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.

It’s scary how many people include “home renovations” as an asset, as well as the (same) property.

And a car...? It’s like saying “my stonewash denim jeans are worth’s fortune”... in 1988.

Don’t put all your eggs in one basket.

Re. Car finance - lots of posters saying that they own older cars and don’t owe anything on car finance, which is fair enough. I’ve been the same in the past. What I found really difficult then was the upkeep of the cars. I had a Renault that was about 8 years old and every time it went into the garage, I was faced with a bill for hundreds of pounds, same with previous car. I’ve shelled out £1000 for a new clutch on zero notice etc. There was a year when I easily spent £2500 just repairing my car. Now, I pay £300 pcm for a really nice new car which has a 5 year warranty, free servicing etc. This means that I never get unexpected bills and I’m driving a very safe, economical car. For me, this was a no-brainier. My in-laws have just bought a new Dacia with a 7 yr warranty and pay £160pcm having spent thousands repairing terrible old bangers over the years.
This is an example of good debt for me.

I agree Saz.
You can easily spend more on renovations than any resultant increase in home value. In addition many people say “renovations” when they are really just maintenance/repairs and add zero to the house value.

Similarly, if you buy a new car on finance with nothing down, the second you drive away, your car debt is more than the value of the car.

I thought student loans were written off if you died (or got to 50). Am I completely deluded on that front them?

@Scion286

We have a combined income of £40k. Our mortgage on our £180k house is £16k. We have a holiday abroad once a year and £25k in savings. I’m 39, DH is 42 and we have one child who’s 12. We’ve always got around £500 on our credit card which we pay off and put back on again every 6 months-ish. We also have our sofas on 0% finance and our new carpets.

Very impressive

Master chef.
Sorry, it depends on what country you got the student loan debt in whether they ever get written off or not.
If U.K., I’d still count it as a debt until I reached the write off age of graduation plus 25yrs or 30yrs. Don’t know if your estate pays the balance if you die prematurely.
If US, they’re never written off not even if you declare bankruptcy or die (your estate pays them off).
In France, we have free education so student loans are rare unless you study abroad.
But yes, everyone should know the terms and conditions of their debt and not count it once it is written off or if doing estimates of what they leave behind to their partner/children.

In addition many people say “renovations” when they are really just maintenance/repairs and add zero to the house value.

Correct. We spent $30k last year doing a full roof replacement and won't get a penny for it when we sell. Buyers expect a good roof.

@Subordinateclause

We earn modestly but have put a lot into our house. I know our neighbours wondered how we did it. However, I've barely spent on meals out, clothes, holidays etc for the past 10 years and I think that really does add up.

We've done similar, it's astonising how quickly all the little bits like haircuts, dinners, coffee, clothes etc add up, and then add on big stuff like holidays too. So we chose not to go that route. We tend not to buy brand clothes or the latest new gadget, and cut hair at home. I think the last dinner out was three years ago for a congratulations party, but we prefer home dinners so it's not an issue for us. The biggest expense for us beyond the house has been investing in activities and sports for the kids.

We bought our house just over 20 years ago for 220K, then worked to double pay the morgage each month, and paid it off in about 11 years. It is now worth close to a million due to the location, but we have no interest in selling, so that doesn't mean much to us (except prop tax is much higher now).

We've never had any help from anyone or any inheritance, but we still feel very lucky that we've been able to keep our debt low. Our house came with an inground pool and hot tub, so we don't feel like we miss out on not having many big vacations, and having a fun backyard has been a massive blessing during lockdown.

Debt has always been a scary thing for us being mostly self employed, so we've tried to avoid it at all cost. We paid cash for our cars/motorbikes and have govnt savings plans for the kids' future uni costs. I've read some great threads on here regarding money matters and paying off debt, and I remember one poster who was fantastic at helping posters sort out how to tackle debt. The Wealthy Barber is also an excellent book to help people with saving.

If US, they’re never written off not even if you declare bankruptcy or die (your estate pays them off).

This used to be true but the courts are now allowing it if you can prove the loans create an "undue hardship".

www.studentloanborrowerassistance.org/bankruptcy/

We became debt free when we paid our mortgage off at 52 and 56 yrs - we don’t do credit cards.

We've been in debt, (not much about 5k) paid that off and then struggled through redundancy which set us back financially. We're now very cautious and debt adverse, despite having 5 credit cards. It can be a useful form of borrowing cheaply and s75 is a good protection for large purchases, cashback offered is the main reason we buy everything on credit card. It is paid in full though every month and never spend more than we can afford.
We're in your bracket and have a good chunk of savings through being fairly frugal day to day. I don't think we're the norm though, I have friends who spend money like water, living for today. I prefer financial security, we are on track to be mortgage free by 43.

My friend's mum just got ten grand on a PPI claim yesterday. I've no idea if she wants to do anything to the house but that would cover a new bathroom and kitchen if she fancied it.

A new bathroom and kitchen for £10k? Where would you buy it from, Fisher Price?

130,000 joint income in late 20s .

No CC debt , pay off every month

Just student loans and 300k mortgage

OP, you are nosy and jealous

Or bored with your life.

Thank fuck I do not live like that...

I always find these threads fascinating for what they reveal about people's attitudes.

We have a joint income of around $600k. Our mortgage is about $430k and the house is worth around $700k. DH has a student loan with a very low interest rate. I bought my car on credit (around 1%). Even in times of low interest rates it makes often more sense to finance than to pay cash.

We are actually more concerned about liquidity than debt ratio. About 6 years ago my husband's business nearly went under (due very much to factors beyond his control). We had always focused on paying down the mortgage as a priority. Access to cash was a real issue and it has changed our attitude somewhat. We still overpay the mortgage but we want to always ensure a cash buffer.

We have a nice house (although nothing fancy by US standards and certainly not what you'd expect if you knew our income) and we've spent a fair bit on renovations (new - IKEA - kitchen/master suite/basement. We are about to do some more, around $25k I think. We will likely get a HELOC rather than pay cash. As other people have said, the value of the house means nothing until you sell it and hopefully we will leave this place feet first!

We also have three kids (primary and middle school) and we've done a fair bit of domestic travel with them. We could certainly be financially better off if we didn't travel as much, but life is for living, you know? Someone upthread seemed rather pleased that they'd waited 21 years for a new bathroom. That makes me a bit sad, to be honest! I'd rather have the payment and enjoy a nice bathroom.

HELOC - home equity line of credit.

I have never had debt...never even has a credit card to be honest. Never had a car payment and we were lucky enough to earn enough abroad to buy our first house in cash full...which we then sold at profit and bought our next house full in cash too. University education was free and postgraduate was with a bursary.
Wedding - both sets of parents helped and we payed about 5k cash towards it too.

I am mid 30's

The only rent I have is the mortgage. I'm very careful not to get in debt. I would rather go without and make do.

I go through phases. I spend and then worry - the big things like mortgage happen automatically (I am divorced), I have savings, but will then splurge on a sofa / painting the living room. Then I spend nothing for a few months. I don’t track my finances well but then nothing really changes - I know how much roughly is coming in and out, and my bank balance.

I mostly wanted to write because I just love the “mini moon”!

@Fungster

My friend's mum just got ten grand on a PPI claim yesterday. I've no idea if she wants to do anything to the house but that would cover a new bathroom and kitchen if she fancied it.

A new bathroom and kitchen for £10k? Where would you buy it from, Fisher Price?

You think a new kitchen and bathroom can't be got for 10k unless it's from Fisher Price? How odd.

In the UK you could easily get a nice new kitchen and bathroom for 10K from IKEA or B&Q.....

OP, I've got a bit of debt (£1700 on a CC) & DH has about £3k on his. We are working on paying these off this year and have paid off big chunks in lockdown from not over spending.
We have a joint income of about £80k and a mortgage of £150k on a £300k house.
Paid off the student loans years ago and have shortened the term on our mortgage from 35 years to 19 years in just 7 years by overpaying.
Debt is not always evil, only if it consumes you and costs you lots.

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'.

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

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