people lie about debt
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I think there's a subtle difference between a car loan and a car lease agreement:JayRitchie wrote: »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.
- 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).0 -
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%.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
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.Aiming to make £7,500 online in 20220 -
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.No longer a spouse, or trailing, but MSE won't allow me to change my username...0 -
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 tomorrow0
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maisie_cat wrote: »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.
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.0 -
midlander81 wrote: »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!
It’s not a great topic of conversation for that kind of setting, it’s too personal. There may have been one or two or even more of your coworkers feeling really uncomfortable and wishing the subject would change.0 -
JayRitchie wrote: »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.
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 opinionAugust 2011 - Total Debts - £47,352.12
November 2018 - Total Debts - £0:beer:0 -
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.0 -
There is a newish housing estate by us. Average about £400000 per house. Most people on that estate are in their early thirties, with young children and pets. Most have two new cars, eg a mini and a 4x4. Most walk their kids to the local school each morning, so I would say there's not two full-time incomes. At Halloween and Christmas their houses are lit up like a late night footy match with lights and snowmen and witches.
Of course they are in debt.0
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