Between quarter and a third, give or take. Even those approaching bangernomics (£3000 cars maybe) will have taken on debt to buy.

Tell me about it. I know of people who are looking at 2 and 3 times one salary excluding the mortgage. And that’s on low 6 figure (sterling) salaries. Bit of an extreme (i hope) but scary stuff.

I have no idea how you manage to burn through that amount of cash.

I have no idea how you manage to burn through that amount of cash.

Answer’s obvious – coke & hookers.

As mentioned above, student debt must be quite a large part of that, cars another chunk and credit card debt probably makes up most of the rest.

Don’t think I’ve ever had any significant unsecured debt (beyond the free month on the credit card). Missed student loans by a year…

**** me, I’ve only got a grand, best get cracking, anyone want an intense?

Tell me about it. I know of people who are looking at 2 and 3 times one salary excluding the mortgage. And that’s on low 6 figure (sterling) salaries. Bit of an extreme (i hope) but scary stuff.
I have no idea how you manage to burn through that amount of cash.

But someone on £100k far more able to service the debt than someone on ~£20k (assuming jobs are stable).

Say the minimum required to live normally is ~£15k (house, energy, food, water, car). That leaves the £20k guy with £5k to repay loans (e.g £13k over 3 years), Mr £100k has £85k to make repayments with (if he wanted to be poor and clear the debt quickly), so could be borrowing ~£220k at the same interest rate.

I’ve got about 2k debt on an interest free credit card with bugger all savings and that’s stressful enough. Can’t imagine 13k, I wouldn’t sleep.

Me.
No credit cards
No finance deals, not even a mobile phone
No mortgage

Everything I own is paid for 100%

We’ve got a reasonable household income (when compared to national averages) however we’ve got loads of debt (Mortgage in excess of £200k) and a few £k on credit cards etc.

Not bothered about it – doesn’t keep me awake at night.

We could just scrape by on one of our incomes if one of us lost our jobs (we’re in different industries so hopefully wouldn’t both loose them simultaneously)
We have +50% equity in our house, so if we sold it tomorrow, paid the mortgage/all our debts off we’d be left with enough to buy a smaller/cheaper house outright somewhere not quite as nice.

I have no idea how you manage to burn through that amount of cash.

Quite easy, SWMBO eliminates the word ‘NO’ from your vocabulary in the first couple of years of a relationship, before moving onto a £200/wk spend on cosmetics and double that on shoes and handbags.

Not quite so high wages, but its easy to see examples where I work (and I assume at most workplaces).
I worked with a few guys my age, all earning similar money. Going from one extreme to the other, one can buy new cars and still have ~£400pcm spending money, whilst another drives a banger, has at least £10k of debt and never lasts until payday without current account running dry.

Not sure how many students have debt but most are going to have around £40k which will throw out the numbers. As most will not actually be paying it back or paying back a minimal amount it is not really the same as ‘normal’ debt though is it, i.e if I get a job that pays £20k per year I still have to pay my loans…

Do student loans count as consumer debt in the UK? It’s different in the USA (where it’s an actual loan from a bank with fixed repayments). But Tax debt doesn’t usually count in consumer debt figures.

But Mr £100K won’t be living in the same sized house with the same mortgage. He’ll still have considerably more disposable income to burn holes in his pockets but it won’t be £85K.

Despite all the other tribulation in my life I’ve been fairly careful with money/debt and now feel happy in having over a years salary in savings and less than that still owing on the mortgage

So even with the mortgage included I am +£13000 so for once I am a fairly happy bunny

You’d struggle to hold down a job (or a relationship!) if you were going through the coke and hookers at that rate……

Probably paying twice that on the mortgage. And twice that for cars.

Only way they’d be able to service the loan is if the house and cars were repossessed……..

If that excludes mortgages, sounds like many people are living beyond their means to keep up with the Joneses!

Me, I’ve got a small Student Loan which I rarely have any deductions taken off my wages for and that’s it. No mortgage, but been paying ~£65k in rent for the same flat over the last ten years, now Mrsgoat is working we are borderline for a shared ownership place.

However, I doubt we will ever earn enough to own a place outright, so what happens when we retire in ~25 years and we only own ~50% of the flat? Will Housing Benefit cover the rental bit until we push up he daisies, or would we be forced to sell our shared ownership place?

Average household income is £26,000 – average debt 50% of that

Firstly its worth making sure that the ‘average’ you’re comparing is like for like. The press tend to use ‘Average’ but might actually be talking about mean or median. You could be comparing very different calculations

The second thing is – income isn’t really the useful thing to compare debt or borrowing against. You should really compare against wealth. Debt and credit tends to be a privilege for the wealthy – nobody lends to poor people if they can help it.

A £13k credit card bill if you have no assets would be a pretty big deal. Having £13k to pay off on your yacht when you have a house, an ISA, and a pension pot and so on is less of a big deal. 50% of the population have assets of £230,000 or more – 10% of the UK population are now asset millionaires.

Only 1% are in a position of negative wealth (rather than only having debts to service) and on average they owe £3600.

if it includes student loans, then this news is meaningless.

Probably paying twice that on the mortgage. And twice that for cars.
Only way they’d be able to service the loan is if the house and cars were repossessed……..

It’s hypothetical and unrealistic, they’d also have to give up the coke, hookers and Intense bikes.

But the banks only bothered about whether you can make the repayment without going bankrupt. So measuring debt as a multiplier of income isn’t always a good way to compare to completely different circumstances. The banks know this so they happily lend more multiples of salary to high earners.

I love these threads on here…

So many wonderful STWers in the world who are far superior to the normal world.

It is a bit of an abstract statement in itself though isn’t it? Surely you have to see the bigger picture ie, LTV on any mortgage, savings etc.

For me – I have just taken on a £10k loan (first loan in many years) as we have some home improvements we wanted to make. The loan is going to cost £800 in charges if we let it run its course (5 years). But I ‘only’ have a £190k mortgage on a house worth £600k so if we were ever in a difficult situation then we have more than enough equity to cover us and we could buy somewhere outright. To be honest I sometimes like the idea of doing just that, but then I also want to maximise the inheritance potential for our two girls as they will need all the help they can to buy when they are older.

Crikey. I assumed that cars on debt were maybe 10% of people with cars. If my car broke down I would either fix it or buy a new one from savings – maybe 8k on one?

I think in total I’ve got maybe 50 quid on a credit card. Plus a load in savings.

I tend to think that I’m pretty bad with my finances. I guess not!

That being said I do owe a sh*t load on my mortgage!

If you were ever in a difficult situation, Johnhoh, chances are that many other people would be too and your house would be worth maybe £250k.

I don’t have any debt but do have investments. I’m on the point of selling one, a flat, which I’ve kept on the basis it’s an investment that I wouldn’t lose if the banking system went tits up. But thinking about it: if the banks fail nobody will be able to buy it or even pay rent so it’s going for something that returns less but is less hassle.

This consumer debt, would it count the fact that for example I use a credit card for almost everything as get cash back but pay it off every month so it looks like I’m constantly 1K in debt when I’m not?

50% of the population have assets of £230,000 or more

Good point. And that same 50% may be the people with debt higher than £13,000 and if they do then so what if they have that amount of assets.

Going from one extreme to the other, one can buy new cars and still have ~£400pcm spending money, whilst another drives a banger, has at least £10k of debt and never lasts until payday without current account running dry.

I am discovering that much of this kind of difference is often down to how much their background and parents has ‘set them up’, as much as their behaviours and efforts.
We have a car loan, a couple of (cheap) phone contracts. Frustratingly we have two mortgages, one a Buy to Let. That said, each month is a juggle of priorities to save us running out at the end of a month….

@anagallis It usually refers to long term debt agreements so if you paid off your credit card bill each month then each is seen as a monthly loan. If you failed to pay off the full amount then it starts to look like a long term debt.

If you were ever in a difficult situation, Johnhoh, chances are that many other people would be too and your house would be worth maybe £250k.

£600k to £250k? A reduction of that amount is utterly unlikely – the entire country would be in ruins and my particular plight would be the least of anyones concerns.

Debt and credit tends to be a privilege for the wealthy – nobody lends to poor people if they can help it.

Lol, I’ll have one of whatever you’re on.

Two pages and no link to the article? C’mon, gotta get fact checking.

The only debt I have is my Student loan which is kind of invisible tbh because it comes out before taxes from my salary. If I don’t earn, the payments stop.

Other than that, zero debt here! I also don’t own a car or a house, which will change if/when I move out of London in a few years….

Lol, I’ll have one of whatever you’re on.

Pop into Wonga – tell them that you want to borrow thirteen grand and you don’t have a job

If you were ever in a difficult situation, Johnhoh, chances are that many other people would be too and your house would be worth maybe £250k.

£600k to £250k? A reduction of that amount is utterly unlikely – the entire country would be in ruins and my particular plight would be the least of anyones concerns.

+1 – Ours is worth a similar figure, our recovery/rescue plan works with a 10% or even 20% drop in value, but there is no way the London housing market is going to loose +50% of its value..

Pop into Wonga – tell them that you want to borrow thirteen grand and you don’t have a job

Aye, cos it’s only unemployed people who are poor. What’s the purpose of wonga if not to lend to poor people? Tell them you have a shite job and next to no disposable income and they’ll sort you out with a loan. Might not be thirteen grand at the start but it soon will once you’ve missed some repayments.

9 years ago I got to the point where I could no longer shuffle money around to pay the minimum amounts on CCs etc. I’d get paid, and then I’d have virtually nothing for the rest of the month once all the bills were paid. It was awful, I’d kept it to myself and hadn’t told my OH. My total debt was in the region of £12k.
Got a voluntary agreement in place to keep the creditors from the door, which helped a little day to day, but ultimately didn’t really tackle the outstanding debt.
My wonderful mother basically paid it off out of my inheritance. Part of me is eternally grateful, but part of me is ashamed that I couldn’t sort it myself.
Now, other than a mortgage I am debt free and owe nothing to anyone. Ok we have to do without the shiney and new stuff and things, but I can cope with that.
I start to feel physically sick at the very thought of getting something on credit nowadays.

2 pages and we’re missing one persons important opinion, Shirley.

No loans, car finance, etc here, just the mortgages. And we’ve never re-mortgaged in order to pay for other stuff. I wonder how much that would affect the £13k figure, if you could quantify the proportion of mortgage lending that’s not been spent on the house ?

Our only “debt” is a joint credit card for day-to-day spending but it’s paid every month and even during the month there’s always cash in the bank to cover it – Santander pays interest and we get John Lewis vouchers for using the card so it makes a lot of sense !

I am discovering that much of this kind of difference is often down to how much their background and parents has ‘set them up’, as much as their behaviours and efforts.

It can be that.
Or it can also be the £80pcm in gym memberships that get used once a fortnight, the £100pcm on phone contracts, £100pcm at the cinema etc.

Some folks have different priorities which is very understandable, but how they can cope with the needless stress of being permanently low/empty on cash whilst spending a small fortune on entertainment i’ll never understand.

Surely when your pay isn’t lasting until payday you just don’t go to the cinema rather than living off beans on toast and running the car on fumes for a week? 😕

Broooesss to the forum.

In California house prices fell more than that in 2007-2009, Johndoh. My ski flat is worth about half what they were selling for in 2007. Still double what they went down to in the previous crash which was when I bought.

its interesting that the viewpoint here generally seems to be that debt = bad. Debt can be very useful – I revolve credit cards (spend one month, pay off at the end of the month) which would account for 10% of that figure, I think buying a car with a loan so you can drive to a better job and earn more (much in the same way governments should borrow to fund infrastructure) is a sensible idea.

unsecured loans are available from 2.8% APR. that means the cost of borrowing £20k is under £50 a month. Doesn’t seem like a bad way to fund an extension or other home improvements…

Would be interesting to know the age of the average debtor ….

Then there is ….is it really debt if you have the savings in the bank to cover it ? Ad while financially it makes sense to transfer it over in some cases it’s possible to be earning more return on investment than you pay in interest while retaining fluidity of funds.

its interesting that the viewpoint here generally seems to be that debt = bad. Debt can be very useful – I revolve credit cards (spend one month, pay off at the end of the month) which would account for 10% of that figure, I think buying a car with a loan so you can drive to a better job and earn more (much in the same way governments should borrow to fund infrastructure) is a sensible idea.

Maybe, but in that particular case the car isn’t unavoidable debt, you could still have bought a cheaper one with cash.

Student debt, or business finance fit’s your analogy perfectly but I can’t think of anything that could be considered consumer debt (unless your a sole trader using personal finance as a business loan).