To think apart from mortgage it is possible to live debt free!?

[Moneytalkone]

Just that really, AIBU to think that it is possible to live debt free, that debt isn’t a necessity in life! Apart from a mortgage I suppose if you want to own a house. Had a chat with a friend who claimed that debt is given these days, it’s almost an accepted/expected part of life? What do you think?

It is possible to live debt free. I was up to my eyeballs in debt, and it took ten years to pay off. But I haven't had any since. I reviewed my spending and now choose to live within my means.

"Why are you snapping at me? I asked a genuine question. I don't understand your logic. Because if you are young and have only started into the world of work, what would you have to sell? You presumably wouldn't own much yet because you wouldn't have built up the finances to buy stuff. So you sell it, and it's gone, and then what? You wouldn't have years of work experience behind you to make it easy to find another job."

I always always had agencies ringing me and offering work, so I'm struggling to think about this situation. I'd left home at 18, if and its a big if, I had no job, no money, I'd have gone home or to a friends, until I did. Most of us have a support network. I wouldnt have taken out a loan. That's me. My parents never had loans either. I've grown up saving. If we couldnt afford something we didnt have it. We grew veg in the garden, pickled stuff, made stuff..fixed our own shoes. We didnt have a car until we could afford it. We were close to poverty, but we never got a loan.

Handwashing isn't free - I pay for water with my water meter...

Yes it's possible to live debt free but is it that sensible? Not always. There is a balance to be struck. It's sensible to make use of the protection afforded by credit cards. It's also sensible at times to spread a big purchase using credit rather than struggle for months on end. It's sensible to buy a safe family car with manageable credit. And it is sensible usually to buy a house, with a mortgage, rather than rent. It's also sensible to go along with student loans as not doing so could restrict a career.
It's possible to be debt free but it is not necessarily something to aspire to.
Living within our means and with manageable debt can work out for the best.
Racking up credit when it is clearly not manageable isn't sensible.

I've been debt free except mortgage for 3 years, but before that I owed multiple thousands. It took an age but I did eventually pay it off. It's just down to circumstances, if I lost my job tomorrow I would be in debt in a couple months. Nothing inherently wrong with debt, if you know you can pay it off.

"Most of us have a support network. I wouldnt have taken out a loan"

I think because of housing and benefit rules, for many areas of the country, those support systems don't exist.

Then there's the people (I'm one of them), who never had a support system.

You can live without debt, if you have enough money coming in to save, or what you need isn't too expensive.

I can't live without debt. It started when I was widowed, went for a while and now I'm disabled, it continues. My last big debt item was my fridge freezer. My DD's was her decent mattress.

It can end up costing more in time and money to buy second hand.

@Besidesthepoint, not necessarily bad decisions or planning, just bad luck via a life event.

Well obviously it depends on what you earn and what you buy. I only had a student debt for a few years (no fees just rent) and have always lived within my means. I bought my first car at 37. Not everyone can do this though but I was also brought up with the idea of saving then spending rather than spending and then paying it back.

I do think it's weird that people say they can't save a single pound but can take on a new debt which means extra expenses every month. So if you have zero, how do you pay the new loan oayments then? To me that sounds like you made a bad financial planning decision somewhere.

I think the word planning is the key to it. We fell into debt in our early 20s because we hadn't yet had time to build up savings to cushion us against job loss. We are very cautious with money - we have never borrowed to buy furniture or go on holidays, even now when we are financially comfortable we have a barely functioning bathroom in our house because we haven't saved up enough yet to replace it. We never went on holidays, not even a honeymoon, in our 20s because we knew it was beyond us financially. But when redundancy hit us (out of the blue, and without redundancy pay) there was only a few hundred pounds to fall back on. We owned our house (ironically because we couldn't afford to rent!), but we had only owned it for a few month so the equity we had would only have covered the costs of selling it, at which stage we would have been viewed to have been voluntarily homeless. We weren't entitled to benefits, and my salary (I was the lower earner) was only enough to cover our mortgage and my commuting costs, there was nothing left over for food and household bills.

If the same set of circumstances hit us in our 40s we would have had twenty years to cushion ourselves against it. In our early 20s, working in low paid jobs, we just hadn't had time to build up a decent amount of savings. That's not lack of planning, it is lack of years.

I think that a lot of people get very frightened by debt in general and don’t separate out the debt that actually makes you money and the debt that drags you down

Not having a credit card can actually cost you money.

It gives you the ability to live and be able to invest an amount at the same time without attracting interest.

Same with paying council tax and water rates up front as opposed to monthly payments.
There isn’t any incentive to give all your money to your local council. There isn’t any discount.

A mortgage allows you to put a roof over your head with out the costs of renting
Friend has lived in the same council house since she was 18.
She has always paid more money in rent (apart from a period of time in the early 90s) than me.

Atm her rent is £850 per month.
Our mortgage is about £400 (interest only)
Hers is a 3 bed terrace house
Ours is a 4 bed detached in 1/4 acre.

We are selling this year and will buy a place here and a holiday home for cash.

Friend and her dh never wanted to take on debt and are now stuck.

Debt with a low interest rate on a rising asset is good.
Debt on a car or furniture or carpet unless interest free is not good.

It is about separating out the good from the bad and not being scared of taking on good debt

I think it is possible but not necessarily for everyone. For example people on extremely low incomes who cannot save for things that they need eg furniture buying in credit may be the only way. I think it is desirable to live debt free but I haven't always been able to even on a decent salary.

Yes, although I’m pre-students loans - which does throw an extra dimension in. Good that there are starting to be higher level apprenticeships etc that offer degree level qualifications without the debt. But I’d qualify it by adding student loans as well as mortgages, for those for which uni is the right path.

@Ponoka7

Can you please reread my post where I say that it is possible for more people, but not all people. Can you then tell me how you disagree with me?

The poorest in our society need universal credit, and because you don't get any money for 5 weeks most people will borrow that money (an advance) so people on benefits now START in debt. That's before considering that a lot of people start claiming benefits because of a life change like a health condition or an unexpected pregnancy or they are separated/widowed/divorced which comes with other financial implications. Do you think that when people are having to chose between heating and eating and using food banks they don't sometimes pay their council tax late? Or try to ignore the water bill? Or not pay their tv license? Then not paying those can result in late charges, CCJs and court costs, bailiffs fees, etc. As well as defaulting on previously affordable debts like credit cards, car payments, etc. So I think that even the idea that people shouldn't be in debt comes from a place of overwhelming privilege compared to the reality for a lot of families.

I think that a lot of people get very frightened by debt in general and don’t separate out the debt that actually makes you money and the debt that drags you down

This..

Some people seem to think all debt is bad. Yes you can live without any debt but honestly sometimes it helps to make life better and used sensibly doesn't mean you pay more or end up in a financial mess.

@Besidesthepoint I wasn’t referring to your statement! It’s just that you were the post before one. The pointless statement I meant was the OP’s title!

I agree with the idea of 'good' debt and 'bad' debt. Sometimes debt is a sensible financial decision.

When I was younger (and gullible) I used to read women's magazines, you know the sort, fashion and beauty etc. And almost without exception, they would refer to 'maxing out your credit card' on a particular fashion item. I am such a boring cautious person that I even actually wrote to one of them once, pointing out that normalising that sort of debt is extremely damaging, but I got a snotty reply in response. (It's kind of ironic that Tabby was snapping at me earlier and assuming that I am fine with borrowing money left and right, when I am actually the opposite).

But I see a huge difference between falling into debt to meet essential living costs, and falling into debt to keep up with more affluent people.

@ponoka7

No, you literally wrote:

@Besidesthepoint, not necessarily bad decisions or planning, just bad luck via a life event.

So that statement was directed at me. Otherwise you wouldn't @ me in the same sentence.

Sorry, I should have said there is 'good' debt, 'bad' debt, and also, sadly there is 'slipping into debt' by way of trying to actually survive.

In my opinion, good debt is fine, bad debt is bad decisions, and slipping into debt is a sad and stressful situation, and no one who is in that situation wants to be there.

If you can afford to make regular repayments I honestly do not see why you would go without a washing machine or fridge for months, just to avoid debt.
To me, that would be a sensible, manageable debt.
Tumble dryer, dishwasher, fancy car, latest iPad, not so much. But even so if you can afford the repayments then ok that's up to you.
Of course it is possible to avoid that debt
(Go without the washing machine) but I would choose the calculated risk of the loan.

Sometimes debt is a sensible financial decision

Absolutely true. For years, not paying off my mortgage has saved me money.

Like others have said there is debt and debt. But also it depends on income. We buy everything on a credit card (and pay it off in full) and take out any options of interest free credit for large purchases. But crucially, we could afford to buy the things anyway. I think it must be very easy to get into a slippery slope of buying things you can’t really afford. Some of the debt figures I’ve seen on here would scare me. One of my friends had an £80k plus salary but had well over £40k of debt. His debt was partially sensible (career development loan) but also ott lifestyle stuff that he couldn’t really afford despite an excellent salary.

Debt can be like alcohol, smoking, a drug addiction or eating disorder.

"Some" people can manage debt sensibly, just as they can manage a healthy lifestyle.

Sadly, others can't, hence addictions, whether it's booze, drugs, McDonalds or raking up debt for non essentials.

Yes it is possible to live debt free, if you
'cut your cloth' according to your income

However, I'm aware that circumstances can change such as bad luck, unemployment, poor health, no family support, unexpected things happening in life etc

Our only debt is our mortgage, and we were fortunate enough to be able to replace four tyres on the car, the washing machine and the tv one after the other, with Christmas thrown into the mix as well, without having to worry.

But it's taken a lot of hard work to get here. We've gone without for years. It's only the last year or so where we've really seen the benefit after years of struggling.

That's not lack of planning, it is lack of years
Actually a good point. In my 20s I became a single parent, if that happened now, I would have a cushion of savings and a house almost paid off thus giving me choices of what to do for the best result that kept us all housed and fed. Back in my 20s however I didnt have the time to save the money or almost pay off the mortgage.
Of course I could have not married that man or had children, but we all make choices and those were mine at that time with what I knew then.
Hindsight says I should have done it differently. But hey ho.

I think that a lot of people get very frightened by debt in general and don’t separate out the debt that actually makes you money and the debt that drags you down

not paying everything upfront whilst you could afford it, and have enough money for that, is not being in debt.. that's the whole point.