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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To ask about debt?

99 replies

rosie1979 · 04/03/2011 20:46

Basically I feel like we have a lot of debt.

We have a mortgage that is probably about 175k with (hopefully) the house being worth say 240

I have about 8k on personal debt, dp probably about 12k. It feels like so much of our income goes to paying it off, switching to 0% cards all the time ect.

Is this normal to exist like this? Most of the time I dont worry about it but then I start feeling worried about never clearing it.

OP posts:
BringOnTheGoat · 04/03/2011 20:50

I don't think it's normal as I have no debt but most people do, so it's probably the norm. What are you really asking? Are you just worried or looking for help to change situ?

AnnyR · 04/03/2011 20:51

The mortgage is an OK kind of debt - not sure about the levels of it. But we have no personal debts at all and never have. But then, we both went through Uni in the "old days" when we got grants not loans.

So, now we have paid off our mortgage we don't have any debts. I do worry for our DSs though as I can't imagine how they will manage in this modern world where debts seem to be normal. We were both brought up by parents who had lived through WWII and who had a mortal fear of debt. We have always lived within our means (not that we have ever earned very much) - very few foreign holidays, basic cars etc. But then we don't have the debt worry - we have enough other worries to cope with instead.

I hope you can manage to clear yours.

Original poster
rosie1979 · 04/03/2011 20:51

Just seeing if its normal to be in this situation really!

OP posts:
BringOnTheGoat · 04/03/2011 20:54

I honestly think it is normal, most of my friends have some personal debt and a mortgage.

SoftKittyWarmKitty · 04/03/2011 20:55

Have you had a look on the Money Saving Expert Debt Free Wannabe forum here? There are loads of people in a similar situation to you who are working their way out of debt. Try contacting a free credit company such as CCCS or National Debtline - MSE has lots of info on these companies.

Good luck with sorting it all out.

trixie123 · 04/03/2011 20:55

we have a mortgage of £202,000 and the house is not selling at £235000 which is a bit less that we paid for it. we don't have any other debt but feel fairly "trapped" in a small house and we really need more space. You have quite a lot of equity in your house and could clear your other debt if you moved - is that an option? To be honest, although its a hassle, this is not a good time to sell so so long as you can service the debts I would keep doing what you are doing - paying 0% interest is a good thing for the sake of a bit of admin hassle.

IAmTheCookieMonster · 04/03/2011 20:56

I have 15k student debt and about to add more!

Combined personal debt of about 8k.

I hate the amount of interest we are paying each month, we should be free of our debt in a year or two because I will start earning.

Original poster
rosie1979 · 04/03/2011 21:02

Thanks SoftKitty, will definately check that out.

My dp wants to remortgage and put our personal debt on the mortgage, but Im worried about it - has anyone ever done this?

Trixie - we are in a teeny terrace, moving not really an option, I so know what you mean about needing more space!

OP posts:
NinkyNonker · 04/03/2011 21:06

We have a mortgage of £120k on a house worth around £210k, I have a mortgage of the same amount on a flat worth around £140k, soon to be on the market. I have a student loan of around £10k , which I'm not paying off as am not working, not that fussed about it though.

We have a small loan of a few thousand I think.

Also have savings of around £10k. Not sure what the norm is.

leeloo1 · 04/03/2011 21:44

'My dp wants to remortgage and put our personal debt on the mortgage, but Im worried about it - has anyone ever done this?'

Yes, friends of mine did this - they ended up in negative equity as it became the norm for them to run up a few K of debt/loans/credit cards/home improvements and add it to the mortgage...

'We have a small loan of a few thousand I think.
Also have savings of around £10k.'

Martin Lewis (on the money saving expert site linked to above) always recommends not having savings until you've paid off loans/credit cards etc as you're almost guaranteed to be paying a higher interest rate than you're earning on the savings.

QueenStromba · 04/03/2011 22:16

If you have all of your debt on 0% credit cards then you're better off leaving things as they are. If the overall rate of interest you're paying on you debt is higher than you mortgage rate and you can remortgage at the same rate or lower then you'll be better off in the short term but since the period of the load is a lot longer you will more than likely you'll pay a lot more overall. People tend to forget that since a mortgage runs over a 25 year period you end up paying back around twice what you borrowed even though you are paying a low interest rate. If you overpaid your mortgage so that you were paying the same amount as you were in mortgage and debt payments combined then you could end up paying your mortgage off years early and paying thousands less in interest. It does all depend on what your specific circumstances are. There's plenty of financial calculators out there to work this sort of thing out. Also, leeloo1 said, you need to think carefully before you start going down the remortgaging path because it can be slippery slope.

QueenStromba · 04/03/2011 22:19

Please forgive the typos in the above post, the contraceptive implant has ruined my mental faculties.

givemesomespace · 04/03/2011 23:16

Stating the obvious, make sure you've priced in the effect of interest rate rises on your ability to service your debt. Concensus forecasts for base rates are at around 0.75% by May 2011, 1% by August 2011 and 1.5% by Feb 2012. Not huge increases, but always worth checking what this will do to your monthly interest costs. On £195k of debt, that's an additional £165 of monthly interest by Feb next year (assuming the worst that you'll be paying interest on the credit card balances by then). I know it's not particluarly appetising, but it's better than putting heads in the sand. :)
What an uplifting thread........

huddspur · 04/03/2011 23:55

Your situation doesn't sound too bad as you do have some equity and if your personal debts are on 0% credit cards then the situation could be a lot worse. One quick thing to mention is that I wouldn't expect interest rates to stay at their low-level so the cost of your mortgage may increase depending on your type of mortgage.

movingsoon · 05/03/2011 00:30

Don't re mortgage as you will be changing unsecured debt into secured. When my husband wiped the balance from his card by getting a loan on the house it didn't really help as he kept spending. He earnt more than me so when we were in a shop I would ask if we could afford something he always said yes. We got help here it is free It took a long time but we paid all the money back and are now debt free and have just got a new mortgage and about to move to a bigger house which is nothing sort of amazing. Please get help now before the debt gets bigger

3ismylot · 05/03/2011 08:17

I think its common to be in your position but I dont think it should be classed as normal really.
We are becoming a nation of "want it get it" people which I think is a bad thing.
Our parents and Grandparents wouldnt have dreamt of taking on these huge debts yet we see it as an everyday thing!

Dont get me wrong I used to be the same and have had debts in the past but since falling pregnant with my 1st DC I have worked hard to pay all my debts off.

Sometimes debt can be unavoidable if you suddenly lose a job etc but most debt these days is caused by sense of entitlement or greed, nobody NEEDS a flat screen tv, ipad,smartphone,games console,designer clothes etc yet we are happy to get into debt to own them!

DH and I are about to buy our 1st home so will have a mortgage which cant be helped but we will overpay as much as possible and will go without holidays/gadgets/non essentials if the money isnt readily available.

Chil1234 · 05/03/2011 08:18

I think your situation is reasonably normal these days, but that doesn't make it advisable or a particularly relaxing way to live. If you're worried about the size of your debt and if financing all the payments each month is becoming a stretch then talk to one of the free debt advisory services. You may find that there are more efficient or cheaper ways of managing your debts.

As someone has already pointed out, interest rates are going to rise soon. It's advisable to plan for it and build in some slack. And in that light... how's your budgeting? It pays to keep track of all your outgoings and pare down spending on everything possible. Use anything you save to pay off debts and the interest you save will make things look better more quickly than you think. Good luck

ivykaty44 · 05/03/2011 08:29

It isn't the question of whether it is noraml or not - but the question of do you feel comfortable with this debt. Which from your post you feel ok mos of the time and then at times you worry about the debt, therefore suggesting that it is a burden and it would be best to decrease this debt and make yourselves feel more comfortable.

LoveBeingAKnockedUp · 05/03/2011 08:34

Whether it is normal or not doesn't really matter if you are worrying about it then you need to see if there is a better way.

Agree with the comments re will you keep sending on the cards once it has been cleared if so you'll be wanting to do the same thing in a few years.

Do you pay the min Bal? The only way to get rid of a credit card Bal is to pay a fix amount, it can be whatever the min Bal was last time and just keep paying that off everytime.

FakePlasticTrees · 05/03/2011 08:42

It is increasingly normal to be in that level of personal debt, although we just have the mortgage and a lot of our friends are now in the position that their only debt is mortgage.

OP - at the risk of sounding judgey, you don't suddenly get £12k and £8k of personal debt unless it's for a car, if it's not just for big ticket items like that, have you looked at how you treat credit to stop you running the debts back up? For me, that's a scary amount of debt.

Bogeyface · 05/03/2011 09:07

You could put it onto the mortgage as the interest rates are lower than the rates on a credit card or loan. But the only way that works is if you close the credit accounts and dont keep spending.

We did this when we bought my car as we had more equity than we thought and the interest rate was much lower than the credit agreement. But we have no credit cards or loans now. If you clear the debt and end up spending up to the limit again then you end up in deeper shit!

If you are sure that you will not re-spend on the cards then do consider it, but if you have this debt because of bad money management or lack of budgeting then you may need some debt counselling to help you.

TotallyandUtterly · 05/03/2011 09:11

I have thousands and thousands of debt. Yours looks like a drop in the ocean to mine. It's normal these days... but it's bloody awful to live like it- constantly worrying about bills.

Not good for relationships either- causes rows :(

bythefire · 05/03/2011 09:12

Seems like a lot to me OP. We have 40K mortgage and no other debt at all so your debt seems a lot to me.

lurkerspeaks · 05/03/2011 09:56

No debt except mortgage here which is for about 60% of my properties value.

No real savings either but I do have a mortgage overpayment reserve of more than 12 months mortgage payments.

I worry that the easy availability of credit has changed expectations. I saved up to buy my furniture when I moved house (had the stuff from my old place so wasn't sitting on the floor). The number of people who questioned why I hadn't just got a loan was scary.

Also trying to buy a new car. Garages couldn't believe that I didn't need finance.

As others have said. Money saving expert is your friend. Try to clear personal debt and certainly don't take on any more.

My favourite website is Quidco. Money back for buying things I would have bought anyway. Biggest cashback so far was 100 quid for car insurance on a policy that was one of the most competitive I'd found.

Original poster
rosie1979 · 05/03/2011 09:57

Thanks for all your good advice. Am definately off remortgaging now!

The personal debt we do not add to, we do not actively use our credit cards and we pay more than the minimum balance.

In the industry DP and I work in it is very hard to break into, we worked as unpaid interns ect. Now we have quite a hefty joint salary but the majority of the debt was accumalated in the early days when credit cards paid for food and petrol, depressing!

We could definately budget better and reign our selves in - I am definately a "want, want" person and need to change.

OP posts: