Is debt considered normal these days?

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Just that, really.

We have a car on finance (good deal) and mortgage but otherwise refuse to buy anything on credit - no pay later, overdrafts, credit cards etc. As soon as the car is paid I wouldn’t get another on finance either (husbands idea to do it and I don’t want to again!).

If we want something like a holiday, new furniture whatever we save for it.

A good friend of mine recently shared with me that her and her husband have just under £30k on credit cards, plus a holiday for £4K that needs paying before the summer. Plus car plus mortgage.

She said this without a care in the world - as though it was normal and she’d pay it off later.

They’re good earners so I think they must be living hugely out of their means but she seemed shocked that I was shocked by it?! I hate the car finance as it is and think I would feel incredibly stressed with that credit card debt sitting over me?

I know there’s an element of keeping up with the Joneses etc but I was so surprised (she spends a lot, regularly posts her days out etc on social media).

When interest rates are high (and this is to do with the economic environment, rather than banks charging whatever they fancy) banks are also paying out higher interest rates to savers. You don’t (or shouldn’t) enter into a mortgage contract without being aware that you may have to pay more if/when interest rates rise (even on a fixed rate, when that rate ends).

Yes, your comprehension issues - skills are clearly lacking.

"Interest rates are astronomical though aren't they?"

Not really, no.

In historical terms the cost of money at the moment is about average I think. For the 2010s it was way below average. Pretty much made sense to load yourself up with debt during this period.

Yes, completely agree you don't enter into a mortgage lightly, rates are variable of course. I am so pleased to be on the housing ladder, when so many cannot get there due to the state of the economy.

A bit like an income thread, these posts attract responses from people who feel good about their position and are highly unlikely to be representative answers to the original question.

Having no debt is a great place to be but debt is very common and is accrued for a variety of reasons.

There's a good chance that your friends perception is they haven't lived massively outside their means but may have built up a cycle of debt. It may be perfectly manageable for them so they see it's normal for them. You are still in a better place than them though

We’re the same as you OP. I’ve never had a credit card and I don’t have an overdraft. We only put our DFS sofa on 0% finance as that way our savings could continue to make interest instead of paying for it outright.

However, I think debt has become more normalised. I have a friend who is in thousands of pounds of debt, but who refuses to go without her holidays, etc. She believes she is entitled to them while she is young, and plans to use her future inheritance from her in-laws to clear it all. It is affecting her sleep though, so I guess did may be more worried than she lets on.

Also, recently a porch salesman was stunned when I explained anything we bought would be paid for. He genuinely could not believe that I did not want to discuss credit options, and would only pay what I could afford from savings. I actually ended up not agreeing to anything, as I though it was all over-priced and he was very pushy. He was clearly used to customers having no issue with credit arrangements 😂

I agree but also think that what is missing from the conversation is the advantages that can be gained from a different risk appetite, that those proud of no debt posters will find inaccessible.

ie I have a friend who owned 4 London properties, from taking advantage of cheap debt in 2002-2006. They leveraged one to buy the other to buy the other, renting out the ones they didn’t live in.

at 45 they sold them and walked away with £1.3m net cash, and a still mortgaged family home. They could retire but chose not to, but without the attitude to risk they would be faced with another 25 years working away slogging away at the mortgage.

that’s a normal person who saw opportunity and took risk.

people terrified of owing money will never do this sort of thing.

I don't think debt is abnormal and is very much the norm for a lot of people.
The capitalist world is ingrained to buy,buy, buy for all our industries.

We've been risk averse due to our parents, only paying cash what we can afford.

I now use lots of credit to our advantage, all our monthly spending is on credits cards earning annual cashback and with section 75 protection that has been very useful in the past against an expensive faulty watch and holiday booking that went bust before we arrived.

I also stooze around £22k of debt on 0% credit cards and pay it off in 3 with the cash to pay it off earning 4.5% in tax free savings, a nice chunk of interest. So we are earning money from our high amount of debt but we are not really "in debt" because it can all be paid off tomorrow.

Exactly this. On a much smaller scale, we have interest free debt but have savings in high interest accounts, so earning us money doing absolutely nothing.

Pretty much but these days, mortgages / property is no where near as good an investment as it was pre 2010 (probably pre 2008 really though you could pick up cheaper properties immediately after 2008).

Obviously investment in terms of stocks and shares is much easier, less bothersome (no new roof / boiler/ tricky tenants etc). As youve said, its attitude to risk. Medium risk (I’m not brave enough for high) diversified investments will make more money than property, these days.

You are kidding? Don’t pay your mortgage, home is repossessed. Don’t pay your rent, you are evicted. Yes it takes a while if you have kids, while avenues are explored. There were 50k homes repossessed after the 08 crash and over half a million in the 90s.

Yes, but in the happy clappy socialist dreamland everybody would be allocated housing based upon their loyalty to The Party.

It's very normal to have a car on finance or to be paying a loan for a car. We usually borrow from my MIL and pay her back interest free.

I have a couple of hundred on a CC which will be paid off in the next few months. I pay £100 towards it and I also have about £60 on Klarna.

They are really useful ways of paying for something expensive without the initial big cost. I've just ordered a running vest and put it on a CC because it was £90. It was a last minute scramble because I've suddenly decided to go ahead with a long race really soon and can't be waiting to save up for it. By doing it this way I get it before the race and pay for it next month.

If I had several thousand in debt I would be stressing out but the debt we have isn't causing us sleepless nights because we could wipe it tomorrow but it's more cost effective not to since it's interest free.

We are also taking out money against them mortgage in the next few months to do up the house. It's a minimal amount but worth it to add value and we have a low mortgage anyway so the extra repayments won't make much of a dent.

No I am not.

Banks do not want to repo houses, and they are discouraged to repo houses where families are involved. This makes sense because if a family is made homeless the burden just goes on the state to house them instead.

They want to work with people to find ways that they can keep their property and there are a multitude of different ways in which they can do that. For example payment holidays, loans, reducing payment temporarily to i/o. The government also has support that some people can qualify for.

This is not to say it is recommended to risk your luck as the support can be expensive and also limit your ability to mortgage in the future. It is just that families that get their homes repo'd its often due to an extraordinary set of circumstances where there appears to be no chance of them ever finding a solution to keep the payments going, or it's because they bury their heads in the sand for literally months ignoring the warnings that the banks give them.

We are not now living in the 90s. That is 30 years plus ago.

When I was a kid, I travelled the world. USA/ Bali/ Australia etc. Going abroad for at least 2 weeks a year was unconditional for me.

DH and I are putting our financial future first and are camping instead of long haul trips. It's very unglamorous and took a long hard adjustment but we aren't living for today .

Yeah it's pretty normal tbh

A bit lost with the quote. I didn't say I'd go into debt for a family holiday🤷🏼‍♀️

I'm another one without debts. I'm now retirement age and the mortgage is paid off. We've never had a credit card or borrowed to buy things.

About the only thing I can think we bought that we didn't save up for was a 3 piece suite from DFS on '3 years interest free credit'. That is probably 20 years old now!

This is what we do. We have significant savings but tend to pay for things with credit card and it gets paid off in full at the end of the month. I can see that wouldn't work if you needed to know exactly how much you had left but this way, the money stays in our account longer and we get statutory protection.

You are lucky to have been able to save, sadly a lot are working to simply get by now, with nothing at all left over. I guess when they're at retirement age they won't own homes, it's terrible for those young people who cannot get on the housing ladder despite their utmost efforts. Dh, and I bought our home 'just' before things got too bad, about 9 years ago. We're very fortunate.