Should I be scared of debt?

[Feasty]

So speedy past history. Me and the missus have been lucky, earned well and always had a few 10k's of savings tucked away, delved into from time to time.
A few years ago we went though a really bad patch, losing babies late in pregnancy, she lost her brother very unexpectedly and so on. This led to her leaving her high paid job and going self employed. She earns a lot less and so due to this the savings have gradually ebbed away, as we've got a kid, mortgage etc, etc.
This year, I had a 'special' birthday and we went away on an expensive holiday (something we very rarely do having a caravan and dogs!), then in the summer we had all the doors and windows replaced on our house as the old ones were knackered, seals gone etc.
Today I'm about to upgrade our car and shell out another fair few grand, not on anything brand new - but something smaller, more economical and less likely to breakdown than our current one. Due to this, for the first time ever we'll be in debt and owe more money than we have in savings.
Basically we're mostly shelling out in order to minimise monthly outgoings and risks of big bills coming in, like car repairs.

My big worry is putting my family at risk and how to get this money back, the obvious way is through better paid jobs - but that's not as easy as it sounds. We're not big on pensions or putting aside for a rainy day so the future is not looking brill at the mo. I know we can tighten our belts a little on some of the things we buy but that won't add up to much, as at the moment our incomings and outgoings are just about even.

Anyone in a similar situation? Is this par of the course for middle agedom? I don't know if my circumstances are 'bad' yet, I just hold on to the fact that spending now will minimise any big spending we'll need to do over the next 5-10 years, but after that who knows...

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Previous: Aprilia Habana Retro 50cc (beauty), Yamaha SR125 (fell apart), Honda XR125 (nippy little commuter), Honda SLR650 (Geewhizz), Yamaha Diversion 900S (Smoooooth) written off courtesy of a stupid escaped horse.
(7 year gap), BMW F650 (Relaxing ride). Aprilia Caponord ETV1000 (Big and bold). Yamaha FZS600 (got me in trouble too quick!).
Current: Yamaha TDM 900 (Comfy, light but big, power when needed).

[recman]

When the wife and I first started out, our outgoings were greater than our income.
Holidays, decent motors, any kind of luxury really were simply not on the agenda.
Times were tough and sacrifices were made.
I'd have loved to have had a caravan to sell tbh.
It sounds like you're not in a position to replace the savings you had yet but it doesn't sound like you'll be out on the street anytime soon either.
You've lost your buffer which can be scary but I think if you took a long look at your lifestyle and the things you don't really need you could probably build another decent buffer quickly.

[Rogerborg]

Repairing doors and windows costs much less than replacing them.

Bangernomics is cheaper than trying to buy reliability.

Sounds like you're living beyond your means in the hope that something will turn up.
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Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[stinkwheel]

What Roger says makes sense.

I thought I needed new windows but because I'm a cheapskate, I took the windows out and replaced the seals and hinges. Mrs stinkwheel gave the frames a good doing with Jif and a cloth.

Works out about a tenner per window. About £20 worth of tools to make the job simple.
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“Rule one: Always stick around for one more drink. That's when things happen. That's when you find out everything you want to know.”
I did the 2010 Round Britain Rally on my 350 Bullet. 89 landmarks, 3 months, 9,500 miles.

[Feasty]

Thanks for that recman, it is scary losing a buffer we've had in place for many years. But you're also right, we do have ways to get some of this back reasonably quickly if we had to.
Luckily we have a low rate mortgage that combines a current account with a daft high overdraft limit - also based on the low mortgage rate, we just have to make sure it can be paid back in the long run...

I also take on board the repairing and bangernomics. However the car we have does cost a lot to run, nearly top tax bracket, thirsty on diesel and more often than not its broken down on longer journeys towing. These repairs alone have cost us over £1500 on top of having to use a hotel because we couldn't reach a caravan park in time.

The windows have already been repaired a couple of time over the years but they don't last very long, and now with mould growing round the sills and locks not latching properly we decided to splash out and get the whole lot done. That way we have a 10 year guarantee, so no further repairs needed for a fair while and already in the cold weather it's noticeably warmer with the heating on less.
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Previous: Aprilia Habana Retro 50cc (beauty), Yamaha SR125 (fell apart), Honda XR125 (nippy little commuter), Honda SLR650 (Geewhizz), Yamaha Diversion 900S (Smoooooth) written off courtesy of a stupid escaped horse.
(7 year gap), BMW F650 (Relaxing ride). Aprilia Caponord ETV1000 (Big and bold). Yamaha FZS600 (got me in trouble too quick!).
Current: Yamaha TDM 900 (Comfy, light but big, power when needed).

[Alpineandy]

I'm sure you know that the ultimate answer to that question is 'Yes debt is bad', but there are varying degrees of bad in this case.

Because you have a family to worry about, you need to be absolutely certain of your job prospects and you're insured adequately if something goes wrong or a health issue comes up which would stop you earning, or do your utmost to reduce the debt asap.

Does it happen to everyone, No.
Does it happen to most people, Yes, but some of them get in serious shit because they don't get themselves out of debt as soon as they can.
You've got kids that will be an expense 'for years to come', so you need to be in control of your finances 'for years to come' (or as much as you can control).
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The above comment isn't necessarily the truth and anyone that says it is, is only correct if it's the truth or they're bigger than me.

[angryjonny]

Debt can be useful. Unmanageable debt is a problem.

I'm of the opinion that debt is ok as long as you have an associated asset to clear it. Car loan, ok as long as you have a car you can sell. Mortgage, ok as long as you can sell the house. Credit card debt, not so good... That's a hole that's harder to dig yourself out of.

That said, I want rid of the mortgage ASAP. At least once that's done Mrs AJ and I have a roof over our heads whatever happens.

[Alpineandy]

[angryjonny]

[Baffler186]

Sorry to say mate, but if you're spending more than you earn now, things aren't going to get any better. Your child(ren) will eat more as they get older, need more clothes, school trips etc etc. it all adds up.

Write down all of your standing orders, DD, bills etc, work it all out monthly. Hopefully the figures will scare you.

Don't get takeaways (we worked out we were spending £60 - £80 a month). Cut back on other stuff until you have a ~£200 per month buffer. best case, you can start saving £200 a month. Worst case, you'll have to tighten your belt even tighter. But you'll have to get over it.
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Current: 2009 SV650 S, 1990 Kawasaki GT550
Previous: 2009 CBF125, 1998 GSF600, 2004 FZ6 Fazer, 1978 CB400a Hondamatic

[Lord Percy]

[Feasty]

[CBFcarl]

We did the same with the car this year.
We had a 2l Rav4 but with a teenager who was struggling to stay in the back of the car, silly tax and insurance and things were starting to break (97 reg). We got finance on a £10k car, but it works out that the amount that we are saving on petrol, tax and insurance every month is paying for itself.

Sometimes replacing is the way to go, sometimes repairing is the way to go, and as someone mentioned above, manageable debt is good, but credit cards, loans etc aren't great.
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thx1138 wrote: Well if you had a car, I'd bet it would smell like urine had had drunken sex with vomit and made a poo baby.
Polarbear wrote: They are all old now. Probably had more abuse that a Rotherham schoolgirl.
Hellkat wrote: I want to know if Nigella smells of garlic, or just minge.

[Alpineandy]

[Lord Percy]

Details helped somewhat but I wonder what you would have done if you simply could not afford a hotel room?

Various bumf inside the caravan seems a bit arbitrary as your original plan was to sleep inside it that night anyway. The only difference is a change in location.

That being said, good luck on the newfound quest to make savings. I love being a cheapskate. My advice would be to go cheap and cheerful on the stuff that doesn't last long anyway, namely everyday items such as food, clothing etc. My expensive 'fashionable' gear has seen the same amount of usage as my cheap TK-Maxx stuff (in fact I haven't done any arbitrary clothes shopping for years now), and as for food, well it's all the same anyway as long as you get a square meal.

I've got an Excel spreadsheet to keep my finances in order. I enter all the money I know is coming in, then enter all that I know is going out, and make sure to add a few extra expenses and desired savings because it's better to lean on the side of caution. I add a start and end date (typically do it in years), then just need to manually update it with my bank balance every few days. It then figures out my daily budget, £X per day until the given date. Staying within that amount means I'm on track, with savings planned into the budget too, and no sense of hardship because it's planned and spread out over a whole year.

The only assumption is that no massive, shocker of a financial hit will come my way, and I suppose it assumes a known income for the next 12 months, which is a risk for the self-employed, but still most income/outcome models use annual predictions and no employment is safe. Living simple tends to keep that risk down though. Plus it's best to add 'shocking financial hit' to the yearly budget anyway. All about the risk analysis!

[Alpineandy]

[Northern Monkey]

Is your car less than £1500? If so, find a cheaper one. Why on earth would you spend money you don't even have on a newer car.
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Fisty: after polishing the tank with the glistenng beads of sweat from my full hot scrotum, I filled the headrace bearings with 10cc of my manmilk

[Beehive Bedlam]

Debt is not real you are already dead.

[colink98]

[iooi]

[The Shaggy D.A.]

If you're paying more in interest to borrow than your savings are earning, what have you got savings for? A buffer is good, but if you're not using it you're just paying to keep a set of numbers looking good.

That said, win the game by going to the grave heavily in debt
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Chances are quite high you are not in my Monkeysphere, and I don't care about you. Don't take it personally.
Currently : Royal Enfield 350 Meteor
Previously : CB100N > CB250RS > XJ900F > GT550 > GPZ750R/1000RX > AJS M16 > R100RT > Bullet 500 > CB500 > LS650P > Bullet Electra X & YBR125 > Bullet 350 "Superstar" & YBR125 Custom > Royal Enfield Classic 500 Despatch Limited Edition (28 of 200) & CB Two-Fifty Nighthawk > ER5

[arry]

[duhawkz]

[duhawkz]

Debt can be a good thing it depends on the situation. If you using it to get things you can't normally afford then it's risky

When we bought our sofa we had the money in savings but they were offering buy now pay in 12mnts at 0%. So it was better for us to get the sofa on credit and earn another 12 months interested on the money
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"The guy is a worthless cunt and I honestly believe I would be a slightly happier person if he died." - Chris-Red

[Stoker]

Depends on the debt.... Council tax arrears and owing to HMRC will see you in court, so see to those first, along with your rent. Always prioritise these sorts of debts, they will not go away.

A small amount of debt, regularly repaid (i.e. credit card, mobile phone on contract) can be a good thing, as it re-assures potential lenders that you are not high risk.

If you have credit card/ mobile/other debts, after a time spent chasing you they will "sell" your debt to a third party for recovery of said debt. They often masquerade as Baliffs and official recovery agents.
You do not have a contract with these people, and, nice as it was of them to pay your debt for you, you don't owe them a penny, as you never entered a contract with them.

In the link, you will see advice on A4V and Promissory Notes, please ignore those unless you are a Freementalist/have time to absorb and spout ancient laws.... some good advice here, I saved thousands of pounds, and more importantly, can sleep happy at night.
Good luck

https://www.getoutofdebtfree.org/