Consumer debt......
Discussion
Now I know a lot has been said about this before. The rising amounts and the potential spiralling out of control.... but is it that bad?
The reason I ask is that I believe that I have too much debt. In fact, I have a two credit cards, one with a BIG balance which will be halved in a couple of weeks. Then around 6 months later it will be paid off.... I dont have that much savings, but thats my failing.... I always assumed that I was one of the worst offenders....
But, it seems that I am not! My wife was talking about someone she knows who has 7+ credit cards, each maxed out. So much so that he couldnt fill up is car the other week.... and then went on a foreign holiday....!!!
I dont know the full details of this person and their financial situation, nor do I want to. But they are maxed on mortgate (£350k), maxed on cc's and dont use cash as they cant get it out any more. Is this as common as the doom-sayers are indicating? Is consumer debt really threatening the fabric of society? I must admit that I am coming around to this view.....
Am I being stupid?
The reason I ask is that I believe that I have too much debt. In fact, I have a two credit cards, one with a BIG balance which will be halved in a couple of weeks. Then around 6 months later it will be paid off.... I dont have that much savings, but thats my failing.... I always assumed that I was one of the worst offenders....
But, it seems that I am not! My wife was talking about someone she knows who has 7+ credit cards, each maxed out. So much so that he couldnt fill up is car the other week.... and then went on a foreign holiday....!!!
I dont know the full details of this person and their financial situation, nor do I want to. But they are maxed on mortgate (£350k), maxed on cc's and dont use cash as they cant get it out any more. Is this as common as the doom-sayers are indicating? Is consumer debt really threatening the fabric of society? I must admit that I am coming around to this view.....
Am I being stupid?
Whatever happened to self-control? I want a lot of things but I'm not buying them until I know I can afford to pay for them - I don't mind loans and stuff, as long as I have the income to pay them off.
It's no-one's fault but the slavering pillock who takes out each loan, each card, each finance offer. There is a choice at the point of sale, idiots!!
It's no-one's fault but the slavering pillock who takes out each loan, each card, each finance offer. There is a choice at the point of sale, idiots!!
CC just make it so much easirer to have the creature comforts in life. "Ahhh don't worry dear i will get it on the CC and it will make it more affordable as we only have to pay £30 a month for it, instead of paying £1500 for it now" fools don't take into account that £15 of that £30 is interest
When they're calculating such 'personal debt' stats, what's included? Mortgage, secured loans, unsecured loans, credit and store cards, overdraft etc etc?
I don't tend to look at my mortgage or vehicle finances when I think about my level of debt, because I could sell and generate enough to pay off the finance. Is this naive, bad financial planning, or a reasonable view.
Otherwise I think my debts are quite reasonable (less than 15% of my annual income).
Any views?
I don't tend to look at my mortgage or vehicle finances when I think about my level of debt, because I could sell and generate enough to pay off the finance. Is this naive, bad financial planning, or a reasonable view.
Otherwise I think my debts are quite reasonable (less than 15% of my annual income).
Any views?
Acoording to this story:
http://news.bbc.co.uk/1/hi/business/3935671.stm
the consumer debt calculation includes secured loans such as mortgages etc..
I kind of agree that loans of that sort which are backed by an asset which exceeds the value of the debt are in a different category from credit card debt and the like. However, you do still need somewhere to live, and the value vs debt calculation can be a little subjective, esp. if its secured against a car ...
http://news.bbc.co.uk/1/hi/business/3935671.stm
the consumer debt calculation includes secured loans such as mortgages etc..
I kind of agree that loans of that sort which are backed by an asset which exceeds the value of the debt are in a different category from credit card debt and the like. However, you do still need somewhere to live, and the value vs debt calculation can be a little subjective, esp. if its secured against a car ...
I don't think of my mortgage as debt - more "rent that's paid to the bank", and I'm not going to get very far without one, as I'd have nowhere to live...
Two friends of mine recently had a party to celebrate their debts topping £1.6 million. I was suddenly overcome with an overwhelming sense of financial security...
Two friends of mine recently had a party to celebrate their debts topping £1.6 million. I was suddenly overcome with an overwhelming sense of financial security...
Just had a friend declare himself bankrupt with over £50k worth of debt in the form of credit cards and loans 
He says you stop worrying after £20k 
My personal debt? I owe may dad £800..... Then again he's more hassle than a bank sometimes, although his interest rates are better (they run at about 2-5 pints per week).....
He says you stop worrying after £20k My personal debt? I owe may dad £800..... Then again he's more hassle than a bank sometimes, although his interest rates are better (they run at about 2-5 pints per week).....
parrot of doom said:
Blimey. I thought I was heavily in debt with a 74k mortgage and an 11k loan.
Oh, and no CC debts either!
Sorrry, have'nt read the thread, but I'm about to buy a house, single, small size, first time buyer, €275,000. Cheer up if hgouse prices are your psrob, it could be worse.
I've had it drummed into me that debt is categorically not a good thing to be in, and as a result, I'd only buy things I could afford. I'd only buy a car, for example, if it was either next-to-nothing from Auto Trader, or I knew I would get my money back from it when I came to trade it in. If you want something, you save up for it.
Handy though it may seem, this 'convenience culture' is having a sad impact on all financial aspects of life. Banks are spouting gibberish in order to con you into making them rich through interest, and just about every consumer good it's possible to buy seems to be just a part of a big finance deal.
It also means that, in being 'smart buyers', everything's become homogenised. Why do you think that nearly every car for sale in this country is silver with grey leather upholstery and slushmatic transmission? Because 1. It's easy to sell to recover debts, and 2. In deciding what finance option to go for, people just can't be bothered with the other bit, the car, and go for 'default'.
Also, for some reason, 'good financial history' means, to a bank, 'pays off debts', so in return, your financial history is judged on how many debts you've had. Surely you would be a better customer if you avoided debt? Oh no, they want your interest-paybacks.
One debt at a time is the way I see it. I don't want to 'juggle' anything. I'll only think about a mortgage once my student debt is paid off. I'll get on the car-buying ladder with savings. I also refuse to succumb to advertising, and I don't - and hopefully will never - have a credit card.
Handy though it may seem, this 'convenience culture' is having a sad impact on all financial aspects of life. Banks are spouting gibberish in order to con you into making them rich through interest, and just about every consumer good it's possible to buy seems to be just a part of a big finance deal.
It also means that, in being 'smart buyers', everything's become homogenised. Why do you think that nearly every car for sale in this country is silver with grey leather upholstery and slushmatic transmission? Because 1. It's easy to sell to recover debts, and 2. In deciding what finance option to go for, people just can't be bothered with the other bit, the car, and go for 'default'.
Also, for some reason, 'good financial history' means, to a bank, 'pays off debts', so in return, your financial history is judged on how many debts you've had. Surely you would be a better customer if you avoided debt? Oh no, they want your interest-paybacks.
One debt at a time is the way I see it. I don't want to 'juggle' anything. I'll only think about a mortgage once my student debt is paid off. I'll get on the car-buying ladder with savings. I also refuse to succumb to advertising, and I don't - and hopefully will never - have a credit card.
Credit cards have their uses. Ideal for buying stuff online because you get automatic protection if it never shows up. This is the case for ALL credit cards regardless of whether they advertise the fact or not.
But you must clear the balance very month - then you can benefit from cashback deals and actually make money from the purchases you were going to make anyway.
But you must clear the balance very month - then you can benefit from cashback deals and actually make money from the purchases you were going to make anyway.
Doesn't it depend upon how you look at life?
I have known one person whose mission in life was to shuffle off this mortal coil owing £1 million!
Conversely, plenty try to do it the other way round.
Personally, anything above about 99p in the bank account at the end of it all seems a waste. Yet I would hate to find that at any timeI was actually or technically insolvent!
The route to the final bank balance is certainly an interesting one.
Just take a look at the bigger picture!
I have known one person whose mission in life was to shuffle off this mortal coil owing £1 million!
Conversely, plenty try to do it the other way round.
Personally, anything above about 99p in the bank account at the end of it all seems a waste. Yet I would hate to find that at any timeI was actually or technically insolvent!
The route to the final bank balance is certainly an interesting one.
Just take a look at the bigger picture!
rsvmilly said:
Credit cards have their uses. Ideal for buying stuff online because you get automatic protection if it never shows up. This is the case for ALL credit cards regardless of whether they advertise the fact or not.
But you must clear the balance very month - then you can benefit from cashback deals and actually make money from the purchases you were going to make anyway.
Hmmm.
I use my debit cards the way a lot of people use their credit cards.
You use a credit card by buying something with it, getting into debt then paying money into it to counter that debt.
I, on the other hand, pay money into the debit account like you would pay off a credit account on a regular basis, except that, when I buy things, I'm spending my own money.
I can still whip a card out if required and it'll do the same job, I just won't have to deal with a debt.
As we've said before on previous credit card threads, there are cases and cases. Details matter. If you systematically move a card debt around and benefit from zero introductory rates, fine. if you use a credit card for credit (debt) but use the money to earn income at a greater rate than the interest rate, fine. If you accrue debt but have no difficulty paying it off and the interest rate isn't damaging your finances - presumably partly because you've got the sense to move balances around - fine. If you spend more than you can pay for in credit card terms, and fall in to financial difficulties as a result, not fine, but your fault.
Credit cards and the terms associated with them are like cars, guns, knives and so on. They don't present a danger, the problem lies with the human that uses them. Should the alternative consideration take hold for good, where we legislate in various ways to stop this item or that item from falling into the hands of Darwin Award candidates, we'll have nothing but the fluff in our belly button to deal with each day since those types rarely walk round with the relevant bar code on their forehead.
Credit cards and the terms associated with them are like cars, guns, knives and so on. They don't present a danger, the problem lies with the human that uses them. Should the alternative consideration take hold for good, where we legislate in various ways to stop this item or that item from falling into the hands of Darwin Award candidates, we'll have nothing but the fluff in our belly button to deal with each day since those types rarely walk round with the relevant bar code on their forehead.
The difference is that with a credit card if a vendor overcharges you then you have time to resolve the matter and fix the problem.
With a debit card if you get cleaned out then you are into an overdraft as you try to make purchases, or are simply prevented from doing so - which is pretty inconvenient.
A good rule if you are using a credit card is not to buy something unless you have the money in the bank.
Bear in mind that many cars also have incentives to use them. My wife and I use a British Airways credit card for 90% of our purchases, which has got us two round trips a year on BA from the USA to the UK. That's a fair incentive.
With a debit card if you get cleaned out then you are into an overdraft as you try to make purchases, or are simply prevented from doing so - which is pretty inconvenient.
A good rule if you are using a credit card is not to buy something unless you have the money in the bank.
Bear in mind that many cars also have incentives to use them. My wife and I use a British Airways credit card for 90% of our purchases, which has got us two round trips a year on BA from the USA to the UK. That's a fair incentive.
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