Acceptable debt?

£0.00

If you want something – save for it – old fashioned, I know.

No one will give me credit even if I wanted it (which I don’t)

I think it really depends on so many factors.

Right now – I have zero debt. Its good but I am not righteous about it.

But in the past I have had some debt – maybe up to £10k – but these debts have enabled me to get to where I am today, especially useful coming out of university. Without the extra cash I honestly don’t think i would have been able to get to my position today.

But I always stuck to one rule – if I could not seriously buckle down and pay it off in a year then it was too much debt.

I don’t think student loans can be seen as ‘normal’ debt as there are conditions around when you pay it back, the rate and time period.

It’s better seen as a time limited graduate tax isn’t it?

Still owe my father-in-law 3 payments of £275 for some money I borrowed for my car, I just about manage to sleep at night!

I needed a car (old on needed £1k of work to get it through the MOT) a good mates Dad was selling a really well looked after example of the car I wanted and my FIL offered me the loan interest free over a year.

All worked out very well for me really. Aside from that I have a credit card which I clear each month and no overdraft, same for my wife. I could have debt, but I don’t really find I need to – and yeah the mortgage is more than enough in reality.

It’s not like I go without either I have plenty of ‘stuff’ I just also earn enough to pay it off each month.

I would prefer to be overpaying on my mortgage too though, so it’s not like everything is perfect.

Debt is not bad. Bad debt is bad. If you get my point.

I can “afford” to pay off my debt several times over with my savings. If a CC is going to offer me 0% for the debt I have for 18 months I’d be stupid not to take it. The savings are earning more interest than the debt costs.

Wonga.com and the rest of the loan sharks are vulture scum of the highest order. But some people don’t think they have a choice.

There are a lot of people with large mortages that preach no debt to others. If I owed 100k or more to a bank that can, and did to someone I know, call in that debt with 30 days notice, I wouldn’t be able to sleep at night.

I’m with Mr Micawber

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

For those who only know pounds and pence this refers to the old pre-decimal currency. I am old!

If I owed 100k or more to a bank that can, and did to someone I know, call in that debt with 30 days notice, I wouldn’t be able to sleep at night.

What’s the alternative though? How much notice does a landlord have to give you when you are renting? Does having no house to call your own help you sleep any better?

I was happy with £800 on my interest free CC. Then I went away for work and missed the payment date. So now I’ll be paying interest on it and that’s unacceptable to me!
(I think I’ll borrow out of a savings account and pay it off.)

What’s the alternative though? How much notice does a landlord have to give you when you are renting? Does having no house to call your own help you sleep any better?

I’m afraid it’s the bank’s house until you’ve got rid of that charge by paying off your mortgage. Sleep easy won’t you 😉

renting tenants have considerable protection from being removed from a property (much to the dismay of most landlords)

renting tenants have considerable protection from being removed from a property (much to the dismay of most landlords)

Odd that folk aren’t afforded the same protection from banks – since they are effectively letting “their” house to you too.

Odd that folk aren’t afforded the same protection from banks – since they are effectively letting “their” house to you too.

😀

Odd that folk aren’t afforded the same protection from banks – since they are effectively letting “their” house to you too

Who said that mortgagees were not afforded a similar protection to lessees?

The point I was making is that you’ll be out on your backside if you fail to keep up rental or mortgage payments, and that tenants are afforded substantial protection from landlords being able to boot them out on a whim.

Stop paying your mortgage and see what happens. It’s pretty similar to what happens if you stop paying rent.

Yeah but according to bigblackshed above, the bank can just “call in that debt with 30 days notice” which sounds unreasonable and isn’t something a private landlord could do.

The point I was making is that you’ll be out on your backside if you fail to keep up rental or mortgage payments, and that tenants are afforded substantial protection from landlords being able to boot them out on a whim.

Stop paying your mortgage and see what happens. It’s pretty similar to what happens if you stop paying rent.

You went to Law School right?

how ever bigblackshed was suggesting that his mate was just turfed out

if you dont service your debt then you dont deserve to keep the asset – i have no issue with that !

A student is going to leave Uni with up to £50k in debt now.

It’s not normal debt though.

I don’t have a problem with the concept of debt. You’re paying for a serivce that lets you get what you need or want, when you need or want it.

Irresponsible borrowing is another issue, but there comes a point when I’d rather pay 20% more for something than go without for two years.

I’m afraid it’s the bank’s house until you’ve got rid of that charge by paying off your mortgage.

No, it’s yours, it’s just collateral for the loan.

Otherwise it wouldn’t be reposession if you defaulted, it’d be eviction.

You went to Law School right?

Are you suggesting that banks in the UK don’t repossess homes on default?

9,600 homes repossessed in first 3 months of 2012

No, it’s yours, it’s just collateral for the loan.

Otherwise it wouldn’t be reposession if you defaulted, it’d be eviction.

A was being a little bit facetious to emphasise the point that just because your name is on the title deed, doesn’t mean that your immune from being booted out of your house, as the figures quoted above would suggest.

Not sure anyone thinks that you are!

Are you suggesting that banks in the UK don’t repossess homes on default

Of course they do, but your implication is that banks will repossess a home at the drop of a hat and that private landlords will have to jump through hoops of fire before they can oust their problematic tenants.

The reality is that the mechanisms in place to assist home owners struggling with their repayments are far reaching and banks will do a great deal to keep mortgage payers in their properties paying (something).

Landlords don’t want none payers or difficult payers and as you certainly know the Law more than recognises this fact. Whilst it’s not easy to evict tenants there are very straight forward mechanisms in place for landlords to remove none-payers and very useful and adaptable mechanisms for mortgage payers who are struggling to remain in their homes.

I’d much rather be a home owner than a tenant.

The reality is that the mechanisms in place to assist home owners struggling with their repayments

Some would argue you aren’t a home owner yet…

Tenants would argue you aren’t a home owner yet…

Indeed they would.

A student is going to leave Uni with up to £50k in debt now.

Yes, A student, the average will less.

As for the original question, no debt for me unless you’re being picky in which case stuff like phone contracts are effectivey credit as you’ve promised to make the payments in the future. Apart from student loan which I’ve more in savings than the outstanding loan but that’s accuring intrest at a comparable rate to the loan and will be better put towards a mortage deposit at some point.

You can’t talk about Debt and then say that we aren’t counting mortgages. Mortgage debt is still debt but as others have suggested its more “good” debt than “bad”.

I have a 115k mortgage left, a 0% credit card paid off in full each month (i use it for the benefits it provides) and will have around 13k of student loans in a years times.

I wish I had realised how cheap my student debt would be as its cheaper than my mortgage. I could have moved the mortgage debt to the student debt and saved myself quite a bit of interest in a few years time.

0 debt apart from mortgage. There is a very good reason people wish to lend you money. If you can’t suss that one out put your head in the oven now.

You can’t talk about Debt and then say that we aren’t counting mortgages.

It’s my thread and I can make whatever rules I like. 😉

The Bank: It’s my house and I can make whatever rules I like.

😉

There is a very good reason people wish to lend you money.

Yes, but there is also a very good reason I pay people for all kinds of services, of which lending is just one.

I can’t really understand what some people have against having debts. It’s the basis of any society. You do something for me, I’ll do something for you in return. Hardly something to loose sleep over.

Obviously having debts you can’t pay back (whether money or anything else you might owe) is a bad idea, but otherwise borrowing is extremely useful for everyone and enables a large scale economic machine to work.

I’ll own up to being in a large amount of debt with nothing to show for it, a lot of it due to charges from burying my head in the sand and being scared to deal with it, a lot of it from just being stupid.

Have no float, no pension, renting, no investments. However I refuse to go down the route of bankruptcy/IVA: I caused the problem, I’ll sort it.

Looks like I’ll never have a mortgage though, and will be able to start paying into a pension at about the age of 70 or so…

I bet you there’s more people on here in a similar situation than would openly admit to it.

I’d love to be debt free but realistically it’s never going to happen.

GrahamS – Member

What’s the alternative though? How much notice does a landlord have to give you when you are renting? Does having no house to call your own help you sleep any better?

Housing Co-op. Affordable rent for life. And no I’m not glouting, you haven’t met my neighbours.

The single mum who was turfed out after 30 days, no default, no missed payments, husband just walked out leaving her with a reducing overdraft type mortage, (not really sure what it was called, not an expert), which the bank felt she was not able to manage to pay.

As it turns out most mortages have the 30 day clause in them, but obviously it’s not in the best interest of the bank to use it, they would loose the future years of interest payments and with low priced houses hitting the market, as a result of people off loading property, they are not going to be able to sell big mortages.

Incidentally, after the fallout and her getting herself back on her feet, her husband then dicided that he’d “like to come home”. 🙄

Of debt and personal finance in general, this book explains it in simple terms and has nice story to go along with it too:

The wealthy barber
Amazon link

Can thoroughly recommend it.