so in my books that is necessary credit).

What I've realised is that most of my other debt was unnecessary - expensive double glazing loan when I wasn't aware of any options, taking holidays on credit cards, eating out on credit cards when I didn't have enough cash in the bank Jeez - what an absolute idiot I was!!

Not now - not since my MSE conversion :money:

Alfie_E

cazziebo wrote: »

paulj2001 wrote: »

One of the posters on this thread describes themselves as being 'out of debt by December 1st'; this is great but then they go on to say APART 'from a car loan, which I see as a necessary loan'; surely, a lot of people regard their debts as 'necessary' but is that an excuse not to count it?

I count it as necessary because I changed jobs and switched from a company car now I get a car allowance as part of my salary. I therefore had to buy one and at that point didn't have the money to pay upfront (so in my books that is necessary credit).

Given the results, I think people have interpreted the question in sensible ways. Credit cards for stoozing or where the balance is always paid off in full don’t seem to have been counted. If you’re a sole trader or general partner in a partnership, any business debt can be a debt that you’re personally liable for. I don’t suppose people are counting that. You can use the same logic to exclude a car loan. The debt is a necessary part of generating your income.

Former_MSE_Lawrence

Poll Ran between 05-13 Nov 07: Do you owe more than you earn? Results

How much debt do you have compared to your annual income? We’re not talking any mortgage debt here; though if you’ve added other debts onto your mortgage, it's best to count that. Be prepared to be shocked…

How to work it out?

Step 1: Calculate your total debts. Don’t guess, add them up properly; this in itself is an important to-do.

Step 2: Divide the total by your annual income. If you owe £5,000 and earn £20,000 your debts are a quarter of your earnings.

A. I’ve no debt/only mortgage debt 38% (2876 votes)
B. I owe less than a tenth (10%) of my annual income 14% (1039 votes)
C. I owe less than a quarter (25%) of my annual income 12% (875 votes)
D. I owe less than a half (50%) of my annual income 10% (716 votes)
E. I owe less than my annual income 9% (655 votes)
F. I owe more than my annual income 9% (689 votes)
G. I owe more than double my annual income 4% (302 votes)
H. I owe more than three times my annual income 2% (170 votes)
I. I owe more than five times my annual income 3% (228 votes)

Voting has now ended but you can still click reply to discuss below.

seven-day-weekend

I'm very glad to say we owe nothing to anyone.

With an annual income for the two of us of only just under £10k, we can't afford to.....:rotfl: :rotfl:

We also have £19.5k credit limit on two credit cards:eek: (kept for absolute end-of-the-world emergencies only).

So we have the potential to get into debt to the tune of twice our annual income (as a couple). Doesn't bear thinking about......

halia

1 mortgage of 25% of house value, total mortgage = 80% of annual earnings.
2 second mortgage on buy to let property of 30% of house value, mortgage covered by rent + 25% for R&M.
3 £200 on credit cards, usually paid off monthly
4 £1,500 in savings
5 £2,000 in Child trust fund

We've worked bloody hard NOT to live beyond our means.

Laceyfi

I think you have to include student debt? Including my student debt I owe exactly as much as I earn in a year (before tax)

kamoha

I owe nothing and I own my flat outright with about £12 000 savings in the bank. I would hate to be in debt, I worry even though I am not in debt. I wish I could enjoy my money a bit more, but I stress about things a lot.

dag_2

If you’re a sole trader or general partner in a partnership, any business debt can be a debt that you’re personally liable for. I don’t suppose people are counting that. You can use the same logic to exclude a car loan. The debt is a necessary part of generating your income.

Yeah it's funny you mention that - because by my reasoning, I figure I would go mad if I didn't treat myself to the odd coffee out now and then. And if I went mad, then my OU study performance might not be so good, and I wouldn't get such good marks in my exams. Therefore, pretty much any credit card debt I ever incur is a necessary expense for generating the future income that I don't yet have.

The point I'm trying to make is, you can only get away with that line of reasoning so far. If students can't include their coffees, then partners can't include their business debts either. But I do agree that stoozing is a completely separate category from either business debts or student coffees.

I also agree that I don't think this poll is a representative cross-section of the wider population. Good old Martin Lewis tries very hard not to moralise about debt, in my opinion, and I'm sure many forum regulars do too. But despite these efforts, sometimes we can still sound moralistic about debt when we don't mean to be. Unfortunately, this can sometimes mean that the people who are most in need of help are sometimes put off forums like this one. But hey - what can you do?