To think that personal debt levels must be very bad

[linblondie]

Hi

So before I start, I know that for many people debt is a product of totally unforeseen circumstances and life events etc, however a few things that I have observed recently have led me to think that debt levels must be astronomical.

I went to change my car on Saturday. I was looking for something for about 3k to replace my old banger. I was telling my niece about this and she asked me why I didn't get a new one 'on finance'. She is 21 and has just taken out car finance for 15k.

I listen to some of my colleagues stories about their finances. Most of them are 5-10 years younger than me ( I am 46) and they think nothing of taking out large loans. It almost seems normal to owe tens of thousands of pounds in debt.

Is this really the way that people live? I would never sleep lol

You don't get any rewards for using credit where I am, although I would imagine that's how people are sucked in to running up massive credit card debt if it's the norm in other places- rewards like this are rarely actually free ime.

Debt was cheap when I was younger, got myself in a mess and had to go on a dmp. Wouldn't take on debt now apart
From mortgage but in a high earning job so don't need to. Swings and roundabouts.

Thinks like karma worry me for younger people / lower earners seems like a good idea at the time but miss a payment and you're in trouble.

I think a lot of it is, you have young adults still living at home, so low living costs. They have a lot of expendable income so think nothing of paying £200 a month for brand new car to impress their mates.
Especially if they think owning a home is out of reach...

@MollyRover I pay my credit card balance off fully each month so no interest charged. I get M&S vouchers so save them up and treat myself for free. I even stick my monthly council tax on my credit card. At least I am getting a bonus for money I would have spent anyway. A few years ago I took out another interest free for 3 years credit card and stuck 5.5k uni fees on it. Paid it back over three years instead of one which was much more manageable and again no interest payable. Makes sense.

I love my John Lewis credit card....we put everything on there...food, going out, holidays, concert tickets,clothes. Pay off in full and get about £300 a year in JL vouchers.
Never paid a penny intetest

If you can't afford stuff (I mean essentials; our only loans have been for a car, basic furniture and a funeral) any other way then debt becomes normalised. It also makes no sense to live like a total hermit/cinderella if you have no hope of affording a house deposit at the end of it. That kind of thing is doable if it will take a couple of years but not when it would take 10-20.

It must have been nice to have been born when prices and wages were reasonably aligned. Blaming millennials' precarious financial status on choice and loose morals is a bit tired by now, isn't it?

There's different levels of debt as explained on this thread. From using cards for rewards and not incurring interest to borrowing for short term repayments to struggling with high levels.

Personally I've had trouble with debt and had maxed out cards. Now I use cards to my advantage and gain around £250 a year in cashback and vouchers. I'm also stoozing a 0% bt card in savings to gain a years interest.

Your language is interesting - sucked in?

Not sure why you can't see that's a vast overgeneralisation and quite a narrow view.

Like a previous poster I've had vouchers for M&S, Tesco, John Lewis, cash back over the years, no strings attached as I paid my bill off in full each month. I've had twenty years of these and they've paid for essentials as well as fun stuff.

Being anti debt of any kind can be quite limited / illogical. Most of us take on a mortgage at some point in our lives, and whilst we all hope it will be an appreciating asset (whereas a car will most likely be a depreciating asset) it's not always the case and it's a big gamble.
We buy cars on finance but for us it makes sense because we value having good quality vehicles with limited needs for maintenance, MOT, under warranty, reliable etc. We also have gone electric on both vehicles and they don't come cheap, but our savings on fuel (plus environment +) make it worthwhile to us.
We have a mortgage of about £250k and about £15k on one car, £25k on the other outstanding (both new). We usually have about £5k on a credit card for house projects but we constantly pay down.
It doesn't keep us awake at night. The cars can be sold if absolutely required and will make back most of the debt against them. The house has appreciated in value and the cc earns us airmiles etc / can be paid off relatively easily.

Whilst financing a new car for the majority of its cost has been commonplace for decades, it previously wasn't seen as a 'given' in the way it is now.

There are often threads here requesting a critique of a mumsnetters budget, which typically include hefty car finance payments that are frankly disproportionate to income but fully justified in the mind of the struggling poster as they 'need' an expensive car. Cutting back in this area is unthinkable; as is saving up for a new car before buying it.

Started in the 70s with inflation at over 20%, it suddenly became a bad Idea to save as you couldn't save enough to buy something outright.