Is it that bad to be in debt to have a decent quality of life?

[Gemini1992]

I know this probably sounds insane but I'm starting to wonder if being financially responsible is worth it?

I have always been a spender, not necessarily debt but wouldn't have had much left at the end of the month. I started getting my finances sorted last year as I want to buy a property so currently saving for a deposit. As I'm sure many can relate to it's a long slog, I've no gifts coming my way so it saving every penny I can which means I don't have much of a social life any more, no holidays etc.

I see some of my friends who have big mortgage, car loan, holiday loans but they do have what I can at least see on the outside a comfortable life.

I grew up in poverty and worked really hard to get to a position where I earn well over the average wage but due to the economy this doesn't go as far as it used to.

I know people say debt is bad but I am starting to think, you only live once, might as well enjoy it. No use being 80 and having a load of cash from being frugal. When I say debt I mean debt that you can still afford to pay back but just allows you to have what you want sooner rather than scrimping for years.

Have I lost the plot?

I’ve known people who have lived way beyond their means and it worked out , but there were two of them and credit was easier to access.
Some who had the ‘ only live once’ attitude, it didn’t work out that well. It is harder now because things are so expensive and getting any kind of loans or credit isn’t as easy to do now. House prices haven’t helped.
Im sure others will have different advice, but living within your means isn’t a bad thing.

Depends on your attitude to risk, I suppose. Personally, I like the peace of mind that comes with being debt free and knowing that we are living within our means. Circumstances can change, and debts which were affordable can very quickly become unaffordable. But I know some people have a very different take on things.

If it's managed debt it's fine but it's a slippery slope! Getting £10k on a 0% credit card for 3 years to fund home repairs or a new car or similar and paying it off at £300 a month is hardly different to saving £300 a month before getting the car / doing the work - apart from losing a bit on interest.

But it should be for necessities or things you were going to do anyway rather than additional things.

Depends if you can be sensible with it or not!

I think there’s a balance. We have some debt. But even if dh lost his job tomorrow (hopefully not) we could still afford the repayments through other means and own our home outright so we’d never be homeless. Others would be absolutely shocked at the way we use credit - we put holidays on it and then slowly pay it off, we’ve just decorated the kitchen and use debt for our household goods so we don’t have to find a lump sum for anything. We’ve lived like this for 17 years now and it works for us. We’re fairly low income too but I used to be a high earner before becoming disabled (hence the house being paid off) so I guess everyone’s situation is unique. We always use 0% cards and switch at the end of a deal. Thankfully we have very good credit ratings.

My Mum was absolutely against any debt whatsoever and it meant a lot of broken things never being fixed / our house always being broken everywhere / never any nice holidays etc and I know others would say that’s just how life goes sometimes but I never want to be like that as an adult now. I wish she’d just stuck things on a credit card sometimes!

I think debt for things that hold value or grow in value (a house) is different than debt for things that lose value or don’t retain any (car finance or holiday). I actually get more enjoyment out of my secondhand car that I paid cash for (£6k) than I ever did the one I financed (£23k). For one, it’s actually nicer because I could buy a higher spec secondhand car than I could afford a new one, but it also makes me feel less angry not burning that £300 a month on a car depreciating in value.

Similarly, with a holiday, it would piss me off working myself to the bone in January to pay back a loan on a holiday I couldn’t even look forward to anymore. Yet I took myself away to Spain for £500 for 4 days and had a great time. I don’t need to spend £10k to go to the Maldives. As a child, my best holiday memories were summers at the beach, not the couple times we went to Disney World.

I have always been careful & never got into debt until last year. I decided I was going to splash out on things I wanted/liked for a change. Now I'm £3k in debt but I do feel that it has been an investment (mostly new clothes/jewellery) I do sometimes worry about paying it back but then I think of others who have fancy cars etc - they must be in far more debt than I am. I think once its temporary & you know you can stop spending it's not an issue.

My parents and dh’s parents ‘ never owed a penny ‘ wouldn’t move home to buy a house ( which both sets could have done ) and lived pretty frugal lives.
They were aghast when he had a car loan and a mortgage , but it seemed normal to us because others did it and we could borrow the money. It all depends on your circs doesn’t it. Getting a mortgage these days is much harder to get / do especially if you’re on your own.

I use interest free options to buy things so I can keep my savings intact and budget over a longer period but wouldn't do this if I had to pay interest so I guess I'm on the fence!

No, you haven't lost the plot. When you start with a mortgage, the payments are tough and things are tight. But if the interest rates sit at about 5% like they are now, and we have inflation of 3.5%, gradually your pay rises but your mortgage payments do not. It means, after a few years, mortgage payments get much easier.

I'm 20 years into my mortgage and I pay about £400 a month for a four bed house, but my salary is double what it was when I first took out the mortgage. Even taking the Global crash and covid and everything else that has happened along the way.

In another 5 years, I won't have a mortgage at all. My ds will have left home and I can go part time or downsize and retire earlier etc. It opens up options.

I'm like you. Grew up with nothing, and my home is my security. It allowed me to give my ds a secure home without the worry that we might be evicted.

I'd keep away from debt until you have your house OP I've only ever had mortgage debt plus the odd interest free credit for a sofa or kitchen.

I have a friend who always lived well. he's now in his mid seventies and still working because he has no savings at all. And yet... it keeps him young. he has energy and a glint in his eye and as soon as he gets paid, he and his partner whizz off on holiday and blow the lot. Then back to UK to graft again. I sort of admire him. I doubt he'll ever retire but he'll never stop living well either.

Smart managed debt can actually make money.
Eg I put xthousand on 0% card while I had that amount in savings making interest. This is a small scale example. Couple hundred there and there.
You can do that on large scale too. Property, business etc. That's how lots of serious wealth is made. Financial leverage is quite interesting.

But that doesn't answer your queation. Yes you can live well without debt. But that depends on personal definition of "well"

Some do have the ‘ you only one life’ attitude to money.

There is a whole world of difference between being frugal and wealthy aged 80 and being so far in debt that the bailiffs call when you are 30

using credit to get your idea of life and living will easily take you into trouble / use credit this year and then what happens next year? Struggle to pay it off means even less living than now ? Or get more credit ? See where that ends up ? The stress of always keeping your debt under control whilst not changing your idea of living will get you down

live within your means and remember living isn’t having a posh car and instagram holiday - it’s friends bringing a bottle round to yours for a low key party because they all want to watch the pennies ; it’s the free music at a local pub ; a run round a nature reserve. Truely living is about living in the now and making the most of all your assets - who you are and your skills , your friends , your youth and energy - bet you could cope with an overnight bus to a seaside campsite and watch the dawn or sunset

It’s all a balance - you need some spare cash to play with really but as others have hinted - if you want to maximise the spare cash for living over your whole active life , getting into unsecured debt isn’t the way to do it, and a short term pain in terms of saving like crazy towards a stable home will bring much more opportunities in the future

I think there’s a balance - we use credit cards (zero interest) for big purchases and holidays rather than save up for them in advance and generally I have no regrets. We also have life insurance including critical illness so that if one of us became ill we’d still be ok and be able to pay these things as that was a worry of mine. We’ve lost enough people at a young age to want to enjoy the here and near

Debt terrifies me. I live well but within my means. I’m a saver, I like knowing that I’ve got money ready should the dc need anything, if I need a new car or a holiday. I think about what I am spending.
I grew up with nothing and don’t earn a huge amount but I have come further than my parents told me that I could.

Some big purchases are better bought on credit as you have some leeway if things go bad with the purchase.

When you do your mortgage application they will expect to see financial prudence and any credit card debt will be deducted from what you can borrow - on the other hand buying things on credit cards, paying them off and using points/being protected as a consumer are good things.
Perhaps your saving goals are too aggressive?
Can you save in other areas or earn more?

I am old and almost mortgage-free and have never had any debt other than mortgage, and a very risk-averse attitude to debt - I've been a saver and never lived beyond my means through saving for holidays, cars etc.

My young colleagues are spending tens of thousands of pounds on weddings, holidays, cars, huge first homes and some have eye watering levels of debt, in my eyes. Some are scrimping at the end of the month but present a very affluent lifestyle.

My biggest worry is that your financial position can change in a heartbeat. Job loss. Redundancy. Sickness. Separation and divorce. Adding a child/children to the mix. Almost none of my colleagues think life or critical illness insurance is worth having. Some are a couple of months away from absolute dire straights and if they found themselves out of work for 2 months would be needing to very quickly sell cars and homes.

I sleep well at night knowing I live within my means whilst still having a decent holiday and funds to fix the 8 year old car if something goes wrong.

I definitely wouldn’t take on unnecessary debts just before doing a mortgage application. It will lessen the amount you can borrow

But you have to pay the debt off.

I am not a high earner and had to use a credit card to fund a few unexpected bills.
The issue I have now is that my monthly repayments are quite high and so I have even less money than before (I am doing zero interest etc to try and clear it quicker).

Once the debt is cleared, I will be much better off.

So I am wondering why saving for something is worse than buying something and then having debt, with interest.

What sort of things are you talking about?

What is good is things like Klarna that you may off monthly but interest free, is that an option?

It depends what you mean by debt. If you mean a mortgage then pretty much everyone who wants to buy a house has one of those, no problem there. When it comes to cars they're only ever going to depreciate so we spend as little as is reasonably possible on a small second hand one - having a huge, expensive car gives me no joy at all. A loan to go on holiday is crazy, go cheaper - easyjet flights, airbnb, cook some of you own meals.

So I tend to agree now. I wanted the new kitchen and my house to look a certain way because I am always in it . I go through speedy times when I need stuff or just want it for quality of life and then I go into pay back mode. At least paying it back is easier when you have the things and are using them. Of course nobody wants to be in debt, but for some of us its a necessity to not have a depressing poverty lifestyle.

*spendy times

I think you need some kind of safety net in case of emergencies or poor health. How much that is, is up to you. I wouldn’t feel comfortable having debt beyond mortgage or ‘essential’ debt tbh. I wouldn’t holiday first and pay later for example. I might use a cc to pay for say a new fridge if I really needed one quickly, to be able to keep my savings for a bigger emergency or to earn interest.