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Original poster

Unsecured debt

153 replies

Cookiemonsieur · 29/12/2023 20:51

Cheeky question so feel free to scroll on-

How much unsecured debt do you carry as a household, and how does this compare to your income?

ours is 31k on a joint income of 72k and I’m uncomfortable with this and about to get intense with paying it back

OP posts:
Musiclover234 · 31/12/2023 09:16

My phone is coming to the end of a three year plan…. £120 ish?

That’s it.I got had credit when younger, all managed fine and paid back on time but took ages. So that’s it now I won’t do that anymore. I save for everything instead. Yeah takes longer but it feels better to me
Just a mortgage and that’s being overpaid as I don’t like owing so much.

OldTinHat · 31/12/2023 09:30

No mortgage. Income of £800 a month.

Currently have £102 owing on a credit card but I deliberately spend on it each month and pay in full to keep up some kind of credit rating.

CrabbiesGingerBeer · 31/12/2023 10:02

None on an income of £50,000 a year (also mortgage paid off).

I put everything possible on a cash back credit card and pay it off in full each month to keep up a credit record.

Chantellier · 31/12/2023 10:28

Interesting thread. I’m a mortgage adviser so I get an insight into peoples borrowing habits and believe me, a lot of people have high levels of debt. It’s usually couples who have high salaries that carry the most. It’s not unusual to see a couple on 6 figures carrying a joint 6 figure unsecured debt. It’s usually because their salaries shelter them from the reality- they can afford the repayments so all feels well and good.

I did a remortgage for a couple about a month ago who owed 90k on credit cards between them, as well as other car debts etc. you’d be amazed at how common it is.

20-50k as a couple is almost commonplace. I’m generally more shocked when customers don’t have debts!!

Toooldtoworry · 31/12/2023 10:30

Chantellier · 31/12/2023 10:28

Interesting thread. I’m a mortgage adviser so I get an insight into peoples borrowing habits and believe me, a lot of people have high levels of debt. It’s usually couples who have high salaries that carry the most. It’s not unusual to see a couple on 6 figures carrying a joint 6 figure unsecured debt. It’s usually because their salaries shelter them from the reality- they can afford the repayments so all feels well and good.

I did a remortgage for a couple about a month ago who owed 90k on credit cards between them, as well as other car debts etc. you’d be amazed at how common it is.

20-50k as a couple is almost commonplace. I’m generally more shocked when customers don’t have debts!!

I'm a Protection Adviser in a mortgage brokers and I agree with you. People think they're living within their means because they can afford the debt repayments.

Namemchangeforthispostonly101 · 31/12/2023 10:35

This reply has been withdrawn

The OP has privacy concerns, so we've agreed to take this down now.

BeatricetheBeautious · 31/12/2023 10:45

This is an interesting thread - especially the comments from mortgage advisors saying high earners tend to have more debt maybe as they feel more secure? I would be terrified to take out a loan tbh. But I don't earn much!

I do watch a lot of budgeting / money management youtube videos (which clearly makes me an expert 🤣🧐). They say the same about usually their own history eg The Minimalists say they had big salaries but also huge amounts of debt before they saw the light!

We don't have any debt except my student loan and our mortgage. Dh's salary is quite good but mine is shite. Dh is also really, really careful / good with money. I don't think either of us would take out a big loan. The most I've ever borrowed is £100 on Klarna and the like. Dh also uses a credit card for everything, but pays it off at the end of each month. I'm trying to get a better job this year. It's my 2024 goal to get started on a better paid career somehow! I wonder if I'll be less risk averse if I ever get a higher salary 🤞. I don't imagine I will at this stage in life though

Onacuctustree · 31/12/2023 10:50

Low income, but mortgage free.
Probably about £3000.
But I have savings to cover it if needed.
All debt on 0% cards and I pay off much more than the lowest asked.

Chewbecca · 31/12/2023 11:04

I have never had any except credit cards paid in full by DD every month (for points / cashback / protection). I am from the (older) school of thought that if you can't afford it, you can't have it and the expenditure must wait until you have saved up. If the emergency fund is empty then they are covered with the savings that were originally intended for luxuries which are then reduced / postponed.
I track our expenditure and the idea of having another category for paying debt interest just doesn't make sense.
I recommend everyone starts their working life with this strategy!

GeneCity · 31/12/2023 11:24

@BeatricetheBeautious, do you recommend any particular YouTube channels? We don't carry any unsecured debt (probably because I'm scared of it!), but I'm really interested in budgeting and ideas about financial management etc.

BeatricetheBeautious · 31/12/2023 11:36

Yes @GeneCity, I like the ones where they talk about minimalism and spending. I like that there is an ethos behind it rather than 'just' money. These are the ones I like:

Grace Nevitt
A to Zen life
Cara Nicole
According to Nicole
Gabe Bult
Christina Mychas
Use Less

They're all chatty / motivational rather than practical advice imo, but I prefer that

EdgarsTale · 31/12/2023 11:37

Zero, but we have a mortgage.

BeatricetheBeautious · 31/12/2023 11:39

Forgot The Minimalists! I like them too (although when Josh talks about his sex life I have to switch off - no thank you)!

Heartbreaktuna · 31/12/2023 11:44

I'm surprised there aren't more replies mentioning car finance. I always assumed everyone is financing these luxury brand new cars I see everywhere!

avocadotofu · 31/12/2023 11:44

That sounds a lot, in comparison to your income! We don't have any debt other than our mortgage. Our joint income is slightly over 80k.

Wantarest · 31/12/2023 11:46

Debt is not necessarily a bad thing. If it is cheaper to borrow than use your savings, then debt can be a good financial decision (assuming you can meet the repayment terms). Granted, interest rates are high now so debt financing is not as attractive as it was before. It is important to balance the interest rate on your savings vs the interest rate on the debt.

Manageable debt also improves your credit score, which helps if you are thinking of taking out a mortgage, for instance.

That said, I would not be comfortable with a debt of this size vs the income your mentioned. I would fear that I am over leveraged.

Wantarest · 31/12/2023 11:48

Heartbreaktuna · 31/12/2023 11:44

I'm surprised there aren't more replies mentioning car finance. I always assumed everyone is financing these luxury brand new cars I see everywhere!

That would be the financially sensible thing to do, I think. Also why buy a car outright when it depreciates so quickly in value?

NewYearNameChanger · 31/12/2023 11:57

Wantarest · 31/12/2023 11:48

That would be the financially sensible thing to do, I think. Also why buy a car outright when it depreciates so quickly in value?

Show quote history

Or why do people always need to have the latest brand new car - we've had our second hand car for 7 years now and it's still going strong, and we don't have a balloon payment/paying interest to worry about.

caringcarer · 31/12/2023 12:01

Our income is higher. Mortgage paid off this year in August. I think DH has about £1500 on his credit card because we had a holiday end of October into beginning of November. He put that on his card. I paid my half back to him and then he bought me some expensive gifts for Xmas. I know by February half term he'll have paid it off though. We both normally pay off credit cards at the end of each month.

doriangraybutimthepaintingintheattic · 31/12/2023 12:03

@Wantarest if you're buying a new car or loaning, you're the one paying the depreciation not the manufacturer or bank. @NewYearNameChanger has it right on this one. Most of the depreciation has already happened and you have an asset you can get rid of at any point if you need to.

Wantarest · 31/12/2023 12:25

doriangraybutimthepaintingintheattic · 31/12/2023 12:03

@Wantarest if you're buying a new car or loaning, you're the one paying the depreciation not the manufacturer or bank. @NewYearNameChanger has it right on this one. Most of the depreciation has already happened and you have an asset you can get rid of at any point if you need to.

Precisely but with hire purchase, you can change the car every two or three years without being stuck with a car that over time you could not sell at a price that would allow you to have a brand new car (and avoid expensive maintenance).

You avoid a big outlay, you avoid ongoing maintenance costs (including avoiding having to do an MOT), and you can have a brand new car every few years. Plus depending on the interest rates, it might be better to keep your money in your savings account.

Why hang on to a depreciating asset when you can pack it in every couple of years?

GeneCity · 31/12/2023 12:35

Well, it's horses for courses, isn't it?

My car was nearly new when I bought it outright, and now I'll keep it for a good few years. It hasn't cost a lot to maintain over the last couple of years, and I haven't had to pay a monthly amount for it.

It's generally accepted to be more cost effective to buy cars outright, but then different people value different things.

Wantarest · 31/12/2023 12:47

GeneCity · 31/12/2023 12:35

Well, it's horses for courses, isn't it?

My car was nearly new when I bought it outright, and now I'll keep it for a good few years. It hasn't cost a lot to maintain over the last couple of years, and I haven't had to pay a monthly amount for it.

It's generally accepted to be more cost effective to buy cars outright, but then different people value different things.

Can you explain to me how it is more cost effective? If anything, it probably comes out in the wash. It also depends on what you do with the lump sum. If you invest it in premium bonds for instance, you could be earning the equivalent of the repayment on your car every month. In our case, we do.

So when you say cost-effective, can you help me understand your cost-benefit analysis? I am a miser so would hate to be paying more than I should for anything.

Wantarest · 31/12/2023 12:49

And yes, I completely agree. It is horses for courses because it depends on your financial situation, including your (rate of time) preference for having cash available now, etc.

GeneCity · 31/12/2023 12:51

Hmm, this is what Money Saving Expert says:

Cash savings – the cheapest option for most cars

The clear winner if you want to own the car fully from day one, as you'll avoid paying any interest or taking out debt. Though if you're looking to buy a brand new car – which on average loses about 40% of its value by the end of the first year – and are likely to change it in the next few years, it's worth considering a leasing or personal contract purchase deal below. With these, the overall cost of ownership can work out cheaper.

So, maybe you're doing the right thing for you since you want to have a new car.