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  • FIRST POST
    • midlander81
    • By midlander81 21st May 19, 9:50 PM
    • 191Posts
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    midlander81
    people lie about debt
    • #1
    • 21st May 19, 9:50 PM
    people lie about debt 21st May 19 at 9:50 PM
    Does anyone else think that people lie about how much debt they have? I work with a group of 12 people and we were discussing debt in the office yesterday. Almost all of them claim to have no unsecured debt and yet the average person is meant to have something like 13K

    Do you think that people pretend to have less debt than they actually have, or am I the minority who actually has debt!
Page 1
    • JayRitchie
    • By JayRitchie 21st May 19, 9:57 PM
    • 182 Posts
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    JayRitchie
    • #2
    • 21st May 19, 9:57 PM
    • #2
    • 21st May 19, 9:57 PM
    I suspect there is a lot of variation, depending on age, type of job etc. Plus financial knowledge. A lot of people don't think their car loans/ lease agreements are debt for example.

    I don't think its easy to know how many people have debt. I have a friend who looked into this for professional reasons. The figures he saw included anyone with a credit card balance. He noted that he generally has a credit card balance of a couple of thousand or so but this is paid in full when due - he just uses the card for everyday spending as there is more protection than a debit card.
    • theoretica
    • By theoretica 21st May 19, 10:11 PM
    • 5,858 Posts
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    theoretica
    • #3
    • 21st May 19, 10:11 PM
    • #3
    • 21st May 19, 10:11 PM
    One lot of recent data shows that the average household (not person) debt is £15k - BUT around half of this is student debt which many people in conversation may not think to include as debt. https://www.bbc.co.uk/news/business-46780279
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • charlie792
    • By charlie792 21st May 19, 10:19 PM
    • 1,689 Posts
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    charlie792
    • #4
    • 21st May 19, 10:19 PM
    • #4
    • 21st May 19, 10:19 PM
    I suspect there is a lot of variation, depending on age, type of job etc. Plus financial knowledge. A lot of people don't think their car loans/ lease agreements are debt for example.
    Originally posted by JayRitchie
    100% agree with this. a large majority of people I work with think nothing of paying a few hundred a month on their car payments or their sofa etc. but if you asked them they wouldn't say they were in debt.

    I suppose it's all peoples perception.

    personally I've always thought of debt as having to borrow to make ends meet, that's just what I remember from my childhood with my parents borrowing to pay the bills, I wouldn't for example class my day to day spending on a 0% credit card as debt, or my mortgage etc
    MFW 2019 #111 £8,656.82/ £15,000
    0ffset Balance £28,455.12/ £80,761.07

    Aug 2014 £114,750 -35 yrs (2049)
    Sept 2016 £104,800
    Nov 2018 £82,500 -24 yrs (2042)

    Aim Mortgage Free by June 2023 (26yrs off original term)
    • keepcalmandstayoutofdebt
    • By keepcalmandstayoutofdebt 21st May 19, 10:55 PM
    • 3,607 Posts
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    keepcalmandstayoutofdebt
    • #5
    • 21st May 19, 10:55 PM
    • #5
    • 21st May 19, 10:55 PM
    Depends on age, I know when I've worked with younger people, the conversation has gone about how they can get 8% interest on finance etc I just presume by good rates they wouldn't be the sort in to much debt, if any.

    I'm about 3k (I thought it was a lot more but recent close attention revealed the figure) I have 2k available credit (not that I'll be using it) it used to be 9k but fortunately I did something silly last summer and think I got a credit decrease.
    RIP my Rags. 16/06/19 at 4am
    Know I had to moneysave but you didn't have to go
    x
    • JayRitchie
    • By JayRitchie 21st May 19, 11:02 PM
    • 182 Posts
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    JayRitchie
    • #6
    • 21st May 19, 11:02 PM
    • #6
    • 21st May 19, 11:02 PM
    I suppose it's all peoples perception.

    personally I've always thought of debt as having to borrow to make ends meet, that's just what I remember from my childhood with my parents borrowing to pay the bills, I wouldn't for example class my day to day spending on a 0% credit card as debt, or my mortgage etc
    Originally posted by charlie792
    Perceptions differ! I think of debt as being anything which means I have to pay money out in the future. So gym memberships - I check cancellation clauses, mobile phone contract, rent/ mortgage.
    • maisie cat
    • By maisie cat 22nd May 19, 4:08 AM
    • 710 Posts
    • 884 Thanks
    maisie cat
    • #7
    • 22nd May 19, 4:08 AM
    • #7
    • 22nd May 19, 4:08 AM
    With the prevalence of 0% options around there are going to be people, us included, who have 0% unsecured debt and equivalent savings. Our savings are offset against our mortgage so it makes sense to have 0% debt. I do not consider us as being in "net" debt because we could pay it off tomorrow.
    • MovingForwards
    • By MovingForwards 22nd May 19, 6:09 AM
    • 1,326 Posts
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    MovingForwards
    • #8
    • 22nd May 19, 6:09 AM
    • #8
    • 22nd May 19, 6:09 AM
    Some people may not see debt as other people see it. E.g they owe money and can afford payments so it's not debt, to them debt would be when they can't afford to pay it.

    Other people would see any money owed by them (mortgage, CC, loan etc) would be debt, regardless of whether it's serviceable or not.
    • NorthernMonkey1
    • By NorthernMonkey1 22nd May 19, 8:00 AM
    • 294 Posts
    • 1,102 Thanks
    NorthernMonkey1
    • #9
    • 22nd May 19, 8:00 AM
    • #9
    • 22nd May 19, 8:00 AM
    Perceptions differ! I think of debt as being anything which means I have to pay money out in the future. So gym memberships - I check cancellation clauses, mobile phone contract, rent/ mortgage.
    Originally posted by JayRitchie
    Probably more correct to think of that is a liability than a debt. a mobile phone SIM only contract as a debt, but it's definitely a liability. There is a grey area if you buy your handset as part of the contract.

    I have a number of liabilities in this respect (Gym membership, pay monthly SIM contract)

    I also use my credit card for a lot of day to day spending, and there is about £1700 outstanding right now, although I haven't paid any interest for years at the're all set to pay off in full every month
    • Brenster
    • By Brenster 22nd May 19, 9:11 AM
    • 124 Posts
    • 80 Thanks
    Brenster
    Good Post, as everyone says above it depends how people view different debts;

    On one hand;

    I owe £100k on my mortgage (although have plenty of equity)
    I am tied into a car lease where over the next 2 year i owe £8k
    I have a student loan of £5k
    I have savings at £10k
    So some people would do this sum and say i have £103k debt

    BUT

    Others, would only see the equity in the house....Say £150k, and not the mortgage
    See the car as affordable in my current earnings / car allowance
    Completely discount the student loan as 'its not a real debt'
    So this scenario actually shows a positive of circa £160k

    So based on your perception of debts, my personal position could be viewed as (£103k) or + £160k, which is a difference of £263k !!!!

    I personally happy with my financial position, and it is an individual assessment, no one knows better than yourself, do not allow yourself to base your decision on what the norm is / or what others tell you !!!!
    Last edited by Brenster; 22-05-2019 at 9:25 AM.
    • SSDD23
    • By SSDD23 22nd May 19, 9:15 AM
    • 1,108 Posts
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    SSDD23
    I don't think I've ever worked in an office where I'd be happy to disclose details about my debt, I only discuss that with my OH as I think it's quite private
    Debt Target #01 - £0/£228
    • Sanctioned Parts List
    • By Sanctioned Parts List 22nd May 19, 1:34 PM
    • 443 Posts
    • 1,127 Thanks
    Sanctioned Parts List
    I suspect there is a lot of variation, depending on age, type of job etc. Plus financial knowledge. A lot of people don't think their car loans/ lease agreements are debt for example.
    Originally posted by JayRitchie
    I think there's a subtle difference between a car loan and a car lease agreement:
    - For a car loan, I've borrowed money in order to purchase an asset. I expect to own and keep that asset. I've used money that isn't mine in order to obtain that asset. I am therefore in debt.

    - For purely leasing a car (PHP), I am paying a fixed amount of money over a fixed period of time for permission to use somebody else's asset. At the end of the agreement, I return the asset. I have not borrowed any money, and I am therefore not in debt. Same logic as renting a house on a 1 year tenancy agreement.

    What complicates things is i) exit terms. Like the tenancy agreement, attempting to end a lease early is expensive, without the forbearance of the asset owner; and ii) other arrangements like HP (which is a loan), and PCP (which is a lease option, not a lease).

    • enthusiasticsaver
    • By enthusiasticsaver 22nd May 19, 9:36 PM
    • 8,611 Posts
    • 20,023 Thanks
    enthusiasticsaver
    I think there probably is a wide variation as many older people do not have debt and many young people have student debt which can be quite considerable. Some people probably forget the student debt as it comes direct out of salary usually and maybe some do not want to admit to having debt. There is still a bit of a stigma to it but in these days with low interest rates many people offset unsecured debt to savings by taking out 0% cards and keeping their money in savings accounts.

    I do not think we talk enough about debt and maybe that is why we have a big problem with high debt in some demographic groups. For those who think it is private and they will not discuss it with anyone else why is that? Even some partners and married couples do not know how much debt their partner has. Do people still feel shame these days if they have debt and if so why when it is so common and banks are so keen to lend out at good rates when you have a good credit record? Sometimes it can make good business sense to keep money earning interest and borrow at 0%.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Karonher
    • By Karonher 22nd May 19, 10:40 PM
    • 616 Posts
    • 2,286 Thanks
    Karonher
    I dont think any of my friends bar one have any kind of debt. Those who have had mortgages are at an age where they have been paid off and anything they want to buy or do will be paid for from either funds saved or put on a card and paid off in full.

    The one who has bought a very expensive house a few years ago, knowing that they and their partner are due to retire with large payoffs later this year, that will be paid off.

    Younger people ware more likely to have debts due to student loans, wedding expenses and maybe not being in work due to maternity leave.
    Getting ready for Christmas 2019

    Aiming to make £5,000 online in 2019.
    • trailingspouse
    • By trailingspouse 23rd May 19, 6:47 AM
    • 3,599 Posts
    • 6,616 Thanks
    trailingspouse
    I think people don't view debt as 'money I owe' but rather as 'money I can't afford to pay back'.
    So, for example, I have a car loan and a mortgage - but I don't see myself as having debt, because I can meet both of those payments easily.

    And I think that's a perfectly reasonable way of looking at it - debt only becomes a problem when you can't meet the repayments. I also think very many people are unsure of the difference between secured and unsecured loans.
    • infj
    • By infj 23rd May 19, 11:57 AM
    • 47 Posts
    • 20 Thanks
    infj
    I think people lie about money in general. It's cultural and social conformity. Will it exclude us from the "group" if we (a) admit we are in debt or (b) admit we have thousands saved & could retire tomorrow
    • Takmon
    • By Takmon 23rd May 19, 12:53 PM
    • 596 Posts
    • 582 Thanks
    Takmon
    With the prevalence of 0% options around there are going to be people, us included, who have 0% unsecured debt and equivalent savings. Our savings are offset against our mortgage so it makes sense to have 0% debt. I do not consider us as being in "net" debt because we could pay it off tomorrow.
    Originally posted by maisie cat
    The problem with that is that mortgage rates are so low you can get a low rate mortgage and then invest the money and make a pretty good return on it considering it's usually a good amount of money involved.

    So in reality your effectively losing money by having that kind of account and it's only really good for people who need access to the money in the near future.
    • onwards&upwards
    • By onwards&upwards 23rd May 19, 7:22 PM
    • 520 Posts
    • 939 Thanks
    onwards&upwards
    Does anyone else think that people lie about how much debt they have? I work with a group of 12 people and we were discussing debt in the office yesterday. Almost all of them claim to have no unsecured debt and yet the average person is meant to have something like 13K

    Do you think that people pretend to have less debt than they actually have, or am I the minority who actually has debt!
    Originally posted by midlander81
    Itís not a great topic of conversation for that kind of setting, itís too personal. There may have been one or two or even more of your coworkers feeling really uncomfortable and wishing the subject would change.
    • The_Analyst
    • By The_Analyst 23rd May 19, 9:51 PM
    • 75 Posts
    • 109 Thanks
    The_Analyst
    I suspect there is a lot of variation, depending on age, type of job etc. Plus financial knowledge. A lot of people don't think their car loans/ lease agreements are debt for example.

    I don't think its easy to know how many people have debt. I have a friend who looked into this for professional reasons. The figures he saw included anyone with a credit card balance. He noted that he generally has a credit card balance of a couple of thousand or so but this is paid in full when due - he just uses the card for everyday spending as there is more protection than a debit card.
    Originally posted by JayRitchie
    Agree with this. I am officially debt free as of 6 months ago, but having just moved house
    I have a £250,000 mortgage. - I suppose that is "debt" but I don't see it as such

    Additionally, I have 2k on my AMEX, but that is cleared each month. So does that count as "debt"? Not in my opinion
    August 2011 - Total Debts - £47,352.12
    November 2018 - Total Debts - £0
    • hugheskevi
    • By hugheskevi 23rd May 19, 10:14 PM
    • 2,265 Posts
    • 2,959 Thanks
    hugheskevi
    I find younger people in my office very willing to engage in financial conversations. Unfortunately their focus is mostly on very small-beer things (usually trivial ways to save money), and they clearly haven't thought about serious financial planning. The older people in my office mostly prefer not to discuss specifics, but are open about more general strategies and principles.

    I suspect office demographics strongly influence debt holdings. If most are aged 50+ then I'd expect a much lower proportion to have 'debt' (however defined) than a group aged 20-30.

    One thing that interests me is attitudes to mortgage debt vs. credit card debt. For years I've been building up ISA saving whilst taking out as much 0%, £0 fee credit card transfers as possible, and gradually paying down mortgage. As things stand, my wife and I have around £200,000 of liquid savings, a mortgage of £46,000 and credit card debt of £67,000. We could reasonably be defined as being in zero debt, £113,000 of debt or £67,000 of debt depending on different people's interpretations of debt.

    Most folk I chat to are horrified at the idea of £67,000 of credit card debt, yet relaxed about a mortgage of a similar magnitude. That is despite the mortgage requiring interest payments and being secured on their property.

    From an accounting perspective, I've mused about the correct way to record pension wealth. This is because income tax will be due on the pension when drawn. It is not obvious how to record this contingent liability, but if recording pension as an asset at its pre-tax value then it can be argued that the contingent tax liability should be recorded as a debt.
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