Different views about money and debt

[StrongCoffeeAvalanche]

So some of my friends spend around £1k over what they earn every month. They do get occasional lump sums from family members, or bonuses from work which will obviously help reduce the debt a bit. But the debt value is going up not down over time. They all have mortgages also.

For me, other than essential debts (mortgage and car finance) I try to stay out of further debt. If I do borrow money I work hard to pay off the loan. But my friends have around £20-30k debt on top of the essentials which is always increasing (they are not paying it off, just getting further and further into debt). They go on a holiday abroad every year which cost around £6k each holiday. They always have take aways and buy designer clothes etc.

I have been asked to go on a holiday abroad with them with our husbands and kids. The holiday sounds incredible and I would absolutely love to go. It would also add depth to our friendships and be a lovely bonding trip. But I don't think my family can afford it so politely declined, but said that I hope they have a lovely time on the trip. It would cost about £6k for travel and accommodation which is a lot of money for me.

My household income is less than theirs so I accept my lifestyle will look considerably different from theirs. But they we're visibly stunned when I declined. I think they think I am being tight.

I could go. But would have to be incredibly frugal with money for a very long time to pay off the holiday, which does not appeal. I also don't want to get into debt over it?

AIBU to not go? Or is it worth the money to boost the friendship and have a nice time? I can't work out if I'm just tight with money of if my friends are reckless.... or something in between!

I may suggest a cheaper holiday, but they seem to have their hearts set on this place. I wonder if I am a buzz kill.

Op like others I did get into some financial strife in my 20s and had a £10k debt I had to move home to my parents to pay back but as a responsible parent I can't imagine the stress of living like that now. They say debt steals from your future which is so true.

I wonder if your friends have had enough windfalls, eg bonuses or lump sums, that in their minds something will come along to take care of it, because up until now something has always come along to stop to getting too dire?

But as their income rises so does their debt and their mindset hasn't corrected.

I think you are probably right @OrderOfTheKookaburra

This is true. I wondered if I was going to be flamed for being boring and maybe this is just how people live. So I'm surprised how it's gone to be honest! But appreciative

At some point your friends will wake up to the realisation of the burden of the debt. Lenders will quickly stop lending past a certain point, but they can probably get near £100k debt between them before it catches up with them. And it definitely will!

Paying it back and worrying about it won't be half as much fun as spending it! Best off not to have the debt in the first place. Maybe they will wake up to it sooner rather than later, maybe not. I used to deal with debt management cases and most people just couldn't really work out how they got in debt in the first place, and had the attitude that so long as they could afford the minimum payments they could afford the debt. Fine to a point but not if you keep increasing the debt.

You're doing what works for you, and in the long run it's a more sensible approach.

I am probably somewhere between you and your friends. I have debt for various reasons, some of it through what you would think of as reckless spending, but not as much as your friends. I also believe that there is a balance in life and that life is to be lived. I will put something on credit rather than save up because you never know what's around the corner. My parents had several friends (couples) that did nothing in life, waiting for retirement, then one or other of them died within months of retirement having never done anything or been anywhere. My parents never had loads of money, weren't big on foreign travel, but did everything they wanted, when they wanted and died with no regrets. I intend to try to do similar. As I said, balance is the key.

I should add - I've been in a lot of debt before, paid it off (painfully) and now use debt responsibly eg I bought a car with a manageable loan and use my credit card to the extent I can pay it off monthly eg big purchases I want the protection on and already have the funds set aside.

I like to spend on things like holidays but rather than use debt I make a concerted (and also painful!) effort to increase my income to afford what I want.

I can vouch for the fact that no debt is a much better lifestyle 😊

It's quite scary, but a $5,000 credit card debt (I'm in Australia) with 18% interest, making minimum payments (and not increasing the debt) will cost you $17,181 over 33 years.

33 YEARS!!!!!!

$20,000 would cost you $74,364 and would take 55 years and 9 months to pay off.

I am probably like your friends, I have more cc debt than I should. But we are so poor paying £1k a month nursery fees. I just got a big payrise and from Jan we get our free hours.

Our debt is manageable as we earn over £100k as a household but I am looking forward to next year when we can pay it down further.

It staggers me the way people chose to live. We earn ok, live within our means. Credit card gets paid off monthly by dd. Very occasionally I'll spread it over 2 months. My boss who has no money wants to take his kids to Disney world. £8k. We went to Majorca all inclusive for 4, for a week last Easter £1100. Why do this when you don't have £8k. I just don't get it.

I don't really understand why the long ramble about how your friends afford things and how you disagree with it.

YANBU to make the choice that makes sense for your family. What your friends do is not really relevant.

How did you get AI for £1100?? I can never find anything close to that.

I do utilise credit cards but do so responsibly- I never put anything on a card which does not have a plan to be paid off. Generally, the cards are used for cashback and paid off each month or to spread larger payments over time on 0%.

Technically speaking while we have c.£9k on a credit card it is on 0% and we have the same amount in savings to pay it off when needed. Until then, we are paying it down a little each month while our money works for us in a savings account.

I've watched my sister get saddled with a lot of debt due to her useless ex which she is only just paying off this year (she left him around 5-6 years ago) so I don't like the idea of just whacking lots of stuff on credit.

Used responsibly, credit is a useful thing. I do however appreciate some people are extremely cautious and do not wish to use credit at all which is also fine.

I've never borrowed a penny from anyone, worked my way through college, stayed at home into my 30's until I had saved enough to buy a small home outright, never had a credit card or credit agreement. Don't think I could do the stress of mounting debts growing with interest.

I wouldnt be going into debt for it, but if I really wanted to go on the holiday (not to build friendships, but for myself and my family) then I'd go. I'd take being a bit more careful with money for a few months to have a fabulous holiday. But having been through losing my Dad and some other health shit going on that's why I feel that way. But I wouldnt be borrowing or going into debt for it.

YANBU I am with you. I have credit cards I use, mainly for the protection they afford, but they are paid off each month. I save up to purchase stuff, do stuff, and like another op save each month towards Christmas, birthdays, put money in a pot for car service, tyres etc each month.

I don’t understand this attitude toward debt

I feel like I’m way more relaxed about debt than other commenters here. I am currently choosing not to work too much while my child is very little, for now I’d rather spend time with her gardening and making biscuits than slaving away in a room with 25 other farting swearing adults. I’ve totally adjusted my lifestyle to keep costs down but I’ve also decided to accept that I’ll need to get in a bit of debt for now too. Nothing near the 30k (or 100k 😱) mark but still it is debt. When she’s in school I’ll be back working full time and can play a bit of catch up as long as I keep up the frugality for a couple years.

re Your friends I on the whole don’t disagree with the idea of enjoy life now, worry later. I do find it shocking though that they wouldn’t compromise on an extravagant holiday so that everyone in the group could afford to come. That’s pretty strange behaviour. I’d rather be in a cheapo caravan with my friends around me than a posh resort without them. Everyone’s different I guess 🤷‍♀️

I hope that you don't end up regretting your relaxed attitude to debt. So many people do.

I have a friend who lives in constant debt. She doesn't, I think, think of money as infinite as she always has grand plans. She shops around for 0% interest every few years to keep her interest payments low and "treats" herself to a big designer item every time she does it because "she may as well". She's got a house (that she wants to upgrade) and 3 kids too. I don't know how she does it, I would be constantly stressed about that hanging over me, and keeping up with repayments, but it doesn't seem to bother her too much except when an unexpected expense comes up or if she wants to change jobs etc. Then she's very sterssed about it for a short period and then continues.

My experience is that it's more difficult to work full time when they are in school than when they are tiny.

I wondered about this too.

It sounds like your relationship with money is a lot healthier. If your friends already have mortgages they may feel 'comfortable' however if the debts get out of hand, as the T&Cs say 'your home could be at risk'. If they were to re-mortgage after a break up/house move etc there's a real chance they could lose their home. Having CCJs /bankruptcy etc can also exclude you from various professions and emigrating etc.
Some people run up debt when they first start a family but have a plan to clear it once both partners are back at work and childcare costs are reduced.
I don't know your friends' circumstances but it sounds like they are being very irresponsible and extremely selfish. Debtors rarely pay back what they owe!

My AIBU has 2 parts I guess

1. AIBU to not go on the holiday

1. Is my view on debt unreasonable. Is it just the norm now to be in debt and not seem to care

Hence the long ramble.

I don't disagree with their spending. It's none of my business what they do or don't buy and I am genuinely happy for them if it makes them happy. However MY money is my business as is MY attitude to spending. I am concerned I am not 'living' enough because of my fear of debt. I am curious if that is unreasonable. I am jealous of the lovely things they do and buy, and wonder if it is worth the debt.

me too! Our society runs on an unmanageable debt mountain.