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.

I think getting into debt that will be paid off later is completely understandable and wouldn't worry me. Especially for your reasons.

However their children are older and at school. As far as I'm aware they do not have a grand solution to solve their money problems in time.

I do worry though that I'm not living my life enough though.

YANBU not to go on a holiday you cannot afford without getting into debt.

You do sound a little bit judgy about your friends though

I have a friend who was like this, got into loads of debt, but she knew she was going to inherit shedloads of money, so she wasn't bothered about it. Obviously that could have gone terribly wrong for her in a myriad of ways, but it didn't.

YANBU. There is no way I would risk financially destabilising my family for the sake of a fancy holiday. If they are true friends they will get it and not pressure you or make you feel bad about it.

We all have our levels of comfort in terms of things like debt; I too am super uncomfortable being in debt so try and stay as far out of it as possible. I don’t judge others for being in debt, although I think some reasons for being in debt are better than others - eg being in debt to keep up with the Joneses seems oddly self-destructive to me. Living for today is great but why does that necessarily have to involve living outside your means?

You do sound a little bit judgy about your friends though

How so? Please explain.

I definitely wouldn't go on this holiday, I imagine your friends will be spending a lot whilst they are there too, and it will end up costing even more than 6k.

Also, if you did end up getting into debt for the holiday it would end up costing more with the interest payments. And lost interest if you take the money out of your savings account.

I'd also question why somebody would be "visibly stunned" at you declining a holiday invite. I have friends with different finances to me, but we are never "visibly stunned" like this! Do you think they were trying to make you feel bad?

Whether or not accumulating debt you can't pay off is "normal", it is not a good idea. Everything they buy will cost them much more with years of compounding interest added on. They are also missing out on earning money through investments or savings interest.

I was watching a video on Twitter yesterday about a young (30-ish I think) American couple who have $1m in debt. $300K on student loans (what a country!), $200K on their mortgage and the rest on credit card debt. My gast was flabbered. I've been in debt before myself and don't plan on going back there. Especially in the current climate. Your friends spending £1K over their earnings each month sounds nuts.

I'm like you.
Don't have debt and save for what I want.
But I think we may be in the minority.
A couple of weeks ago a colleague announced - two days after payday- that she was ready in her overdraft.
We work in a fairly well paid profession but her desire for new things, holidays (she's been abroad three times this year) means she is always in debt.

I'd also question why somebody would be "visibly stunned" at you declining a holiday invite. I have friends with different finances to me, but we are never "visibly stunned" like this! Do you think they were trying to make you feel bad?

I'm starting to think maybe it's a bit like that friends episode where joey Rachel and Phoebe tell the others they don't have as much money as them. It surprises the others and just makes everything really awkward. Maybe I made them feel uncomfortable.

I think what's been said on here is true. Maybe my friends are able to be this way because they are aware of upcoming funds that will come in. I won't have this for a v.long time so can't.

It's difficult to have these conversations with your friends.

I am more like you. Debt scares me.

We have friends like yours who don’t understand why we don’t just put stuff on a credit card or finance. We don’t bloody want to!

They may have seemed stunned because they assumed you are like them, then they were surprised when it turned out their assumption was incorrect.

YANBU not to go on the holiday. They are NBU to go either. It's just different attitudes and values.

And I agree it's difficult to have these conversations with friends.

Ah I see what you mean OP, sorry!

Then yes I think some people do have this attitude. I don't know if it's poor financial literacy, or whether they think they'll come into money later (inheritance?) or whether they think it's the only way they can have anything so just go the whole might as well be hung for a sheep as a lamb thing.

£6k for a holiday for just you is insane

And even more so to get into debt

If they all wanted you to go they would find a cheaper place

i hope so too! 😂 But I’ve thought about it a lot and Id rather risk regretting a bit of debt than regretting not being around for my daughters early childhood, hence my choice.

You are perfectly sensible to say no to a holiday that you can’t afford. But I also think there can be good debt. I used to be firmly in the save up first and then spend camp but am now more comfortable with interest free credit or buy later deals as helpful re cash flow. Eg I booked a holiday in 2022 for 2024. I didn’t have the money available at the point of booking but I will by the time I need to pay the balance. If I can put it on an interest free credit card and then get 18m of the money earning interest then even better. The difference is I know I’m disciplined enough to not spend the money twice. I’ve had friends who have wracked up debt assuming interest free balance transfers would always be available and then getting a nasty shock when they weren’t.

I'm in between what you describe. If an incredible opportunity came up I wouldn't immediately discount it, I would look to see how I could afford it adjusting my finances, holidays usually require a deposit before paying the full balance, I could reprioritise where my savings go (I plan my money up to 2 years in advance and have lots of pots, so that's what I mean by adjusting) I'm not averse to doing some very short term interest free borrowing so long as it's comfortably within my affordability. But it would have to be for something I really wanted to do, a holiday with a friend probably wouldn't trigger that though for me! I wouldn't just throw it on a credit card.

I have a rule that I would never have a holiday on credit , coming back and still having it to pay for would be soul destroying and a difficult habit to get out of

YANBU for living within your means. I think you’re right to decline a holiday you know you can’t afford, but it sounds like you feel your attitude towards money might be limiting you. How about planning something in advance that you can save up for and look forward to? Maybe invite these friends on a long weekend away (in the UK, European city break etc) in X months time? Research accommodation you can afford and suggest it to them once you know the exact price? That way you have some fun plans to look forward to, you can budget for it and so when the time comes you know it’s paid for so you can relax and enjoy it? Plus you still get quality time with your friends to make memories etc, but on terms that suit you better?

It is difficult. I think all you can do is explain that it isn't affordable for you so you can't come. Don't try and get them to do something else, just keep it to your own situation.

Im half and half. I’ve borrowed debt before but with a plan of paying it back. Always have done before another form of debt was picked up (if needed) borrowing can be very useful if done correctly and with careful thought about repayments and consideration for adverse consequences affecting paying it off. I’ve been able to do things and buy things I just couldn’t have done by means of saving before hand and it’s been part of some of the most wonderful memories of my life. I have access to about £40k on credit cards but they are all zero not because the temptation isn’t there ; I have fantasies about blowing a load on just everything I want but the stress it would cause stops me.

I agree though that reckless mindless debt is a fast way to getting yourself into trouble. Sticking meals, a shopping spree or random spends on a card is not a fun way to live as you’re clearly living beyond your means if you’re not able to pay it off and spending like that means you’re unlikely to just pay it off.

all that said it’s not my business how others use their ability to access credit or spend it. Some of my friends do spend as above and know they have forms of help they can tap into if they needed, usually bank of mum and dad. Sadly I don’t have those options which I think puts a clear focus on being careful with finances in a controlled way.

All of my close friends are in debt, drive fancy cars which are replaced every 2 years, go on luxurious holidays several times a year and live the high life. Credit is easy and when you have the attitude that you only have one life so should enjoy it while you can you will.

Personally I can’t live like that. I like to live within my means. I do get a bit of light hearted stick about being too sensible but honestly I don’t want to have humongous debts and a mortgage that I’m still paying off when I should be retiring (as many of my friends will be). My mortgage will be paid off by the time I’m in my early 50s and I can enjoy more of life then.

We don't have any debt other than our mortgage (which would probably horrify you as it's about £370k!). I wouldn't go into debt for a holiday, no. But I'm baffled how you know how much your friends overspend etc. I wouldn't be able to tell you which of my friends were in debt or how much anyone spends in a month.

Stop minding your friends' money business, and get on with your own. How on earth do you even know what/when they're paying towards their debts anyway?

You've already said No to the holiday and explained to your friends why. 'I'm so good, me' virtue-signalling for a pat on the back and a chance to smugly criticise your friends to incur judgment of them on here is the bonus extra. Maybe it's some kind of feelgood factor that you need. You speak as if they're in mega-debt, I know people paying off for a car or some such of that amount. So what?

You're not their friend really even if they think you are, so its a good thing you're not going on holiday with them totting up everything they spend...

this.
Although to be fair the people at the other extreme end who are saying they have never even had a credit card also aren't the most financially savvy either - certainly financially responsible but using credit appropriately (i.e. when you know you can definitely pay it off) is far better than avoiding it altogether. It allows you to build up a credit rating, provides legal protection for larger purchases, and via stoozing (using 0% credit cards while saving the money in high interest bank accounts) can even make you money, all the while (again, as long as you can afford it) without risking a penny.

As other pps have said, I can also see some cases when I might think getting into debt is worth the risk - having seen the loss of quality of life (and in some cases actual loss of life) due to waiting lists for medical treatment I could justify using it to get private treatment, and long term even that might work out better financially if it allows you to work for longer.

to be honest if you'd really wanted to go on this holiday as a one off crazy treat when you're careful in every other part of your life, as you say you could afford it but would have to tighten back on other things, I think you could have justified it - going into a fairly small amount of debt for a short time with a clear plan to pay it back isn't the worse thing in the world and is unlikely to lead to you changing your whole financial view and suddenly accruing thousands more. But tbh it doesn't sound like you even want to go that much, so not really sure why you're asking if it's reasonable not to want to spend money you don't have on something you're not hugely bothered about!

I always think that if you have debt you are paying a higher price for everything you buy, so overall you can have less of what you want and not more.

So for me it's aspirational to have less debt and not more debt.