Would you be worried about this debt or is it pretty common?

[Datinggal]

I have about 6k credit card debt following a car purchase, which is on interest free for another 2 years. I pay off about 300 a month.

I only have 1500 in savings as I just bought a blouse... and I feel worried about this situation. I’m 32 and feel like a bit of a failure!! Is it usual to have debt like this or to this value? With little savings? I don’t want to ask friends, feel embarrassed.

House not blouse!

That would have been quite an expensive blouse

Hey we have around £6k on 0% interest cc paying off for next 13 months. No savings at present as got married and had bathroom done in past 3 months! But we have a decent household income and are insured up to our eyeballs in case anything happens. Debt is only a problem if you can’t afford to repay or the interest is spiralling and that isn’t the case for you so I wouldn’t worry :)

If the credit card is interest free you have chosen the smartest rout of borrowing so long as you are repaying and you don’t feel stretched there is nothing wrong with a car loan, especially given you’ve just gotten on the housing ladder.

Home ownership can sometimes lead to unexpected costs though so ensure you continue to save. If the boiler broke, you sprung a leak, £1500 could quickly get spent.

I have about 7k debt at around £360 a month, no savings or pension, which is a bit scary. I’m hoping that equity in my house will save me when I retire

Why a failure? I know lots of 32 year olds that don’t own houses (I think most own blouses though ;-)). I was just older than that when I first bought (jointly) and I’d say we are ‘comfortable’ now - and that’s with a drop in income following DC.

If you’re genuinely paying 300/month off your credit card (and not spending more on the card) then it will be paid off in the interest free period.

Personally I hate debt and avoid any debt apart from mortgage but I really don’t think you have anything to worry about. Keep paying off the credit card and try to add to the £1500 to give yourself a bit of a savings buffer and you’re fine.

Personally, I wouldn't like having that much debt, but I am very debt adverse.
But if you are paying £300pm comfortably, without going hungry, then your debt will be paid off in 20months, long before you start paying interest on it, so that is actually a very sensible way to borrow money. You even have 4 months grace.

The fact you still have £1500 in savings, just after buying a house, makes you sound pretty wealthy to me. Every time I've bought property that has completely cleared me out.
Sounds like you are doing fabulously.

Say whaaat?

I have 11k on credit cards and £0 savings.
But I never pay interest on anything, I just bounce them around 0% cards when the time comes. Who cares?! As long as you don't piss money up the wall on interest, fees, or gold plated toilet seats, then meh.

If I were you, OP, given that you’ve just bought a house so you need savings now in case of boiler issues, roof stuff, plumbing etc. I’d save into a regular monthly saver and pay the minimum on the debt fir now.

In 2 years when your 0% runs out you can pay it off in a lump sum. In the meantime you’ve got cash in case of emergencies. If you do have to use it then you can look for another 0% deal to transfer any remaining debt at that point.

It sounds like you've overstretched yourself. I'd also be a bit anxious in your shoes. However, you sound in control of the situation. Just a case of carrying on until you've paid debt down and built up savings to give yourself some financial breathing room and security.

As monkey face says really. Debt isn't a bad thing, unmanageable debt is.

Personally, I wouldn't spend £6k on a car unless I easily pay for most of it up front.

I have no savings and 7k debt (not incl student debt). But, the debt is manageable and my marriage left me without savings so although i'd like no debt and savings, i dont feel too bad about it.

I paid for an MSC on an interest free credit card. £7,500 over 27 months. Cheapest way of doing it.

As long as you pay the monthly minimum (otherwise you’ll revert to their standard interest rate), keep your credit rating squeaky clean so that you can balance transfer at the end of the interest free term (if you haven’t cleared the full amount) and pay as much as you can each month to get the balance down then you should be fine. It’s not uncommon, I have friends who have paid for minor house renovations, part of a car etc this way and as long as you don’t somehow end up paying sky high interest rates (see above para) then it’s a good way to borrow.

Just to be clear, I did the MSc part time, while working full time. So I did have a reliable income to pay the monthly repayments.

If it was credit card debt I'd be really uncomfortable. But we have our cars on finance, 1 we will own this year the other we never will as we will trade in and get a new one (PCP). I don't like old cars, too many bad experiences, I'd rather pay a set amount a month and see it as renting. So it is debt, of course it is, but I view it differently to credit card debt which to me is spending beyond means (I know you could argue the same with car finance but I regard that as a bill).

So I wouldn't be too concerned as its debt for an important item that will be paid. You have GAP insurance yes??

I mean I'd be uncomfortable with credit card debt as a result of accumulation of over spending, as it's a credit card transfer for a specific purpose that you have a plan to pay off I would be less concerned. I've done that in the past, as others say it's interest free and you can afford it.

Avalanching, but you're paying interest on your car finance. You're literally giving money away

If you put the car on a credit card at 0% it would still be a monthly payment but just without paying extra. Your logic is flawed.

That would stress be out tbh
I have never been in debt and never plan to be

Our car plan is 0% on our PCP @NotYourHolidayDick so how is it giving money away?

I wouldn't be comfortable with that debt, but I've always hated being in debt & liked to have a good cushion of savings 'just in case.'

You need to be careful it doesn't spiral. Personally I don't agree that debt is normal. It shouldn't be and it's a dangerous mindset to have

If you can comfortably repay the £6k whilst it is still on interest free, that wouldn't bother me.

And buying a new house is an expensive time so you would expect to be at the lower limits of your savings at that point.

Maybe when you finish paying off the car, continue to save the £300pm and save up for the next big purchase rather than paying in arrears? That's my strategy usually as I am quite averse to risk. Many people think they can't afford to save but they can afford to pay c/cards or loans which makes no sense to me, but it does require 'getting straight' at some point, i.e. no debt and no big expense until you've had time to build the savings.

House and car debt is ok as long as you can afford it. Not meant people can finance those purchases up front. Interest free is efficient.

Many

The only debt I personally have is my mortgage I would never have a loan or car finance... however my parents are bankers and they have had loans, finance, remortgaged the house in the past and they don't see a problem with it 🤷🏼‍♀️ personal opinion I suppose.

It sounds to me that you’ve planned for and are managing your debt.
Can you afford mortgage, the cc and to save a little?
Saving is the antidote to money anxiety.