To think a lot of people must have a high amount of debt

[user495827]

I wouldn't dream of being nosey enough to ask people in real life. So thought I would ask on here. I'm asking more from people with average incomes rather than very high. When I say average I suppose I mean around £20000 to £35000
I'm from the North West which I think is relevant as the average house price /wage is lower than the South.
A lot of my friends and their partners are in this bracket. They seem to spend a lot of money. One friend, for example, got married last year a beautiful wedding easily £10000. A honeymoon to Dubai and also a mini moon to Paris. Beginning of this year they bought a house and are completely renovating it top to bottom. I happen to know her salary just through conversations is £25000. Her husbands job probably pays around £30000. Another friend again completely renovating a new house. Both have Audi's cars on finance.
AIBU to think a lot of people spend like this now and that it is normal to have very high debts/high mortgage?
I know it's not my business I certainly don't begrudge them and how they spend their money. I use to earn similar but im now part time and I suppose I'm abit of a saver.

[Mrhodgeymaheg]

I have been asking OH this lately. Combined income is 56k, so not high, but welive in a tourist area where there is poor pay but high house prices.

Everyone seems to have lovely cars, can afford for one parent to work PT, bought their own house, have nice holidays. We live in a flat and can't get on the property ladder and I buy a lot of second hand clothes. We spend about £100pw on food for family of 4 which I think seems fairly typical. We do shell out 800pm in childcare pm and we can't save at the moment, but then these people also have children too, so I can really can't work out why they have such extravagant lifestyles when they have similar jobs/work PT. I have to remind myself that they are most likely in debt or are being bank rolled by family, so aren't as successful as they make out.

I think about 5 million households owe 5k in unsecured debts, with around another 7 million or so owing between 2-10k. I think it's safe to say that all the people you see with nice houses and cars have most likely not bought them outright.

I have met people who are a bit snobbish about me bringing up my family in a flat, but when you talk to them about money they reveal they are in serious debt. I don't think it registers that they don't really own the stuff around them.

[Asdf12345]

@Atthebottomofthegarden

I think a lot of it depends on your stage of life.

We have a small mortgage of c£40k on a £600k house which we will pay off in about 2 years, and no other debt. But we are hoping to retire in 5 years so more debt would really not be helpful now!

We paid the mortgage off about 3 years ago but borrowed £60k back for house renovations.

I’ve never had any debt other than mortgage. DH was in a bit of a state when we met, barely able to meet his monthly commitments (including CM) but we worked to reduce that and he was clear within 5 years.

I’m astonished by some of the mortgages people have v their earnings. Are banks lending 3x joint salary again?

5-6X joint if a secure professional line of work with expected progression and a decent deposit.

We only took 2X joint income as we found more or less what we wanted for considerably less than we thought we would have to pay.

[Pumpkinpie1]

I was always brought up to pay off one debt before you take on another.
We have one credit card which we pay off in full as soon as we receive the bill. Would t buy anything if we couldn’t afford to pay it off.
No debt

[SickOfNorthernExile]

35 years old, 35k salary, approx 25k credit card and loan debt. No savings.
Not a homeowner.

Horrifies me, but single parent, high childcare costs, no financial support from ex... very hard to get out of it to be honest.

The only thing that stops me worrying, is the knowledge that I have a vastly higher earning potential than I’m realising now (took a lower paid job when I became a LP) and will be able to pay it all back when I move back into a better paid role (been head hunted a few times, just not been the right time to go back to that field of work with DS so young).

[PoppyAnnie]

I quite love this thread! Thanks for starting it @user495827!

While I'm not high income (single parent), I work hard at more than one job and have been able to keep our small home going even when it looked impossible. As a result of the luck of property prices booming where we are (previously cheaper borough, now very popular with millennials) the mortgage is about 25-30% of the property's worth. While not really helpful on a day to day basis per say, it is a great comfort knowing if I ever needed to I could sell up, buy a home nearer family for a far smaller sum and likely either have a very small mortgage or none at all. Right now this isn't possible, but it will be long term.

We don't have the cash on a monthly basis for extras, I consider getting good food in my dc's belly a success, as well as keeping a nice home, what I can focus on. There's certainly not money for new kitchens or windows etc., nor holidays abroad. Neither do we eat out, have expensive days out or even city breaks. But we are happy, spent today at a park playing games, had a lovely tea, followed by some favourite card games with popcorn.

Partly for one of my jobs and partly just being that friend people don't have to keep up with, I know quite a bit about a few people's finances and it's always one of four things.

1. Two good incomes - if you can do the main things like mortgage, utilities, cars etc on one, then you have quite a decent amount for the extras you speak of.
   
   
2. Many many people do get help from family. Whether it's paying for Uni, wedding, honeymoon, a deposit on house or childcare it makes a massive difference. One friends dp pay for all three of their children to attend child care, that saves them over 2000k/month. Many friends have received 50k plus from parents/inlaws/grandparents towards deposits.
   
   
3. Inheritance - a friends Granny sold the grandchildren a holiday let (abroad) for ten pounds. They then sold it and profited over 250k each after fees. No one knows, but suddenly they have money for bigger things. Other friends have profited hugely by death of childless aunts/uncles/godparents. A very low income best friend of mine will inherit about 2 million in the next 10 years - two childless aunts, and her parents all in their 80's with large coastal properties.
   
   
4. Debt, debt and more debt. And then more debt.
   
   
5. Freeloaders. I only know a couple but goodness they get so so much for all sorts of things meanwhile live a life of excess and there is nothing they want they don't have. Usually from others. Some people know how to play every system there is.
   
   Personally I work hard, am grateful that means my bills are paid even when it's very hard and there's little left at the end of the month and feel proud of what we do have. It may not be much in terms of savings or investment, but any debt I've had is because of necessity not over spending and I work tirelessly to clear it, and save what I can. I try very hard to avoid noticing other's possessions and lifestyle so that I am not negatively impacting my wellbeing.

[nogreenfinger]

I’m astonished by some of the mortgages people have v their earnings. Are banks lending 3x joint salary again?

Ha most young people in London are borrowing 4.5 x

[Rewis]

I'm debt free, but I'm not a homeowner.

I've always been one of those that doesn't really pay attention to what others are spending. But lately I've been really wondering how a few people in my life afford their lifestyle. They are not the type of people go to debt (other than mortgage etc.) And I know She is parents are not rich. But they have a house in the most expensive area of the city, are looking into investment property to rent out and buying a second home and their budget is about £300k cause otherwise they woudknt be able to renovate it. One member of the couple is working on their PhD and the other one works in a shop but is a sahp at the moment. Like what? Another family I sometimes think is part of my extended family. 2 kids, parents full time students and just bought a new built in an up and coming area (they were already home owners so there is equity), having a £10k wedding and holidaying in the states few times a year and other European destinations few times a year. It's none of my business and I will never say anything but it does make me wonder.

[Atthebottomofthegarden]

I think a lot of it depends on your stage of life.

We have a small mortgage of c£40k on a £600k house which we will pay off in about 2 years, and no other debt. But we are hoping to retire in 5 years so more debt would really not be helpful now!

We paid the mortgage off about 3 years ago but borrowed £60k back for house renovations.

I’ve never had any debt other than mortgage. DH was in a bit of a state when we met, barely able to meet his monthly commitments (including CM) but we worked to reduce that and he was clear within 5 years.

I’m astonished by some of the mortgages people have v their earnings. Are banks lending 3x joint salary again?

[caringcarer]

@botedbored, yes I am a bit older. I inherited money when my Mum died and did not want to put it in bank as interest rates so low. I bought 3 b2l to invest money for 3 children as if I had stuck in bank for them by the time they are older and wanting to buy property it might no longer be enough for decent deposit. So I thought I would invest it into property, provide a home for someone and pay down a few years mortgage so when children ready to live alone they could choose whether to move into property or sell and invest money into different property. I made enough money to buy three more properties and I charged very reasonable tents, below market value. I saved money by not advertising and got new tenants by word of mouth, and managing properties myself so no agency fees.

Actually b2l affordability gets assessed not on salary multiples as residential property is but instead on how much property will rent out for and how much deposit you invest.

[Barney60]

income of 12-14 k, own own home worth about 380k ( moved to lesser stress job, used to earn much more than this) savings of 60k. no debt /loans/ cards. Car 2 yrs old. No credit for mobile, pay as you go. Go on holiday 2x every yr. Dont eat out much, or eat takeaways, but do go to the pub when open 2x per week. Dont have fake nails or shellac put on or false lashes. which i think eyelashes and nails must be around £30 per month depending where you live, id rather wear mascara and save the money. Debt scares me too.

[MotherMorph]

Not sure what kind of world some of you live in.
You can have a kitchen and bathroom from scratch, back to the brickwalls, new plaster, new floor all new units and all new appliances, and a new bathroom from scratch, easily for 10k.
Even with what I would call expensive appliances.

Do you really think 10k only buys new unit doors and a lick of paint!
You people must breathe money!

We certainly don't breathe money but my DH put in a bathroom at home a couple of years ago. We did new tiling, new floor etc as well as bath, toilet, shower and basin and he did everything himself . It came to nearly 4k for a tiny bathroom and we didn't choose luxury versions of everything (anything!) although we also didn't go budget.

I'm pretty sure all the units and doors in our kitchen came to about 2.5k 12 years ago and thats from diy kitchens so not luxury or bespoke. Add worktops,flooring, tiles, appliances (although we kept most of our appliances when we redid the kitchen) and fitting that could easily be nearing 10k, if not over.

[AWryGiraffe]

We owe around £320k on a house we bought for £400k in the north about 2 years ago, we are in our early/mid 30s. I have a student loan, and owe about 2.5k on an interest free credit card that doesn't get spent on, just paying it off. Old banger car, and no other loans etc. We are getting married next year but won't be spending more than 7k, less probably. About 10k in savings I think.

Combined income of about £120k per year, we've put a lot of money into doing our house up though, which for the most part has come out of salary rather than savings. We have fairly simple tastes in things and don't spent much on meals out, rarely buy new clothes etc.

Once our little girl is out of childcare we will focus on overpaying the mortgage and building savings back up.

[ArthurandJessie]

I'm in my late 20s and I know alot of people that get regular help from parents which is lovely that they get that tbh I hope to be a to help my son so he can have no debt too

[Meatshake]

£250k mortgage debt
£90k savings

Credit cards paid off monthly, no loans. £100ish on a next card.

I've got a student loan for £6k that I've never touched in terms of repayments. It'll get written off in 10 years time anyway so I don't really consider it a great inconvenience.

I guess £160k is a lot of debt but it's structured, protected and we have to live somewhere! Our mortgage is 50% LTV so a fair amount of wiggle room in terms of a property crash, plus we have 3 spare bedrooms so no need to move/space for lodgers if we needed.

[mornington444]

OP I think is correct. Ask an economist about changes in the saving ratio over say the last 20 years and I think this will support you.

[swimster01]

I'm not in your bracket but have been at some stage. It's just not a good idea to get into debt - other than taking out a mortgage within your means. Being able to wait and save for something is essential if you want to build a solid financial future.

[rosiejaune]

I only have student loans.

Which means I have no credit history, so when I tried to buy a phone using microfinance I was refused. So my partner did it in his name instead, and I am paying for it. So I still have no credit history...

We both have Help to Save accounts and have so far saved the maximum per month.

[itsonlysubterfuge]

We have tried very hard to never have any debt. There have been a few instances where we have borrowed from family (when we bought a car and went on a Disney holiday) and then paid it back with no interest. We have around £35,000 combined, but we are on benefits. We make sure to pay off our credit card in full every month.

[Bookoffacts]

Not sure what kind of world some of you live in.
You can have a kitchen and bathroom from scratch, back to the brickwalls, new plaster, new floor all new units and all new appliances, and a new bathroom from scratch, easily for 10k.
Even with what I would call expensive appliances.

Do you really think 10k only buys new unit doors and a lick of paint!
You people must breathe money!

Either that or the tradespeople really do see you coming! 😂

[mindutopia]

We have a mortgage (400K) but that's it. No cars on finance, no credit cards (I don't even have one and I'm pretty sure dh doesn't either). We do plan to build an extension and do some other building works, but not until we can save up for it. I wouldn't take out a loan to do it. I'm happy to wait a couple extra years. We have higher than average salaries though, in probably the 120K range combined.

[PrincessConsuelaVaginaHammock]

@Zaphodsotherhead

There's 'new kitchen' and 'new kitchen' though, isn't there? There's the new kitchen that involves stripping out the old one, retiling, new appliances and units, new floor and heating, big AGA, full Good Housekeeping job, and there's 'new kitchen' which is changing the doors and unit fronts and painting the walls, maybe a new cooker.

Depends on what you mean by 'new'.

I mean the sort that can be had for enough to leave you with sufficient over for a new bathroom. Sure, there are lots of kitchens and bathrooms that couldn't be afforded with 10k as well as lots that could. That goes back to the point I made about renovations potentially having many shades of meaning.

[Fungster]

There's 'new kitchen' and 'new kitchen' though, isn't there? There's the new kitchen that involves stripping out the old one, retiling, new appliances and units, new floor and heating, big AGA, full Good Housekeeping job, and there's 'new kitchen' which is changing the doors and unit fronts and painting the walls, maybe a new cooker.

Depends on what you mean by 'new'.

Fair point. When I think new kitchen I think new countertops and cupboards, at a minimum, rather than just refacing the cupboards. For a new bathroom, I'd consider new toilet/sink/shower, tile work and of course the labor. Hence my surprise that you could go both for under £10k.

[Sunshiney1981]

@Zaphodsotherhead

true. Also depends on how big or small you space is!

[Sunshiney1981]

OP meant to say we're in the north west too and are savers too.
We have about £6k in savings currently and our kids (7&8) have trust funds with about £6k and £7k respectively - we pay into them every month as do my parents).

[Zaphodsotherhead]

There's 'new kitchen' and 'new kitchen' though, isn't there? There's the new kitchen that involves stripping out the old one, retiling, new appliances and units, new floor and heating, big AGA, full Good Housekeeping job, and there's 'new kitchen' which is changing the doors and unit fronts and painting the walls, maybe a new cooker.

Depends on what you mean by 'new'.