Big Elephant in the Room with Cost of Living Crisis

socks_uk

I think this is the only place I can mention this seeing as we are all looking forward to being debt free but...

Why is nobody talking about the Big Elephant in the Room which is people's personal debt?
Don't get me wrong, I understand that prices of energy, food and other bills are going up but all I seem to be hearing is how much 'disposable' income people have.
Now since my lightbulb moment of realising I needed to sort out my own debt, I have cut down on my spending and cut out non essential subscriptions,  and I made the final payment on my personal loan last Saturday leaving me with just 2 credit cards on 0%.
We are hearing of people earning £40,000 needing to use food banks but I wouldn't be surprised if they too have personal debt which is helping cause this cost of living crisis but nobody in the news is taking about it.  I'm hoping Martin Lewis will do one of his TV specials about it.

Am I wrong, or even just over thinking this?  Hopefully, if I keep going as I am, I should be debt free by my 60th birthday in 2 years time ( possibly before).

[Deleted User]

Everyone's talking about it, as it all ties into the general strain on people's finances, but the increase in cost of living is the newest element, so has a greater focus.

But prsonal debt has been a major news item for many years now and it won't go away any time soon. 

sourcrates

Personal debt tends to be looked upon as being the norm, in a lot of peoples lives, carrying credit card balances etc.

The usual scenario when credit card payments become to much, is first to balance transfer, then when those offers dry up, to consolidate, and they may do this more than once, so are always paying off historic debt.

Of course not everyone does this, many only spend what they can afford, and clear the balance every month, but lots don`t do it that way, either because the disposable income just isn`t there, or there is always an unexpected bill that needs paying.

Recent rises in the cost of living, inflation, and electricity and gas in particular, tend to make the headlines as it affects almost everyone, it all adds up to a miserable time for many people, and if you are carrying large levels of personal debt to boot, then your situation just gets worse.

The one thing I would say, is that your utility bills and your food shop, are essential spends, priority debts if you like, your personal loan, and/or your credit card, is not an essential debt, and if it comes to a choice between them, your essential debts win out every time, don`t struggle to pay your credit card at the expense of paying your electric or gas bill.

Non essential debts can wait.

enthusiasticsaver

I agree with you that personal debt has become normalised over the years and it is taken for granted people are servicing it in addition to normal bills and expenses. I agree with @sourcrates that people should not prioritise credit card repayments over food, energy costs and other essential bills but I do wish a discussion could be had over peoples attitude to debt and move away from the buy now pay later attitude.  It is not in finance companies interests to do that though and money saving sites like this only attract the minority of people and not usually the ones who need it most. 

theoretica

Between debt, and signing up for contracts, it seems to be very normal to commit to spending a lot of income before you have earned it.  Which of course has a huge loss in flexibility when you need or choose to alter spending patterns.

EssexHebridean

I'll echo what others have said about the normalisation - people are frequently astonished now when you tell them you have no personal debt at all, and in our case not even a mortgage. The assumption is usually that you must have inherited money to clear the latter, and of course there is nothing wrong with it if that IS what's happened, but in our case it was as simple as ensuring that the mortgage we took in the first place wasn't the limit of what we could afford, and also hard work in getting it cleared early. I wish there was more knowledge out there around the difference that even small overpayments to a mortgage can make! 

The current drift across to a buy-now, pay-later lifestyle frightens me - many on here know my dislike of Paypal credit as it just makes it so easy for people to slip into debt without even realising it, and in many cases without even seeing it as debt in the first place. 

RogerBareford

socks_uk said:

I think this is the only place I can mention this seeing as we are all looking forward to being debt free but...

Why is nobody talking about the Big Elephant in the Room which is people's personal debt?
Don't get me wrong, I understand that prices of energy, food and other bills are going up but all I seem to be hearing is how much 'disposable' income people have.
Now since my lightbulb moment of realising I needed to sort out my own debt, I have cut down on my spending and cut out non essential subscriptions,  and I made the final payment on my personal loan last Saturday leaving me with just 2 credit cards on 0%.
We are hearing of people earning £40,000 needing to use food banks but I wouldn't be surprised if they too have personal debt which is helping cause this cost of living crisis but nobody in the news is taking about it.  I'm hoping Martin Lewis will do one of his TV specials about it.

Am I wrong, or even just over thinking this?  Hopefully, if I keep going as I am, I should be debt free by my 60th birthday in 2 years time ( possibly before).

I think the big difference is that having personal debt is usually something that is built up over a period of time and to get out of debt the person involved needs to go through their finances and budget as required. So to get out of debt people can usually fix it themselves and the cause of the debt is usually something they also had control over such as overspending.

The "cost of living crisis" is different because people are having to pay more for essentials such as energy and food but have no control over the price they pay apart from cutting down.

So they are two very different things with different cause.

But i'm not sure what the benefit of reporting that some people have taken on high levels of debt as most people will just say something along the lines of "well nobody forced them to take on debt so that's their own fault".

theoretica

RogerBareford said:

socks_uk said:

I think this is the only place I can mention this seeing as we are all looking forward to being debt free but...

Why is nobody talking about the Big Elephant in the Room which is people's personal debt?
Don't get me wrong, I understand that prices of energy, food and other bills are going up but all I seem to be hearing is how much 'disposable' income people have.
Now since my lightbulb moment of realising I needed to sort out my own debt, I have cut down on my spending and cut out non essential subscriptions,  and I made the final payment on my personal loan last Saturday leaving me with just 2 credit cards on 0%.
We are hearing of people earning £40,000 needing to use food banks but I wouldn't be surprised if they too have personal debt which is helping cause this cost of living crisis but nobody in the news is taking about it.  I'm hoping Martin Lewis will do one of his TV specials about it.

Am I wrong, or even just over thinking this?  Hopefully, if I keep going as I am, I should be debt free by my 60th birthday in 2 years time ( possibly before).

I think the big difference is that having personal debt is usually something that is built up over a period of time and to get out of debt the person involved needs to go through their finances and budget as required. So to get out of debt people can usually fix it themselves and the cause of the debt is usually something they also had control over such as overspending.

The "cost of living crisis" is different because people are having to pay more for essentials such as energy and food but have no control over the price they pay apart from cutting down.

So they are two very different things with different cause.

But i'm not sure what the benefit of reporting that some people have taken on high levels of debt as most people will just say something along the lines of "well nobody forced them to take on debt so that's their own fault".

It's the flexibility thing - as cost of living goes up, I put less into savings and when my car next needs replacing may buy a cheaper one.  If I had taken on debt to buy my last car I would no longer be able to make that change easily - I would have committed to paying £X00 a month towards the car and so be less able to weather changes outside my control.  That flexibility in budget is the thing that debt destroys. 

peteuk

It would be very short sighted of me to say personal debt is just that personal.

As I see it, those in debt fall into three groups, well mainly two of them.  Those who can afford the debt and those who can’t.  Those that can, can be split into those who can just about afford it and those who are in control and plan for such things as the cost of living rising. (The later being as rare as hens teeth)

I thought we were in control of our debts until a change in circumstances meant we weren’t.  For change of circumstances now read cost of living increase…

Those who are in debt who couldn’t afford it, now still further can’t afford it.  Those that cagoule just about manage are no longer managing and the smaller group still can afford their debt.

I agree it is becoming a norm, but should someone with a personal debt get more help than myself to cope with the cost of living?  

LittleMissDetermined

EssexHebridean said:

The current drift across to a buy-now, pay-later lifestyle frightens me - many on here know my dislike of Paypal credit as it just makes it so easy for people to slip into debt without even realising it, and in many cases without even seeing it as debt in the first place. 

^^THIS^^!!
It seems impossible to make an online purchase these days without a 'spread the cost' Klarna/Clearpay/Paypal credit type offer being prioritised. I just want to pay. Now. Today so I don't increase my debt. No wonder debt is being normalised...

femalemonarchfemalecanine

I know a lot of people who live a fairly modest life, which they could afford, but because wages have not kept pace with inflation and they have cut back on everything unnecessary, but with massive hikes in rent and now in pretty much everything, it is coming to a choice between heating and eating or debt. 

Unfortunately we have a vicious government who see the public purse as something for them and their mates to dip into, not money they are supposed to apply to the benefit of all the citizens of the country. 

And there are still people who defend them😱 Stockholm Syndrome