How much debt?

Jaco70

Hoenir said:

Jaco70 said:

VNX said:

I’m 40, Zero. No credit card / store card debt.

No loans or mortgage.

but we are all in different situations.

what debt is it you have may I ask? Mortgage debt or credit card/loans?

 440k on BTL.

What interest rate exposure do you have ? Are some of the mortgages coming up for refinancing? 

Most in 2028, and I haven’t got the rate to hand. They’re mainly trackers (there are quite a few properties, because they’re all low value houses/area), and the monthly cost fell to ridiculously low levels in 2009 (I think 2009) when base rates hit the floor, and stayed there. It definitely made me complacent, and I acknowledge that. 

It was a mistake and I should have concentrated more on paying a couple off, but instead I used some rent money to pay for purchases, my tax bill etc.
You live and learn. 

Jaco70

EssexHebridean said:

Roughly 20% here - just mortgage - at early 50's. 

Was Zero from 2016 until 2023 when we moved and took a small mortgage again. Worth every penny though! The new mortgage term was over 16 years, but we've been overpaying from day 1 so that term length is already shrinking rapidly. 

Mortgage debt is generally seen as "good debt" and isn't something to be unhappy with so long as it is coming down at a steady rate, and the terms are not constantly being extended by remortgages. Consumer debt is what is best avoided, although as we are well aware from DFW that isn't always possible, sadly. 

I was in a similar position nine years ago. Was 45, and owed 27k on my mortgage (although still had other mortgages), which I would realistically have paid off in three years, but then we moved to a house worth twice the amount, and so my mortgage payments went from £70 (I was on interest only on my main house also, but paid it down religiously), to £900, and now it’s around £1300 because of rate rises.

The only bonus, if it is one, is that because I’ve had so much debt, my credit rating is excellent. 

Jaco70

MEM62 said:

I have zero and it has been that way for a while.  If I cannot afford something, I do not have it.  Nobody improves their financial position by hanging onto debt like it is a treasured pet.  

I think you’re right. My parents have taken a very different approach to me, and have essentially been debt free from their mid thirties, buying a couple of additional properties for cash, as and when.

Interest rates don’t concern them, other than it affects their savings, and they’ve helped their kids and grandkids along the way.

Buffett says don’t leverage, and he’s rarely wrong.

eskbanker

Jaco70 said:

Buffett says don’t leverage, and he’s rarely wrong.

Never ceases to amaze me how people cling to the words of an old guy with a fortune the size of some countries' GDP, as if they're pearls of wisdom relevant to the small-time saver or investor!  Sure, he's been hugely successful financially, and respect to him for that, but if you have already been using leverage to your benefit, why would you now be influenced by the pronouncements of someone in entirely different circumstances?

And in any case, unless you're thinking of something different, he didn't actually say "don't leverage" as such but instead warned of over-extending, in terms not dissimilar to how someone might describe prudent use of a credit card:

Unquestionably, some people have become very rich through the use of borrowed money. However, that’s also been a way to get very poor. When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people.

and this is all in the context of justifying Berkshire Hathaway's corporate conservatism ("our extreme aversion to financial adventurism") in the years immediately after the global financial crisis, so that's unlikely to be a particularly useful template for the rest of us....

Mrs_Z

Late 50’s - 0% debt. In fact never had any apart from mortgages, if I couldn’t afford it, I wouldn’t buy it. Old school I guess.

Hoenir

eskbanker said:

and this is all in the context of justifying Berkshire Hathaway's corporate conservatism ("our extreme aversion to financial adventurism") in the years immediately after the global financial crisis, so that's unlikely to be a particularly useful template for the rest of us....

Frequently gets overlooked that at it's core Berkshire Hathaway is an insurance company. 

MEM62

eskbanker said:

MEM62 said:

Nobody improves their financial position by hanging onto debt like it is a treasured pet.  

Plenty of people benefit from well-managed and well-structured debt, hence the earlier point about the benefits of leverage, as well as stoozing and so on, so your dismissive point is too generalised....

I am a very genralised person  :-)

It is certainly true that not all debt is bad.  After all, without a mortgage most of us would never own their own house. I have not stoozed but I can see that taking money from a CC provider free of charge and investing / depositing it for a return might also be a good thing.  But those that always have a high level of credit card debt or expensive car loans ongoing for decades will have spent a fortune in interest.  By getting ahead of the curve early on, saving before you need something and paying cash for it the financial pendulum very swings your way.      

Aylesbury_Duck

None.  Paid off my mortgage when 44 and that's the only debt I've ever had (other than deliberately exploiting zero-interest credit card offers to earn some interest).  I've never taken out a loan or used an overdraft.

fletcher1985

40 this year and no debt apart from 76k left on mortage and 25k savings. hate being in debt even for the mortgage but wont over pay until my savings rate is lower then my mortgage. mum always told me if i dont have the cash to buy something then i save up until i can and i have always remembered that.

Jaco70

Jami74 said:

Sounds like a boast post to be honest, owing half a million as a small percentage on property.

To help you feel good about your situation, I am nearly your age and owe 89% on my first and only property.

(In case anyone misconstrues my comment, I am thrilled to bits with my current situation, someone quoted to me when I was a young adult "We cannot change the cards we are dealt, just how we play the hand" and I absolutely feel like I am winning.)

Not sure how you define a ‘boast post’, when I literally didn’t mention any figures other than my debt percentage, but whatever.

Thanks for replying though.