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Original poster

Is this a common situation

36 replies

laurelrolls · 31/08/2023 11:45

Hi,

I know that every family is different but how uncommon would this scenario be in the curren financial climate -

Family of 4 - me, dh and 2 dc's aged 8 and 12.
Both working full time with a net monthly income of £5000
Mortgage of £850 ( fixed thank god for 3 more years)

BUT

unsecured debts of 40k......

It's credit cards/loans. We are on top of it now and the balances are reducing thanks to us being able to overpay a bit.

I would ask for no judgement if possible. The debt is here and I can't change that.

Just wondering if we are unusual to be in this predicament at this stage of our lives ( we are early/mid 40's)

OP posts:
BorgQueen · 31/08/2023 11:52

Doesn’t sound unusual at all to me.
Get yourself on the debt boards on Moneysaving expert, general advice is to snowball the debt, pay more on the debt with the highest interest and try to move as much as possible to 0% cards.

thdskdrggs · 31/08/2023 12:04

My goal has always been mortgage and (proportionate to earnings) car finance only (I know lots of people will disagree with car finance though) we don't have any other debt, everything else is within our means. I'm not sure what is normal, I wouldn't be adverse to some short term interest free borrowing, or even some long term borrowing that has a plan if it isn't too expensive, it's unplanned and frivolous spending on a credit card (not paid in full) which is where I think the worry is. If that becomes a habit you start to spend beyond your means and can quickly get out of control.

LinesAndDot · 31/08/2023 12:06

I think it is normal to be in a bit of unsecured debt at your age (maybe £5k - £10k) but I think £40k compared to your £5k/month (net) or £60k/yr (net) income is a concern. It seems to indicate you have lived above your means for a long time and can’t budget. Or alternatively you’ve had some kind of financial emergency that has put you into dire straights.

The concern is that if you did have a financial
emergency - job loss, house cave in etc etc - you would be in no place at all to handle it, and the stress would be immense.

I say this as someone who was in a similar position and didn’t realise it. I posted here, people gave me a wake up call and I paid it off as fast as I could. I now have a £35k emergency fund, and I can’t tell you how good it feels to have security.

I’m glad you have a plan to pay it off. As it is SUCH a big sum, I’d encourage you to go at it hard for the next 12 months, no vacations away, no new clothes, be very frugal just for 12 months to make a big dent and take out the urgency. Then maybe continue at that level if you want to, or scale it back a bit and reintroduce some treats but keep paying it off.

Again, I can’t tell you how good it feels to be on this side of things with an emergency fund and a balance budget each week. Worth working towards.

JLC24 · 31/08/2023 12:10

I don’t think 20k per adult is that unusual. Between age 25-40 is a very spendy time. Weddings, buying house, buying all furniture from scratch, kids, childcare etc.

I think age 40-60 is the time to get it all paid off asap, get savings and really look into pensions/retirement income.

anyirose · 31/08/2023 12:48

I'm 44 and don't have any unsecured debt. We use credit cards but clear the balance in full. I'm not aware of any friends having unsecured debt, but it's not common to discuss finances in our social circles.

Heatherbell1978 · 31/08/2023 12:53

A bit of unsecured debt is normal - since Uni I've had something whether that's car loan, kitchen finance, credit cards, sofa finance etc. Between DH and I we normally owe £5k on credit cards at any one time but good at transferring to 0% cards etc. £40k is quite a lot but hey thing is whether you're able to manage it all. I personally don't see debt as a bad thing unless you don't understand the consequences or it's unaffordable for you

Totalwasteofpaper · 31/08/2023 13:00

Honestly i read the 40k and my jaw dropped.

What's the interest on that?

We have 10k (now more like 5k) on 2 year interest free - that will be gone by the time the 2yrs is up. That stressed me.out a bit but we had building work go over cost and it is what it is...

Once thats gone we have no debt bar the mortgage. I think thats common now as most people get their cars as leases vs loans

cocksstrideintheevening · 31/08/2023 13:50

No judgement from me, we
Weee I a similar position a few years ago albeit on a higher income. Preemie twins meant I left my role to extend mat leave, took a lot longer if than I expected to, double whammy nursery fees fucked it for a good few years.

It's paid off now and it is a huge relief.

Xrays · 31/08/2023 13:54

I think it’s far more common than people admit to. And I can’t stand people who are judgey about debt. We have a lot of debt (£8k ish on a very low income) due to drops in income due to health issues / urgent house repairs / petrol needed for healthcare appointments etc miles and miles away etc. It’s just all built up. We are paying it off month by month and just pray for no other emergency situations / repairs to crop up. We have no safety net. I suspect we’re fairly normal really. Every day is a juggle.

mondaytosunday · 31/08/2023 14:36

With £5k take home a month you can make a serious dent in that! I'd be looking to pay £2k towards it, that still leaves you over £2000 for bills/expenses after mortgage. On months with higher expenses (like Christmas) you pay less.

felisha54 · 31/08/2023 15:03

I don't know anyone with that amount of unsecured debt. 5-10k perhaps but not £40k.

Original poster
laurelrolls · 31/08/2023 15:04

felisha54 · 31/08/2023 15:03

I don't know anyone with that amount of unsecured debt. 5-10k perhaps but not £40k.

You probably do. None of our friends know about our debt, but it still exists. People don't usually share details of their debts

OP posts:
drpet49 · 31/08/2023 15:14

felisha54 · 31/08/2023 15:03

I don't know anyone with that amount of unsecured debt. 5-10k perhaps but not £40k.

Nor me and my friendship group openly discuss finances.

Janewithamane · 31/08/2023 15:20

drpet49 · 31/08/2023 15:14

Nor me and my friendship group openly discuss finances.

Show quote history

I think that it’s probably not that uncommon for higher earners. A couple With a new car each on finance, a couple of credit cards and a loan for the kitchen could easily be in the tens of thousands. I think that a lot of people probably don’t kind how much they owe as a couple until something forced them to look at the figures

Janewithamane · 31/08/2023 15:22

*don’t know

Lovelynames123 · 31/08/2023 15:26

Early 40s and no debt bar a mortgage (with loads of equity) and car finance. I pay off my cc in full every month, I was in debt by over 10k in my 20s, and I never want to be in that situation again! I think most of my friends are similar although haven't actually spoken about it

Redpurplebluepink · 31/08/2023 15:27

We are 41 me DH 2 kids
£850 mortgage
£4800 net pay
£0 unsecured debt (no car finance etc)
we use credit cards for family spending but pay them off every month
very limited savings

However I don’t think you’re unusual. I would really like to spend some money on our house like a new kitchen but DH won’t take on any debt so it won’t happen. I’m sure plenty of other people would take on a loan to do this. Same with cars. We have quite rubbish cars but always save to buy with cash. The COL rises along with childcare mean we can’t save at the moment so I think we will need a loan when it comes to replacing a car in the next 3-5 years.

Clefable · 31/08/2023 15:39

I don't think it's unusual but I still think it's a high amount of debt, especially if you aren't actually paying it off at a decent rate. Are you making dents in it? I think debt for specific things like a new kitchen or new cars etc. are a bit different from credit cards due to lifestyle creep or having no emergency fund etc. because the latter is difficult to get out of the cycle as something happens and you end up back in it again and can never actually pay it off.

Personally we are v credit averse so we have 0 debt other than mortgage (but aren't driving around in brand new cars as we save to buy second-hand outright) and I would rather forego something than get credit for it, but other people are happier with being in debt/having credit. As long as you're managing it and have a plan for paying it off

NorthWestThree · 31/08/2023 15:43

I'm 45, hubby is 50. 2 kids living at home, household income of just under 4k. Mortgage is 950 a month. And we have £16k debt.

Xrays · 31/08/2023 16:00

felisha54 · 31/08/2023 15:03

I don't know anyone with that amount of unsecured debt. 5-10k perhaps but not £40k.

How would you know? I would never tell anyone how much debt we have even we were talking about debt.

BarrelOfOtters · 31/08/2023 16:02

Make a proper realistic plan to pay it off in x years. Which will probably mean no 'big' holiday or new car etc etc. It doesn't leave you any room for unexpected awfullness - from a broken washing machine to a new boiler up to losing a wage.

UndercoverCop · 31/08/2023 16:05

I'm a few years younger than you and our income is higher. The thought of 40k unsecured debt makes me feel queasy.
We have about £1500 on a 0% credit card but have the savings to cover it if we needed to pay it off suddenly. We both tend to use and repay credit a bit just for credit rating.
Our mortgage fixed rate expires soon and it's going up a lot. We have been able to secure top of the market rate because of low debt/risk.
Will you clear a good chunk of that before you're mortgage fixed rate ends? How much interest are you paying. I'm very averse to paying interest!

Elsiebear90 · 31/08/2023 16:07

I don’t think it’s unusual, a lot of people have two cars on finance for around that much, we earn 110k combined and have about 30k of debt, which is a home improvement loan, car finance and credit cards on 0% that we used for house renovations and our wedding, our mortgage is only £600 a month so it’s very manageable.

DryIce · 31/08/2023 16:14

It sounds high to me, I've only ever had a mortgage and maybe carried the odd bit on a credit cards but usually paid off monthly.

You're right though most people don't discuss their debt, so 🤷.

Sanch1 · 31/08/2023 16:25

What have you spent it on?! We are similar ages, slightly higher income. No debt. We save for what we want.