Debt

re bank interest rates on loans, overdrafts etc. Interest rates in France are controlled more than in the UK - one of the differences in financial attitudes between the 2 countries.
Our friends had an overdraft with Barclays UK which was charging 25% pa. They managed to get a loan from their bank here to pay it off, 7 years @ 4%.

My income is just a state pension, I also had a nice lump sum when I gave up work which I thought would help me to live a reasonable non extravagant life style for 15 years at least. After three years it was almost all gone and had I not found a part time job a few months ago I would have had to sell the car and make drastic changes to my life - which I will have to do when I can no longer work.
In those three years, I have had one cheap coach trip to Scotland as my only holiday, I do not drink alcohol or smoke, but I do try to buy good quality food. I have bought new clothes and that is something I will have to cut out or reduce, also I spent a fair bit on plants for the garden, so will have to go for seeds and cuttings in future.
Another expense is travel to visit my children as they are not close by, and I go by train (with a rail card). Life will be very limited on the state pension and if the tv, washing machine, boiler, fridge etc need replacing there is no money for it except a credit card to try and pay back gradually. The last resort would be equity release but with interest accumulating for perhaps 15 or more years, that would take away my childrens inheritance. It is only too easy to get into debt, there but for the grace of God it would be me.

No wonder people find themselves in debt with banks and Ioan sharks charging astronomical interest rates for small and not so small amounts of debt. I am by no means destitute however thinking I had paid my credit card the usual I found to my cost I had failed to pay the minimum charge by £3. Guess what? I've been charged £12 for a £3 error. I'm mad not only with myself but the greedy banking system. I'm fortunate I have a decent income and feel so sorry for those living below the poverty line. who can ill afford the basics without incurring financial hardship.

My step daughter was in debt for £29,000. Thank god the bank she worked for made her redundant and she could pay half of it off.

There are many reasons people get into debt. Not all people with debts are spendthrifts or trying to keep up with the Jones'. Some are simply trying to keep a roof over their heads and feed and clothe their children. The comment about Christmas cut me because my girls never got the things that their friends took for granted. We ate well at Christmas because every week I bought a couple of extra things for the Christmas food cupboard. That meant I didn't have to find the money all at once. I bought my girls gifts throughout the year in sales so they never got the latest whatever was the in thing that year. I did my best not to get into debt but tbh it was impossible....see my earlier post.

I agree M0nica - although sadly I am seeing ever bigger debts being accrued by very poor people. It used to be that a debt of four to seven thousand was pretty much the norm, but I'm seeing many more people now with debts of ten and eleven thousand pounds. People trapped in housing that they can't afford (often due to the bedroom tax)are desperate to keep a roof over their heads and will take out loans at exorbitant interest rates, but the amount of debt spirals out of control. Many of them don't sleep at night for worrying about the situation they're in.

The people you describe in your last paragraph I think often operate in a bubble because they do manage to service their loans - and then catastrophe strikes if a job is lost or someone becomes ill and they have no means of paying off their debts.

grannyactivist the people you describe, and I have worked with them, tend not to run up the huge sums of indebtedness quoted in the OP; £14,000 in all per debtor, They get into debt of necessity but the total indebtedness does not usually rise above a few thousand. - and £14,000 is the average so there will be many owing far more than that. And while that sum may include mortgage arrears (not exceptionally high at the moment)it does not seem to include the mortgage itself. We are talking about people with debts of £20,000 and more

There are many people whose comfortable life styles, cars, clothes, holidays are financed by credit card debt. You will probably not know if any friend, acquaintance or family member is running on debt like that. It is fine while they are in work and can service the debt but if times become hard and just one earner in the house becomes sick or is out of work, the whole edifice crumbles and you discover how they were financing their life style.

Despite the poverty among some families there are many families doing very nicely. I am not talking about rich people but middling people like those I saw on a recent reality programme about families and food budgets, some were spending £200 - £300 a week on food alone and seemed not that bothered. They worked as gas fitters and railwaymen and in the care sector or in shops. I did, as I watched them and their spending wonder how they could afford it. I think this report tells us how.

Hoo boy, I'm amazed the figure is as low as it is Ann sixty.
Many folks are on low income but still have to feed, clothe, house themselves and children. More often than not women on their own. You could pontificate forever about not having things unless you could pay for them- I grew up in awful poverty but both DH and myself always had employment so we did just that, didn't buy anything unless we could pay cash-but, if you're desperate you just don't have the choice. I've been involved with a wonderful charity CAP in Bradford which doesn't half sort things out for folks but, of course, they have to do their bit too.
Times are definitely hard for many folks and, sadly, I fear they will only get worse

Debt is always a problem until Christmas comes along!

M0nica I'm sure it's true that some people don't manage their money well and get into debt needlessly because they buy things they can't afford in order to keep up with the Joneses. I tend not to meet those people very often. The people I do come across are those for whom a broken washing machine or children needing new shoes results in a massive juggling act; Christmas and birthdays become a struggle that involves haunting the discount stores and charity shops, and having to take time off work to care for a sick child means not eating so well that month. For these people the (seeming) respite from financial struggles provided by a loan is a very attractive proposition.

Many people get themselves into debt because of the 'take the waiting out of wanting' society. Nothing to do with need or difficult situations.

Do your remember those programmes Alvin Hall and others did 10 years ago with the monetary incontinent? 20 years ago when DD bought her flat she said that people at work were always whining about how lucky she was, but she said most of them had huge credit card bills and high falutin' ideas about where in London they wanted to live. She had bought an ex-council flat, in south London, which was then deeply unfashionable, and furnished it from junk shops and had no credit card debt.

DH recently read a post from a young home owner on a bulletin board complaining that someone in his road had a car that was over 5 years old and it was bringing down the 'class' of his road and was there anything he could do to get them to replace it. DH thought it was a joke, but it wasn't, the poster was serious.

Have you noticed the interest rates on some of these loans? There was one advertised on tv today at over 1000%!

I do feel naive now. I really had no idea and please don't think I am well off.I have known very difficult financial times as a young person. There but for the grace of God.....

Yes, I think a lot of "ordinary people" do get themselves in such a situation.

For example, the self-employed/business owners who hit hard times; those abandoned by their partners, who still have to feed and clothe the children; those made redundant; those who become ill and can no longer work.

The list is endless.

Unfortunately, it's only too true for lots of people as the CAB for one would probably agree. 'Cathy come home' still exists in the 21st century

When I escaped from my ex I had massive debts.....over £30K. These came about because he spent money as if it was going out of fashion....he was a drinker, gambler and womaniser. He would empty my purse and leave me with nothing to feed and clothe the children. I got store cards and used catalogues so that at least I could ensure the girls were properly dressed and shod. He also took out credit cards which (bear in mind I was mentally broken by him) he would convince me to take loans out to pay off thereby saving interest charges. As I was the only one working by this stage the loans were taken out in my name. Of course he had an amazing credit rating because my loan paid off his debts each time. He would cut up the credit card I had just paid off and promptly take out another one which he would again run up to credit limit. I would only find out about this new card when the time came to take out another loan.

When I escaped I went to a debt charity which helped me to negotiate new payments. Then I became too ill to work. The creditors have been wonderful. I pay each of them (17) just £1 a month each. At this rate I will make my final payment in 105 years time.

when my mum died she left no end of debts we knew nothing about! what angered me was the fact that companies were allowing her to get store cards when she was a pensioner and just living on a state pension!
its too easy to get credit / store cards and max them out, this buy now pay later doesnt help!

I apologize sincerely and feel so sorry for these people.
I also grew up in very difficult circumstances but my mother was the sort of woman who was a marvellous manager and I had hand me downs from cousins all my childhood.
Although we have had a good income through our married life and a decent pension income now, we have always lived very modest lives brcsause of those early experiences.

annsixty Whilst I do think maybe the amount is over estimated with regard to the debt amounts I have heard of many people ladies and gents who have large amounts of unsecured credit outstanding,many people shut themselves off from the problem until it is too late and indeed hold the problem close to their chest not even admitting the problem to their nearest and dearest.
I hear of this problem every day through the job I do and we go to extreme lengths to help people when they have a problem,but first they have to admit there is a problem which is very difficult to do.

I think many women on very low incomes have such debts. Due to having insufficient funds for daily life they can get into rent arrears, they take out multiple loans/store cards etc. for clothing and household items until they find themselves unable to service the repayments and realise they owe £10k+.

Middle/high income households also max out multiple credit cards, have car loans etc. and once again the amounts owed can easily exceed £10k.

I spent a lot of my childhood hiding behind the sofa from the rent man who would peer through the windows if we didn't answer his knock. As a consequence of the fear I experienced then I have never been in debt apart from taking out a mortgage - I have chosen, on many occasions, to do without rather than go into debt.