Debts

[Joe]

Had a shocking conversation with my work colleagues today about their debts, in fact I had no idea any of them were in debt until today and I was left a bit :shock: by the experience.

One was a 25 year old with 26K worth of debt all because of a house sale a few years ago, someone else in debt up to the eyeballs with bailiffs on the door each week because they were out of work for 3 years and run up a lot of CC's.

Completely gazumped by it all as I had no idea and I really feel for them, I consider myself lucky to not owe anything (even though I recently felt like my world had collapsed when I borrowed some money from a good friend of mine) but at the same time I am in a situation where I don't actually own anything - so not sure what is better to be honest, having property/cars and other assets but be paying for them or not have anything and not owe money to anyone?!

I didn't want to start a topic on who had debts and who didn't as I appreciate it is a completely personal thing and I am sure no one wants to be talking about it all but if anyone here does have any debts I just wanted to say I hope you manage them and rid yourself of them as soon as you feasibly can.

God I hate money sometimes!

 

[PGowdy]

I've always tried to make sure this is something that never happens to me. The thought terrifies me and i know i couldn't handle the sickening stress of owing huge amounts of money i can't afford to pay back. (i only got a contract phone this year after years of being on payasyougo cos i hate bills!)
But with the exception of Student loans [debt] and a mortgage for a house i see all other borrowing and debt as completely unnecessary and foolish and don't have much sympathy for people who have got themselves in it deep. I don't have a credit card (never have and never will) and i never buy anything i don't have the money for right now. I can't even over-draw from my bank. Not even by a tenner.

 

[itfciain]

Hmmm - I have been there (and still am to a point) - most of mine was self inflicted - gambling and beer - trust me it's not a fun place to be.

That said, I hold no-one responsible for it but me - sure the banks let me have the money - but it was my choice what I spent it on

 

[PGowdy]

Hmmm - I have been there (and still am to a point) - most of mine was self inflicted - gambling and beer - trust me it's not a fun place to be.

That said, I hold no-one responsible for it but me - sure the banks let me have the money - but it was my choice what I spent it on

Sorry, i forgot to add "Gambling and beer" to my list of ok reasons to be in debt. Those are fine too. :lol:

 

[Joe]

I am much like yourself Pete, there was a time a few years ago (before marriage and kids) when I owed 2K but that was dealt with rather quickly and I don't see that as a huge amount - much like Iain that was my own stupid fault but even then I knew 2K was about my limit for uh oh time, couldn't imagine running up more than that as I would have pulled my hair out and gone bonkers I think.

I just keep seeing 26K flash up in my mind - this colleague of mine has a young family too and not exactly raking it in so..I just don't see how they are going to get out of it.

Scary stuff

 

[Richard_H]

I got into a huge amount of debt in my student days. Easily around 50k excl. mortgage Most of it was spent fixing up a house which I bought for 27k (about 15 yr ago so think condition )and needed a lot done to it. I also had a baby going through uni which was expensive. Got a very poorly paid job when left uni and couldn't pay bank back and robbed Peter to pay Paul.

Best thing I ever did, and my advice to your friend, was to go to CCCS and set up a free Debt Management Plan. Got all interest frozen and paid back what I could afford each month. Still have about 3 years more payments to go then I'll be totally debt free. All my fault and will make sure that my kids are better supported than I was.

Today i agree with a lot of the comments above. If i can't afford it I don't get it. Having said that I'm in a very well paid job and i'm not sure that I could survive on my old salaries :?:

 

[jabbawokkie]

i got in a bit of a tangle a few years back with credit card ,got bailed out by that fantastic company known as mam and dad ,it was only four grand and i just give em it back bits at a time as i still paying solicitors of from divorce .my out goings now are only just over 200 a month and if i want some thing i save up or go with out .

 

[edd_jedi]

I've never got myself in massive debt, student loan and a small loan for a car, but until last year I hadn't saved or invested a penny either, and every month was spending all of my salary ending up with zero. I had a bit of a scare in between jobs and it made me think what the hell would I do if I lost my job? Can't really go back to living with my parents at 30 :lol:

So since then I've been (more or less) saving 25% of my salary each month, and just sticking it in ISA account and not thinking about it. After only 18 months it's a decent lump sum that would keep me going if I was out of work for a few months, and the plan is that in a few years I'll be able to buy a house (one of the downsides of living in London - even on a decent salary you need about 50k+ for a desposit!) I also think I'll keep doing this in future rather than paying into a pension, they seem far too risky.

I must add that not collecting Star Wars toys has helped with the above immensely :lol: But it's a fairly decent investment so not money down the drain.

 

[jackabina]

Agree about the pension Edd. Unless you're a policeman, or work for the NHS, stick it under your mattress

 

[Grant_C]

Just get the impression that people are aloud crazy debt to keep the false economy moving 'perpetually' forward. As a bonus people it debt are demoralised and shackled which normally means they won't be causing trouble.

It sucks. Gold credit cards for 18 year students etc.

Except for essentials, I would strongly advise against ever owning a credit card or having a loan. I learnt the hard way and will never owe money to anyone again.

Should have listened to admiral ackbar-

IT'S A TRAP!

 

[ODB]

Agree about the pension Edd. Unless you're a policeman, or work for the NHS, stick it under your mattress

Worst idea ever, it will just be inflated away. At the very least buy some premium bonds or get an ISA at least you will offset the loss on inflation.

 

[edd_jedi]

Correct me if I'm wrong, but from what I have read you pay hundreds of pounds a month into your pension, and then when you reach 65 they give a similar amount back to you each month. So there's no lump sum, and if you die before about 75, you've pissed away a load of money you or your family will never get back. How is having a decent lump of cash in the bank, potentially hundreds of thousands of pounds, a worse idea? Inflation hasn't been that high in my lifetime, in the 20 odd years I've been dealing with money £1000 has always been a decent amount of cash.

 

[Richard_H]

I think he was referring to stuffing it under your mattress. Have to be pretty big for a few hundred thousand mind you.

I'd say that if you haven't started a pension by the age of 25 then investing in ISAs, bonds, or property is far better. And yes life expectancy is a big gamble.

 

[Joe]

Funny enough I just got an appointment with a personal banker for tomorrow to talk about a pension lol! I am going to tell him I can't be arsed but will still sit there for 30 minutes just to waste his time first

 

[silver grin]

Pensions for police officers are amazing! Well, those who get to retire in the next 5 years definitely are! I know a woman who is a police officer and her husband retired in April - as well as getting around a £100,000 lump sum he will also be getting around £17-£18,000 a year for the rest of his life

I used to be a teacher and what the government are planning to do with teacher pensions is unbelievable - I know Gary is a teacher so he will know what I mean. Long and short of it they want you to pay more money per month for longer and in the end you will receive less money at the end.

 

[Richard_H]

I'm a teacher too and agree with your comments

 

[ODB]

Correct me if I'm wrong, but from what I have read you pay hundreds of pounds a month into your pension, and then when you reach 65 they give a similar amount back to you each month. So there's no lump sum, and if you die before about 75, you've pissed away a load of money you or your family will never get back. How is having a decent lump of cash in the bank, potentially hundreds of thousands of pounds, a worse idea? Inflation hasn't been that high in my lifetime, in the 20 odd years I've been dealing with money £1000 has always been a decent amount of cash.

Well for starters a pension is tax free for all contributions and is likely to gain higher returns than a savings account, but as with most things its not the whole answer, a spreading of your options (bonds, shares, maybe property) would be the best bet.

Typically in a company pension you pay in an amount each month that the company then matches, this is a pretax deduction so is tax efficient, the pension administrator then invests that cash to give you a return. When you reach retirement age you are paid either a monthly amount dependant on your earned amount or a lump sum with a lower monthly payment. If you die typically your relatives can get a lump sum or a reduced monthly payment, but it all depends on the scheme you signed up to.

Compound inflation is a real problem though, 2% on 2% over years soon adds up. In the late 90s a Mars bar cost 26p they now cost 70p, mainly through inflation. Thats a tripling in price. Ford Escorts are a prime example, in 1980 they were £3k now the equivalent Focus is £14k, thats a fivefold increase in 30 years, so yes inflation is a problem.

 

[plantman]

Unfortunately most people spend the best years of their life in debt, mainly through a mortgage, and smaller loans.

But looking from other perspectives life can end so quickly (thinking of craig and my best friend who recently ended his own life) as long as im not risking my family im buying exactly what i/my wife and kids want and enjoying life a little more.

I would rather go through life with manageable debt than pressure myself to stay in the green and never have any luxuries.

 

[Richard_H]

Unfortunately most people spend the best years of their life in debt, mainly through a mortgage, and smaller loans.

But looking from other perspectives life cant end so quickly (thinking of craig and my best friend who recently ended his own life) as long as im not risking my family im buying exactly what i/my wife and kids want and enjoying life a little more.

I would rather go through life with manageable debt than pressure myself to stay in the green and never have any luxuries.

I certainly agree with this but it is very difficult when you are first starting off and banks etc throw cc at you. School need to do more in regards to life skills.

 

[plantman]

Oh you definitely need to be sensible, fr example my four holidays a year consist of mainly Center Parks, my super car is a new Fiesta, so i dont go overboard but i manage myself properly.