Debt

[sxround]

I often find myself lying awake at night worrying that we have too much debt. I would be really interested to know in very simple terms what everyone else has on finance to guage my own situation a little more.

For me it is the following:
Mortgage
Car
Kitchen
Lounge suite
TV

Well it depends on how much rather than how many, but personally I think getting things like TV's and sofas on credit is a very bad idea.

Can you afford to pay your debts?

Just about each month, but very little left over

About £350 on credit cards. Nothing else.

But not necessarily a good thing as I cant afford a mortgage.

I've got a mortgage and a sofa on finance. The TV, new kitchen and my car were all paid for outright when i got them.

Just mortgage. Anything else, I don't buy it unless I have the money saved.

Me too :( I have to say, mumsnet doesn't always feel very supportive to those with debt. Money saving expert forums are very good. Lots of understanding and helpful advice.

Now: Nothing
In the past: Mortgage, Car loan, credit card.

If you are lying awake at night worrying about it, then now is the time to do something about it. List them smallest to largest and pay them off - to do that you will need to be on a tight budget and you may need to increase income for a period of time.

Mortgage, and 6 payments left on a training course. We used loans a lot a few years ago, we are now switching to saving first then spending but its hard when unexpected things happen!

I have a mortgage and credit card debt at the moment. I will shortly need a car on finance so that's not great! I'm trying to clear the credit card (approximately 5k) before we get a new car though. Xx

Nothing , used to have the mortgage but that's paid off . We don't use credit for items .

Ive had serious debt with council tax now that's something I've lost sleep from.

If you are struggling, call up the creditors and sort out affordable repayments. It may affect your credit but it's something that can be rebuilt eventually. Xx

Loan, two credit cards and car, plus mortgage and about to buy sofas on credit too. I would like it gone but have always had perfect credit rating and it's all managed into long term 0-low interest. Really struggle to live within my means and am a lifelong work in progress when it comes to spending. Guess I'm in the minority!

Just mortgage. I also have student debt I guess. Those are necessary debts though and I don't class them as debt.

Just a mortgage. Save and buy everything else outright.

Just a mortgage and kitchen. All my furniture is either second hand or cheap as chips from Ikea. We don't own anything pricey enough to warrant credit.

Second the moneysavingexpert recommendation. You need to do a proper budget, and a money makeover, to make sure you have cut all your costs as much as possible.

If you've never changed your gas and electric, and don't generally shop around and compare costs before buying, there are a few tricks that can increase your income a bit and cut your costs a bit and generate quite a bit extra disposable income, that you should really notice.

When do the payments on the TV, kitchen and lounge suite end? Will things look better then? You need to work towards saving money up so you don't need to put these sorts of things on credit, but you won't know whether this is possible unless you have done a proper budget.

You may also need to analyse your spending to see where your money is going and understand the impact of regular little purchases. Lots of people spend a tenner a day on coffee/lunch/snacks at work, without realising that it works out at £200+ pm or £2/3k per year.

Don't compare yourselves with others. Just like many people are a bit overweight or worse, many people are in unaffordable debt too and it would only take illness, job loss or reduction in hours to get into a proper mess.

How long until you pay off one of those things? As suggested list all the debts, starting with the smallest.Then try to pay off the smallest as quick as possible.

Can you increase your income at all? Or can you cut down spending?

Definitely recommend money saving expert forums on debt. I read a post recently where the total debt for a couple for various things excluding mortgage was £96k !!!! Yes really £96k !!!! Do you feel any better now ?? If you're struggling with payments then definitely a detailed budget and if you think it's a problem then you can always contact one of the charities recommend on MSE their advice is always free.

The advice to pay the smallest loan off first is not right.

You should always pay off the most EXPENSIVE one first (i.e. highest APR), regardless of the size of the loan. That's generally credit card or any consumer credit debt. This will save you in lower interest payments going forward.

Given that mortgages and auto loans are generally cheaper forms of debt (because they are secured on the house/car) and that they are mostly essential purchases, I think it is perfectly "healthy" to have this kind of debt (if you can afford it obviously). It gets trickier when you start to buy "non-essential" things on credit, rather than savings up. But again, if you can afford it, then its your choice.

I agree with graffiartist that many times these forums are not very supportive of debt problems (sadly). There are several charities that offer free debt advice and they can be really helpful.

Right? There is no right way to do things? There is the lower interest way which you describe and there is the change in behaviour way which is what occurs in knocking out small debts first.

Brain training is often needed to get out of the cycle of debt. Good debt, bad debt, we have been brainwashed in to thinking that some debt is good. Mortgage, Student Loans seem to fit in the good debt - but those debts can be huge.