Debt

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Soldato
Joined
18 Oct 2002
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Do you consider it a bad thing to be in debt?

According to this BBC report if you're young then probably not
http://news.bbc.co.uk/1/hi/business/7128607.stm

Personally, I can't understand this attitude. I've always been brought up to consider that debt is bad.
Except for a mortgage which, unless I can come up with quarter of a million in cash, is a necessity to buy a house I don't ever want to owe anyone anything and plan not to.
 
To be honest I haven't once thought about my student loan, I know I will have to pay it back but it was a necessary debt as far as i'm considered, if I didn't take it then I wouldn't have been able to go to Uni.

Its debt that people run up on credit cards and store cards etc that I see as bad.
 
Anyone who is bothered about their student loan is poor at financial management. It makes zero sense to pay it off early and it's more beneficial to just leave it until it's paid off through the wage deduction system or written off.

The only wrong sort of debt is bad debt - people financing things they cannot really afford. Have you forgotton that more or less the entire business world operates on credit? How many businesses pay cash for their stock?

How about... very few?
 
Couldn't say, I'm not in debt and have never been so.

Although I imagine it would be very stressful and depressing if you get heavily into the red to the tune of thousands.
 
im the opposite , i dont care whatsoever about this student loan



i do care if i owe someone/something that i can recognize as a person money though , eg parents , mates etc.
 
Debt is horrible. Especially when you get those notices off debt collection agencies saying things like "48 Hour Warning". I've been there, not fun.

Now I don't own a penny to anyone [apart from my mum, actually]. And I'll never get another credit card or overdraft again.
 
Debt is obviously a negative postition to be in. However I dont see it as being wrong.

Its all too easy to get into serious debt. I really think you should have to be 25 before you can get a credit card.

As for student loans. They are the worst as when your 17 they make it sound easy to go to university but the reality is youll come out with a 12k debt which youll struggle to pay off.
 
[TW]Fox;10626237 said:
Anyone who is bothered about their student loan is poor at financial management. It makes zero sense to pay it off early and it's more beneficial to just leave it until it's paid off through the wage deduction system or written off.
Click to expand...

If you have no other debts and spare money, why not? It still accrues interest. The govt would prefer to string it out so you pay the most interest.
 
Rhys said:
I really think you should have to be 25 before you can get a credit card.
Click to expand...

Thats the most daft thing I've ever heard. Why do you think that? I have several credit cards - with zero balances I hasten to aid - why should I not be allowed to have them?

As for student loans. They are the worst as when your 17 they make it sound easy to go to university but the reality is youll come out with a 12k debt which youll struggle to pay off.
Click to expand...

'struggle to pay off'? Do you know anything about the student loan scheme? It's not as if you'll one day have baliffs knocking at your door as a result..
 
sr4470 said:
If you have no other debts and spare money, why not? It still accrues interest. The govt would prefer to string it out so you pay the most interest.
Click to expand...

Becuase the spare money can be better used for other things. The interest rate on the student loan is such that even if you have the money to pay it off, it's better financial sense to instead invest that money into something rather than use it to pay off the student loan.
 
sr4470 said:
If you have no other debts and spare money, why not? It still accrues interest. The govt would prefer to string it out so you pay the most interest.
Click to expand...

But the return on any investment of that money would be greater than the interest cost.

If you have 100 quid then its better to put it in an account and earn 5% p.a than it is to pay off a student loan thats costing you 2.5% p.a.
 
Its very bad to be in debt. Don't really have any sympathy for those who are in debt though, its their own fault it happened.
 
[TW]Fox;10626273 said:
Becuase the spare money can be better used for other things. The interest rate on the student loan is such that even if you have the money to pay it off, it's better financial sense to instead invest that money into something rather than use it to pay off the student loan.
Click to expand...

Not necessarily.
I've recently paid off my student loan as it made no financial sense to keep it anymore.

The interest rate went up to 4.8% in September.
I'd already put £3K in a mini ISA this tax year
I'm a 40% tax payer.

Those things meant that I was paying more on interest for the loan that I was making by not paying it off, so it became advisable to pay it off as quickly as I could.
 
[TW]Fox;10626273 said:
Becuase the spare money can be better used for other things. The interest rate on the student loan is such that even if you have the money to pay it off, it's better financial sense to instead invest that money into something rather than use it to pay off the student loan.
Click to expand...

Don't investments usually carry a risk? Ok, potentially you can earn more interest on savings than the loan's rate, but you said investment as opposed to savings...
 
Are you honestly telling me you could find nothing to invest £10k in which would pay you more than 4.8% after tax?

You didnt try hard enough, clearly.
 
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