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People in extreme debt - is this really as common as I’m told?

271 replies

Lesterzap · 16/08/2023 21:02

Chatting to my friend today who works id debt management. She was saying how busy it’s been since covid and COL crisis.

I mentioned how someone I know had ended up owing 20k. According to my friend 20k of debt is now a drop in the ocean and that there’s been a real increase in people in higher incomes owing 70-100k!!! Totally shocked by this. Aside from my mortgage I’ve never owed more that 5k (car loan)

surely that level of can’t be common?

OP posts:
PlantBasedMuffin · 18/08/2023 08:51

A lady I know owes £9k to her electricity supplier. She hasn't paid them for years. Because she has COPD, they won't cut her off. It annoys me because she has a lot of money coming in and owns her house outright. She just doesn't want to pay her bills.

dizzyHP · 18/08/2023 09:00

This reply has been deleted

Unfortunately we have some doubts about the OP so we've removed their threads and posts.

PlantBasedMuffin · 18/08/2023 09:03

This reply has been deleted

Unfortunately we have some doubts about the OP so we've removed their threads and posts.

She couldn't give a shit 🙄.

dizzyHP · 18/08/2023 09:04

This reply has been deleted

Unfortunately we have some doubts about the OP so we've removed their threads and posts.

PlantBasedMuffin · 18/08/2023 09:13

This reply has been deleted

Unfortunately we have some doubts about the OP so we've removed their threads and posts.

That's what I would have thought, but no. Maybe she refused to have it, I don't know. She was always a CF, even before she was ill. Never bought a round, always pretended she was broke and borrowing money from her friends, even though she had a reasonably good job and no rent or mortgage to pay.

KvotheTheBloodless · 18/08/2023 09:17

I find the notion of huge debt terrifying - I have ADHD and can very easily lose track of how much I'm spending, so I have to have a low overdraft limit and a credit card I don't use unless it's for something that needs protection like a holiday.

It would be so, so easy to get into huge debt, it frightens the life out of me!

teaandtoastwithmarmite · 18/08/2023 11:11

We had a lot of debt in our 20's then paid it off then moved to London and after trying for many years I got pregnant. Circumstances then meant I claimed maternity allowance and DH was the only one with a regular income for 2 years and after that I was part time. We left London owing £70k and it was very scary. We now owe about 25 but still are renting so it needs paying off asap

DiaNaranja · 19/08/2023 10:43

Ariela · 17/08/2023 00:17

@DiaNaranja - just curious you say you don't see cars & kitchen as 'debt', because payment goes out monthly and it's affordable. Is this a generational thing - something that us older generation brought up to save up, and then spend when we have enough saved simply don't understand?

We've never bought a car on finance - or a brand new car come to that, I just don't see the point of buying brand new due to depreciation - although I understand chip shortages have made secondhand cars as expensive as new recently - but not bought a car for perhaps 10 years, so we live cheaply! Likewise our kitchen is perhaps 30 years old, bathroom older than that. No point replacing something that's functional and works, although we do have kitchen plans to do it at some point as we would extend to make better use of the space, but we wouldn't borrow to do it, so it's left till we can afford it. Or we'll not bother and sell up when we downsize!
Any major purchases are planned and affordable.

To be honest, we needed a newer car as DH drives through the clean air zones frequently and our old one wasn't reliable or suitable for this, plus having two small children and lots of ferrying round to do, we wanted a newer reliable car that wouldn't cause us too many issues. Unfortunately it has caused us a couple of "issues" so we have ended up getting a cheap little second hand car as a back up if and when the big one needs work doing. We lived for years with just one car, and it was fine when we lived more centrally, as if it broke we could make do, but we live rurally now and need reliable transport. We could have bought the car outright, but it was 0% Apr at the time we bought it so made more sense to just pay a small amount monthly than wipe out our savings. Same with the kitchen, we did actually have enough in savings to just pay for it upfront, but 5 years interest free, meant we weren't clearing out our savings, and paying the same amount but in a more manageable way. The kitchen wasn't great when we moved in here, and we wanted to put our own stamp on the house and make it work how we wanted it too, and as we spend alot of time cooking, and in the kitchen, we wanted to make it as functional and lovely as we knew it could be. We lived with the old kitchen for 5 years (while saving) to re-do it, and then when we were ready to have it done, the five years interest free credit meant we could use the money we've saved to pay for it, but while it still earns us a little interest too, seemed a no brainer really. DHs student loan just ended so the kitchen repayments have basically just replaced what he was paying towards that each month, hence not noticing the amount going out. We've actually agreed once we've paid off the big new car, we will sell and get another second hand one, as buying new has not been the trouble free motoring we were hoping for, and by that point, hopefully we'll be able to find an "older" car that will be ulez compliant meaning DH doesn't have to factor in those extortionate fees just to travel to work. I guess maybe it is generational, but a big factor is the fact that we know we earn well, and can make the repayments, and not struggle because of them. I'm not sure interest free credit was such a bit thing in our parents generation, so maybe wasn't as easy to access or as favourable then? As I said, we did save up for the kitchen, and were intending to pay for it up front, but actually putting it on an interest free credit arrangement meant we were no worse off, infact slightly better off, as we will accumulate a little bit of interest on the money that's just sat in that account, while the monthly payment trickles out. So yes, we have debt, but (not including the mortgage) it doesn't really feel like debt, as we have enough in savings to clear it all completely if we wanted to, just seems silly to do that, when we aren't paying any extra for the privilege of earning a little interest on the money in our account rather than theirs.

DiaNaranja · 19/08/2023 10:52

I agree with what you say about how debt and getting things on credit has become "the norm" for alot of society and the whole "I want it now" culture means people don't have to save to get nice new expensive things. That can become quite scary if people don't have an actual plan on how to pay back these big purchases, and could leave them in serious trouble. In my opinion, credit has become far too easy to access, and does need clamping down on. For example, when we went to get the kitchen, DH couldn't make the final appointment (I didn't realise it would be the final one, that we were expected to sign the contract for) so I said we'd have to schedule another appointment as he was the one with the money, but the kitchen designer said it wouldn't be a problem, as the amount we were borrowing would go through for basically anyone with a basic credit check! I only work part time, and my salary doesn't amount to much, but sure enough, I got accepted for around 25k worth of credit, and to be honest I was shocked as I don't even earn that in a year. Obviously I knew it was absolutely fine for us, as DH earns alot more and can easily make the repayments, but to think they could accept me for that level of credit knowing my (lack of) earnings is a bit unnerving, and I can see how someone on a lower income could be tempted to just spend spend spend, and think about it later.

SternJosie · 19/08/2023 10:53

I regularly use Klarna and clearpay for small purchases. dh does this too

Use of these can absolutely decimate your credit score - although the actual impact seems to vary wildly. But there are some mortgage and loan underwriters who view them the same as payday loans and will result in application declines.

It's worth being aware of in case you weren't.

MidnightMeltdown · 19/08/2023 11:20

Muhwanda · 16/08/2023 22:19

Until recently I’ve hovered around £15-25k of debt most of life (21-39) I’m down to about 7k now. It is an awful, awful feeling to have that hanging over you, and it spirals. it’s so very easy to get sucked into a cycle of debt. The first credit card I got I was 18, no job, no regular income yet was signed into something I had no idea about to get a blow up sofa.

I'm amazed that, at 21, you were able to get into that kind of debt. I didn't even know that lenders would lend that amount of money to young people, who presumably, are not on very high incomes.

Totally irresponsible of the lender

MidnightMeltdown · 19/08/2023 11:34

I have to say, I'm astonished by some of these figures. I don't know of anybody in debt (aside from mortgage or student loan). I haven't got a credit card and I'm amazed that people are able to borrow so much on them.

I read recently read that 0% interest on credit cards could disappear. I wonder what would happen to all these people who are thousands of pounds of debt

www.theguardian.com/money/2023/jul/22/uk-credit-cards-rules-o-interest-deals-bank-accounts

Anxioys · 19/08/2023 12:47

SternJosie · 19/08/2023 10:53

I regularly use Klarna and clearpay for small purchases. dh does this too

Use of these can absolutely decimate your credit score - although the actual impact seems to vary wildly. But there are some mortgage and loan underwriters who view them the same as payday loans and will result in application declines.

It's worth being aware of in case you weren't.

Yes that is true. Using Klarna or split loan services is specifically identified on credit scoring and mortgage applications

ItsNotRocketSalad · 19/08/2023 12:52

BIossomtoes · 17/08/2023 07:09

I obviously wasn’t clear. Regardless of whether student loans are “real” debt or not, they form attitudes to debt. Once you’re comfortable with the concept of owing huge sums of money it makes you more relaxed with further debt. The “might as well be hung for a sheep as a lamb” principle.

We finance our car through PCP, essentially we rent it so I find it interesting that some people regard it as debt because we don’t owe the money, we pay for the use of the car every month. I put every penny I spend on my credit card and pay it off every month and am rewarded with John Lewis vouchers for doing so, that feels sensible to me.

I don't agree that having student loans makes people more comfortable with debt. Even students understand it's completely different to a credit card debt.

Do you also think everybody with a mortgage thinks ah well, might as well get into another six figure debt?

Meggiebean · 27/08/2023 09:01

I worked in mortgages up until last test and I’m afraid to say that I’m not shocked. I’d regularly see couples on high salaries with huge unsecured debts. For that demographic 100k was commonplace. Worst I ever saw was 320k in loans and credit cards for a couple earning about 150k. They weren’t approved for a remortgage!

Meggiebean · 27/08/2023 09:01

I worked in mortgages up until last test and I’m afraid to say that I’m not shocked. I’d regularly see couples on high salaries with huge unsecured debts. For that demographic 100k was commonplace. Worst I ever saw was 320k in loans and credit cards for a couple earning about 150k. They weren’t approved for a remortgage!

Zipps · 27/08/2023 10:28

Constant advertising and clever marketing, wanting to show off on social media or to friends and family, keeping up with the Jones's, is the problem.
Add that to people who are terrible with their finances= debt. You can earn all you like but if you spend it all it's a waste of time.
It seems more and more people want to
'look rich' and have a big house (with a huge mortgage) and car (on finance)etc rather than actually be rich with money in the bank because no one can see how 'wealthy' they are when it's not on show.
My siblings friends had to downsize from a lovely big 4/5 bedroom house to a tiny 2 bedroom house because they had too much debt to pay off and the stress was overwhelming. He has now stopped unnecessary spending but she has carried on and they are in debt again already.

He's works in manufacturing as a manager and is on good money, she has a small part time job in retail, they earn enough to have a good life with disposable income and savings but she won't stop spending.

Babyroobs · 27/08/2023 13:54

PlantBasedMuffin · 18/08/2023 08:51

A lady I know owes £9k to her electricity supplier. She hasn't paid them for years. Because she has COPD, they won't cut her off. It annoys me because she has a lot of money coming in and owns her house outright. She just doesn't want to pay her bills.

Yes I know one like this. 11k worth of debts on gas, electricity, water and unpaid council tax. yet owns 2 rental properties outright which she refuses to sell ! I'm surprised she hasn't been cut off but has two elderly parents living with her so I guess that may be why.

kipperba · 02/09/2023 14:21

The most I had was about 14k. I was lucky when my partner and I met, I owned my home and he had savings, so he paid off the debt for me and I didn't charge him any rent. That allowed me to save faster for the next home we bought together.

justme2022 · 02/09/2023 14:44

6 years ago I had £50k of debt but it was finance for my car. I could afford the payments so it didn't stress me out.
Cars paid off now so my total unsecured debt is £400 on a credit card which will be cleared at the end of the month same as usual. If l maxed out all of my credit cards tomorrow I would be over £60k in debt. No way on earth I would do it but once you start using them and not clearing the balance it's a slippery slope.

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