Unsecured debt

[Cookiemonsieur]

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

@Weedoormatnomore yes the £275 includes service charges. Given that the specs for cars are ever changing to meet Net Zero, plus parking charges will be aligned to how environmentally friendly a car is.

All of the info was not aimed at you so feel free to ignore what you see as not relevant.

In terms of selling a car if you lose your job; given how things are going and the requirements for cars, I doubt selling a used car in today's world will help a person survive for very long on the proceeds. ULEZ is being introduced all over the place and I do not intend to be caught with an old car that is more trouble than it is worth. That said, I do have a small old car that I purchase outright many moons ago. I bought it off an elderly lady and it had very low mileage. It is over 24 years and is now making it into the "vintage" category and interestingly it meets ULEZ requirements. I rarely use it.

It is indeed horses for courses.

I feel I am derailing the OP's discussion so I will end my contribution on this matter.

I have various cars, the oldest is an 05 plate Fiesta
it is ULEZ compliant

No debt whatever here thank goodness.
Years ago I had a single credit card debt that was unavoidable at the time due to a disastrous change in circumstances. I paid that off as quickly as possible.

Thankfully I am retired, live pretty simply and have substantial savings.

I’ve never bought a car other than outright, the thought of PCP or whatever makes me nervous although I know several people who have done this.

Horses for courses in deed.

No debt, no mortgage, joint income £160,000

£20k in combined £150k income. But £11k of that is ‘working capital’ debt on credit cards that get paid in full every month.

I have also paid of £18k of student loan debt and car debt this month, so if you’d asked me a month ago the number would’ve been closer to £40k.

@TeacherPlease
Was that the whole of your student loan paid off ?
Because partial balance reduction does not affect how much is taken off your salary each month

Yes it was. And I was paying by direct debit and not PAYE so my salary wasn’t impacting the payment amount anyway.

Wow, so many posts! Some good advice too! I am not overly worried about the debt. I am a pratical person and tend to not worry too much about things that can be fixed. It's only money :)

Totally agree. I also work in mortgages and see the amount of debt that people carry. I also agree that the higher earners tend to carry a lot more debt. We regularly see unsecured debts of 100k+ for couples, however this is usually alongside a sis figure joint salary.

The most I have ever seen was just before lockdown. A couple owed £260k in unsecured borrowing on what I think was about 160K income.

I don't think that you will get a true reflection on here due people not wanting to post about their true debt levels, but from what I have seen, personal debt is rife, but just not really spoken about.

I'll use myself as an example. I have a car loan of about 14K. I also have a credit card at 0% with a balance of about 4k, and another card with 2k. I have my sofa on 0% credit. DW has her own car loan and a credit card ( not sure how much), so between us we do have quite a bit of debt. That said, we are fine and don't struggle to pay etc. My point is that a lot of 'average' couples will carry a fair bit of joint debt without really realising it.

Yes, same here.

Only debt is our mortgage.

Saying that, we will eventually need a new kitchen, bathrooms, car, etc and although we do have some savings, we will also need to borrow money, whether that be by loans or remortgaging!

Waves at @Talkinpeace - welcome back!

The observation that the wealthy hold more debt definitely matches my experience of marrying into a family who know how to make money - well my exH did. He was constantly juggling, borrowing and taking risks, with the absolute certainty that it would all turn out well. It definitely has, for him. He and his wife are now very wealthy.

I'm from a WC background and debt and risk averse. Was a professional with a good salary, but no bonuses or anything like that. No debt, credit cards paid off each month, only buy what I can afford. Will never be wealthy (unless the lottery comes through for me) but never now have those stomach lurching times about finance I used to get when with exH.

I hope you manage to reduce your debt as swiftly as is comfortable for you @Cookiemonsieur I would be a wreck with that amount of debt 🤷🏼‍♀️

Virtual hug to @catsrus - lovely to see you are still here

Yes, our loan and credit card is predominantly bathroom and other home improvement related. I expect to pay both off by around September/October. Just in time to re-mortgage and borrow the extra to get an extension.

We've run back and forth whether moving would be more cost-effective but nothing matches what we need, so extension it is.

Not usually with this name these days - resurrected it in your honour!

Thank you my dear !

I need to restart 5:2 tomorrow and it made sense to do it in my proper name !!

Household income around 55k and between us probably 5k in unsecured debt. It is my biggest anxiety without doubt and most of it is mine. I really want to make a huge dent in it this year, the thought of the money we’d have if we weren’t paying anything off is just 😩

40k for an extension overspend. Hoping to make some inroads this year.

Income is about 4x and we are comfortable but we don't want it

I was debt free but after getting divorced last year I’m just working out finances as a single parent. Everything costs the same but household income has been slashed, and the divorce cost a lot more than I’d hoped it would. My income is 60k and I currently have 8k on a 0% card. It makes me very uncomfortable, especially as it prevents me saving. Plan to be back to debt free by end 2026.

Income of 38k. Hoping to rise to 52 if I get a job I've applied for.

Debt is about 20k :(

Credit card 6.6k
Loan 10k
Overdraft 1 1k
Overdraft 2 1.5k
Argos Card £200

Going to try and make a big dent this year but can't see the whole amount being paid off for years unless lottery win or inheritance

I suppose it depends on where people are in life.

We have lived in our house 20 years so everything is now paid for, furniture, appliances etc, Also unsecured debt can vary in how sensitive it is, if you borrow money for a sofa it's not so bad because you need on and it might last you ten or twenty years however if your credit cards are full of holidays long since taken and takeaways etc that's not ideal at all.

Personally there's a great peace mentally in having less debt, as I get older also I'm getting far less materialistic I just don't need or want as much stuff.

Good luck,

We have a joint income of around 65k and unsecured debt of c.£32k
It's definitely a huge source of stress but we do have payment plans in place and should have all of it cleared in about 3 years at the most.

Joint income $120,000
Credit card debt of 9k (just balance transferred for 32months at 0%)

We have over 17k in savings atm earning 5% interest so paying off the car to zero in the next 32 months and earning interest on our savings.
Additional car is almost paid off.
Also have a mortgage.

@Lotrehin it’s good to hear that you managed to get out of debt - well done. And thanks for sharing your tips on what worked. I’m at the point where I’m struggling with repayments because of the high interest levels and I really need to get rid of the debt. I am committed to not taking on any more and to start to clear it. I’m also planning to use the snowball method. I’ve got an app and it shows I should be debt free in four years. Did you find anywhere with good online support (to help with staying motivated?).

Hi @Violet19 thank you!

I found the MSE debt forums were great. No judgement and a lot of good advice. I didn't post much but I read a lot.

If you've got to the stage where you want to take action, honestly just do it and it will fall into place. It becomes a habit after the first few wage days, and by that point you will see a difference in the amount which for me at least spurred me on. I do think that having some money set aside really helped psychologically - I didn't even need to spend it, but just knowing it was there meant it didn't feel like a penance.

Once my credit score increased enough that I got offers for 0% transfer cards I kept the old card on with a zero balance so that I still had access to credit but was using less and less of it and quickly got more offers for 0% transfers and from then it went down much quicker because I kept the amount I was paying off each month the same.

Just start - you will surprise yourself with the difference it will make to you.