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Original poster

How many of you have racked up huge debts?

131 replies

Twiglett · 16/09/2007 08:44

OK, up front I appreciate that this could be taken as an arsey thread but its not meant to be.

I was brought up not to borrow money and our only debt is our mortgage because quite honestly we were scared to incur other debts and went without instead

I find it difficult to truly understand whether this whole 'looming debt crisis' is for real or a media-invention

Do people re-mortgage every time their house value goes up, have you racked up loads on credit cards and taken personal loans every time they're offered .. if so why?

OP posts:
gess · 16/09/2007 10:16

steeple? staple!

FlossALump · 16/09/2007 10:17

Entitlement is definitely DP's problem. He admits if he feels down he goes out to buy the thing he wants, and feels he 'deserves' it.

ThePigletGuru · 16/09/2007 10:21

Sleepless, we were offered 6 times DH's salary - er, no thanks.

Friends of ours have just bought a big house (aspirational and entitlement culture again) and they have a huuuge mortgage. He makes lots of cash, but is away from home a lot. She has had to go back to work fulltime. That was fine with her as their DD1 is near to starting school, but she has just found out she is pregnant with number 2. She will have to go back to work after the second baby because the mortgage isn't supportable on one salary.

Obviously this is their life choice and I wouldn't criticise them for it, but for us - I would rather have a smaller house and the freedom to decide whether to work or not. Anyway, I digress.

SleeplessInTheStaceym11House · 16/09/2007 10:26

six times a salary?!?! thats ludicrous!!

as i say we have twice the amount with the mortgage company and thats fine until i start work and we'll re-evaluate!

ThePigletGuru · 16/09/2007 10:29

Sleepless, read this - it's frightening.

admylin · 16/09/2007 10:31

Apart from a small student loan we are debt free but live in rented accomodation. I do sometimes think it is thrown away money when the rent goes out each month and where are we going to live when we are old etc but somehow we can't sleep if we have debt and have even opened a savings account for an upcoming trip in December 2008!
I somehow missed out on the credit card thing too, never understood how people can shop and shop on credit. My parents and sister do including holidays and house extensions but at the moment they are both crying because their money just seems to dissapear like water.

Gobbledigook · 16/09/2007 10:32

6X salary is not a new thing though. My dad borrowed 6X his salary in the 70s to get us out of a high rise tower block and into a house in a nicer area. He worked double shifts to pay for it and it did pay off in the long term.

Not sure I'd do it for just a bit nicer house though if the one I had was fine.

SleeplessInTheStaceym11House · 16/09/2007 10:33

that is frightening! am

vnmum · 16/09/2007 10:33

we are in debt, we have no mortgage although i dont see a mortgage in the same way as credit carsd etc in that you have to have a mortgage to buy a house, not many people can buy a house for cash.

we ran into trouble with loans that got extended to cover credit cards etc. i have to admit that most of the debt is DHs but i put some of his on my credit card etc. we also tried consolidating to make the interest cheaper but then the banks put up the interest as soon as you say its for consolidation.

we were managing until i had to give up my job and we lost nearly a grand a month income. we then had to rely on cards to get us through the month sometimes and we are now in an IVA. it was stressful when we were trying to sort things out and even now we know that we have to make the payments for the next 5 years or we can be bankrupted so we have definately learnt how to budget better. we have no credit cards and we have both said that we wouldnt want any again as we wouldnt want to get in a mess again.

i do think that the banks etc are partially to blame because when you reach your credit limit they extend it, and they are always offering you more credit. when you have got yourself into a habit or situation where you are borrowing from one to pay another etc its hard to break the habit and say no when they offer more money and say the car breaks down or something, its easy just to use the cards.

we have learnt the hard way that you have to break the habit and stop buying things you dont actually need. we were used to alot of disposable income until i lost my job and then it took us awhile to get used to it not being there. the debt was all run up before we had kids and it was having DS that made us realise we had to sort it out.

the entitlement culture etc where people think they should run up debts then if they die it doesnt matter is wrong, because the chances are the debts will be passed on to your kids and they will have to pay it off for you. thats something i wouldnt want

WideWebWitch · 16/09/2007 10:34

your debts don't necessarily get passed onto your children, not at all.

inamuckingfuddle · 16/09/2007 10:54

We have a large mortgage and manageable debts - but that is with a fixed rate mortgage. When this expires next winter we may well struggle. We are seriously considering jumping off the property ladder for a couple of years until it all calms down a bit, earning interest on the equity from our house, which should be around £80k, rather than paying interest on the mortgage. Has anyone else done this? Is it a bit scary?

mytwopenceworth · 16/09/2007 10:55

Huge debts.

Was very rich.

Business went ker-bluie.

Got very poor very fast.

Now bankrupt.

It happens.

vnmum · 16/09/2007 10:59

we were under the impression that the credit companies will try and get the money somehow so if you have nothing to leave the kids anyway they will try and get the debt passed on to them. maybe we were misinformed. i still wouldnt want to risk it.

we learnt the hard way how easy it is to get into debt and how hard and stressful it is to get out and i dont want my kids to go through that. we will hopefully educate our kids not to rely on credit all the time

Boco · 16/09/2007 11:03

I agree, i've never had a credit card and never would as i don't know what's coming so only want to spend what i have. No overdraft either - and barely any income atm! I have a mortgage and student loans - would never borrow anything else.

This month things are really tight and can't afford to get anything but the essentials, and i have to force myself not to look at lovely things. It's boring being skint. But i also know that i will get a job and dp will sort himself out, and then at least everything we earn will be ours.

ThePigletGuru · 16/09/2007 11:46

Boco, I have had to totally retrain my spending habits. When I was a single girl working in the City, if I saw a £200 handbag - poof! instant gratification.

This week I have spent 4 days going between shops trying to justify spending £22 on nice shoes for DS, rather than £12 on ugly ones at the discount Clarks. Being skint SUCKS Iand I do appreciate that we are only relatively skint). But in the long run, we want to keep saving - I have to just keep thinking of the future.

(But there are some boots in Hobbs I lust after )

Hideehi · 16/09/2007 11:59

inamuckingfuddle - i would buy something even if it's a much cheaper/smaller house to keep a foothold and get a percentage
of the interest from the equity to cover the mortgage on the cheaper place.
We stepped off the ladder for a year and it did cost us dearly but we also sold at the worst time in the last 10 years, quarter 4 of 2005.
Unless you're qualified, it's a big gamble and very hard to get the timing right.

WideWebWitch · 16/09/2007 12:04

inamucking, I'm calling the top of the market at about 2 months ago and I reckon there's going to be a crash. So in your position I'd sell, rent, stockpile cash. Do join us on the houseprice bores thread if you like!
(We're renting and have decided to stockpile cash untl next year as we'll have larger deposit and reckon prices may be lower. If they're not we'll still be able to buy so we're in an ok situation)

WideWebWitch · 16/09/2007 12:05

(But I'm no expert btw!)

QueenofBleach · 16/09/2007 12:09

I'm another one with a DH useless with money, went a bit happy on a credit card and struggling to pay loan although small one. as we runa business from home which covers everything we need and can save I am going to pay off his loan so we are debt clear, joint account and have complete control of money, I already do the books and have receipts for everything. This way any extra money he does earn goes into savings, ISA's etc for rainy days and a holiday with DD once a year.

inamuckingfuddle · 16/09/2007 12:24

ta for the advice ladies

We both have secure jobs (teaching) and are reasonably well paid, considering the profession! We wouldn't struggle to get back on the ladder, esp with 80k deposit and living in the N East. We are thinking of moving nearer to my parents, in Sheffield, so would want to rent to suss out the area before buying anyway, tbh. Also our house is probably about as high as it will go, we bought it new 4 years ago and it has gone up by 50% in that time, can't see it going any higher

WWW I'm off to look at the property threads right now, can't think how I've managed to miss them before

scattyspice · 16/09/2007 12:40

I think the culpret is the lack of affordable housing and social housing. Most morgages seem to require 2 incomes.

People get into debt when their circumstances change (illness, injury, death, divorce, redundancy) and they no longer have 2 incomes.

This is not something to be sneered at.

scattyspice · 16/09/2007 12:41

There for the grace of god go I.

LaDiDaDi · 16/09/2007 12:45

Dp and I have quite different views on debt and money!

He has 15k loans although they are for his business but they still make me worry.

I have 2k on interest free credit cards as we have just had the bathroom redone. Hope to pay them off by April next year when the interest free period runs out.

Between us we have a reasonably big mortgage but we also have savings sufficient to clear our loan and credit cards if we really needed to.

Our plan is to offset our savings against our mortgage when our deal ends in March.

I have a friend who I really worry about money wise. She and her partner bought their house with a 100% mortgage, they each have car loans and credit card debts, they are going to take out a 10-15k loan for their wedding next year and when we were out last week, so just over 1 week from being paid, the bank wouldn't let her get any money out as she was over her overdraft limit !

southutsire · 16/09/2007 13:10

DH knows someone who works for one of those companies that offers to buy your house and rent it back to you, all on the quiet, "so your neighbours need never know" that you have financial problems. There has been a bit in the news about these companies lately as people have been complaining that they only got 75% of the market value. (Er, yes, that's because you didn't put it on the market .)

I can see a very few instances where doing this might be wise as a last resort (i.e. if your home is about to be repossessed and you really want to stay living there), but surely these companies are largely just taking advantage of vulnerable people.

Me: no debt (no house ), except a credit card that we pay off completely every month so incurring no interest. IMO credit cards are usually an incredibly expensive way to borrow money. We don't have many holidays etc, as we're saving a house deposit, and have often felt a bit envious of friends who earn less yet seem to spend more. But we feel really good about the amount we're saving.

ElenyaTuesday · 16/09/2007 13:21

My job involves dealing with people in debt and although there are people with sad stories to tell (illness, redundancy and so on) where the debt is understandable, the vast majority are in debt through over-spending on luxuries and most have nothing to show for it. You wouldn't believe some of the stuff I hear (and I have to keep a straight face, rather than telling them what I really think).

gess, I find your situation shocking - it seems terrible that you have to run up debt to help your child.