High income high debt?

[Fizzychickens]

Is this really a common thing? Trying to get my head around this.

found out that son and his wife are about 65k In debt plus a car on finance. He’s a deputy headteacher and his wife is a head of year in a high school. They easily earn 100k.

we found out about this recently and I’ve tried to discuss it with him. He just doesn’t seem worried and thinks it’s ‘normal’. I’ve never owed more than 2k, aside From the mortgage of course, so ok struggling to understand it,

he seems to think that these sorts of debts are not uncommon in higher earners, but surely that can’t be right?

The term high is arbitrary. A household income of 100k with no dependent putting in the 160 a month in council tax that I pay puts them in the highest 10% of households. Granted I don't know if that's their scenario and if they are trying to put kids through private school or live in London for example.

https://ifs.org.uk/tools_and_resources/where_do_you_fit_in#tool-results-section

Not normal in my world.

I think it’s safe to say op their debt is not normal and they really are in a lot of debt, but as said earlier, it’s clear he doesn’t wish to discuss it. Particularly in line with their earnings.

We earns about £150k combined and last year had a total of £50k debt (£25k car, £15k solar panels, £10k home improvements).

It was however all interest free or lower than the interest rate we could earn on a savings account. We didn’t have the cash when we took out the debt but knew it could be repaid within 2 years and so saved up the money over that time and then paid it all off within that window. We’re now debt free (excluding mortgage). So it’s not always unmanageable or stressful.

£65k of debt would have me awake at night. I don’t know anyone who has that much debt that’s not a mortgage. What on earth is it for?
If it’s not for cars too.
I would feel sick not having savings, let alone that much owing.

Was it for home renovations? Do they have a low mortgage?

No, that level of debt isn't normal. However, there isn't much that you can do about it, OP. It doesn't sound like your ds and his wife are willing to face up to the reality of their situation. They are clearly spending beyond their means, but ultimately, that's their choice. When they're ready to deal with it, they will.

You probably do know people with debt like that, they just haven’t told you! We were heavily in debt 10 years ago but none of our friends knew.

its certainly not ideal, but I imagine that it’s far more common than people realise

What is the debt?

We are servicing debts of around £30k at the moment, which should be cleared in approx 18 months and equivalent to just under 25% of household income. It's not a problem for us and the debt came from home improvements (cheaper to get a loan for 3 years than add to mortgage). We have around 65% equity in our home so worse case scenario we'd have to sell up and move somewhere cheaper.

Yeah I probably should have said no one I know who I’m friends with/close with. Me and my friends talk about money stuff quite a lot. I also have quite risk adverse friends and not many of them have new cars etc and are very careful with their money.
I do know of one couple who owed about £20k at one point but that was partly for a car and part tax bill. And it was a huge issue and is now sorted.

MN doesn't have 'normal' experience of debt due to relative affluence (hence comments about £100k household income being 'not that much') but out in the real world there are a growing number of people with significant amounts of unsecured debt, £65k is small in comparison.

Just have a look at the MSE debt free wannabe board there's probably loads of them looking for support.

As for their household income, seeing as they'd be on more than £80k if they were 30 YO 'standard' teachers then it is more likely that they earn more than £100k with extra responsibilities

https://neu.org.uk/advice/your-rights-work/pay/pay-scales/pay-scales-england

Personal debt has risen hugely in the UK and it's not necessarily linked to low incomes.

"As of March 2023, average total UK household debt excluding mortgages was around £15,501—an increase of 79% over ten years."

That's the average debt. Some people will be in a lot more debt than that.

It's hard to talk about what's 'normal' as different things are normal for different people. £65k of debt is certainly not normal for me - but for some people, they and everyone they know are in debt and that's just life and they accept it. It's a huge problem for the economic stability of the country.

https://www.nimblefins.co.uk/average-household-debt-uk

I thought the OP meant £100k each? But it’s a high level of debt.

We earn £130k combined and I don’t consider ourselves high income. It’s a very modest amount so we can’t afford nice cars, nice clothes, lots of holidays. I think the problem is they are living beyond their means if they want designer clothes, £10k watches, expensive holidays, cars and houses.

But you can’t criticise his life.

Just to add we don’t owe anything except the mortgage.

I would say it’s actually more common than many of us think.

There are a lot of people out there that think “I work hard so why can’t I have nice things?” and this mentality is exacerbated by reality TV and social media, where it seems like everyone except you is carrying a Birkin and going on holiday to Dubai.

So people go and get into debt. Sometimes they can service it, sometimes not and they get into deep trouble. But you won’t hear them talk about it as there is a lot of taboo and shame associated to the topic.

I’ve always been incredibly prudent with my money but that has meant not always going on holiday, missing out on expensive hen dos, and the like! And in some circles this makes you unpopular. But my choices have served me well.

Mumsnet has about 10 million posters and when you look at any thread about income the overwhelming majority is middle to low income, as you’d expect, it follows the population demographics.

No not normal at all, our household income is higher than that and I think I’d feel permanently queasy with that hanging over my head.

Surely it depends on the interest levels and ability to repay?

Granted, £65k + car finance is a lot.

We earn less than that (about £80k combined) and have about £11k debt on top of the mortgage. I don’t worry about it because it is interest free finance we took out to renovate our kitchen and we will easily have been able to pay it off by this time next year, or we might wait until the term is up depending on what interest rates are doing at the time.

I don’t oppose finance - you just don’t want to be financing too many things at once. So last year we did our bathroom and DH’s car. We have paid off both off those loans and were debt free for a few months (mortgage aside). It means I don’t worry about the kitchen.

I also want a new car but I have to wait until the kitchen has been paid off.

You've hit the nail on the head there - you are going to wait until you can afford to get a new car. So many people want it all now. The OP's son sounds like a classic live beyond your means situation.

DH and I earn more than that combined and other than car finance a few years ago have never bought anything significant on credit. We save and then buy outright. Even when our salaries were considerably lower. If I had £65k of debt (plus car finance) I would be unable to function from worry.

If he's a deputy head and she's a HoY, they'll be earning more than £100k between them.

Outside of mortgage no that's high. I earn about £40k and have £12k across to CCs and I'm freaking out a bit, but three huge expenses in the last six months and instead of paying it off at the end of the month it has accumulated. I should clear at least half of it though by the end of the year if not sooner.
They are living beyond their means and if they don't start paying it down soon it is a risk. What if one of them lost their job?

I think its normal , at least for me.

I earn £140-160k lone parent.

My mortgage left on the property is £146k , worth over 1m

I have cc debit of £40k which I'm paying off interest free , over 2 yrs. This debt was for the massive build I had on the house.

If shit hit the fan in a really big way I could still service the debt. Its all direct debit and I've not missed a payment ever.

We have 60k of debt - it was for home improvements, big kitchen/back of house refurb.
For us it was cheaper overall to take it out as 0% credit/ low interest loan rather than put it on the mortgage because our mortgage was/still is on a really low rate and the rates were just starting to go haywire. We can pay it off and afford it so it’s fine. Definitely want it gone over the next 5 years though !

Our joint income is around 230k. We have unsecured debt of 3k max (just spending on card for airmiles etc that we pay off immediately).
A mortgage of 160k
We do not have a fancy lifestyle by any means.
I only use public transport and buy minimally.

I don’t understand the premise that this is normal.
That said I also don’t really care about what other people do with their incomes. It would stress me a lot to have a debt equal to 65% of my income!

No it’s not normal.

most high earners live within means and save because they can. Outside of a mortgage and a possible car loan they would not have debt, unless they were in the process of starting a business or something, or had taken out a loan to do a renovation with a view to sell a house.

100k between them would only be a lot if they have low outgoings (small mortgage etc because they are in the north.) 100k for 1 person is not really a high earner in London.