So how much "bad" debt are you in?

ericbomb@lemmy.world to Ask Lemmy@lemmy.world – 107 points –

Hear about how much debt everyone in the US has all the time, curious about some of your stories!

My bad debt is 10k left on a school loan from a for profit school that is now out of business.

Only other debt is house.

So how are you all doing with debt management?

108

Fuckin debt free 😎

Own my car 😎

College educated 😎

Gainfully employed 😎

Making more than the average household in my state, solo 😎

So is my gf 😎

Still cannot afford a house 😢

Same, but without the SO to help.

New head canon, this is a government conspiracy to push polygamy. I will need at least two wives and three husbands to afford a house.

Jokes on them my girlfriend’s a stay at home mom, polyamory ain’t doing shit for our financials

You need to maximize your financial potential. Get 5 husbands, why assume that 25% lower income per wife?

I'm in the exact same boat, to the letter. It's been great watching interest rates and inflation eliminate 60% of my home buying power in the last year.

You know what's neat?

In 2008 the economy tanked because the banks had made a habit of cough approving mortgages that they knew people couldn't afford in the long run. Then they auctioned off those subprime mortgages to smaller banks, and played hot potato until oopsie, economic depression.

If we're in this boat, who the fuck is buying a home, who approved their loan, and how the fuck is 2008 not right around the corner again?

Good thing we bailed them out.

There's no subprime market ready to collapse. This isn't a housing bubble. The increase in prices is partially demand and partially inflationary imo.

Interest rates will keep prices level but we aren't going to see a crash cuz all those companies are cash flush after the ppp fraud and rental Rates skyrocketing. The only houses on the market are ppl who have to sell or ppl who died.

No one wants to jump out of a 3.2% mtg and into an 8% one

I think the interest rate has a lot to do with the declining value of commercial real estate. I think the banks are trying to cover losses. Small businesses going fully remote makes it difficult to sling commercial real estate at the old rates.

I think this is also behind the odd fetish of returning to the office we read so much about.

I have a meme for you: https://lemmy.world/post/6902250

I looked at a 400k home that literally had standing water in the basement at the time of the showing.

That would cost me and my gf a solid ~4k/month for 30 years with a 20% down payment.

Bank profits over $1M

If it's not murder house in middle of nowhere, it's out of budget.

Like tiny homes are becoming a thing... but like smallest legal home lots are 250k in most cities. Feels like middle of nowhere is only place to be.

Wtf that’s fucked up

The American Dream is dead.

The American Caste System is based on land ownership.

Lol looking at some of the debt ledgers in here, I bet you "can"

Oh, I "can". I just know that $4000/mo is not what we can "afford". We'd sooner squeeze into her apartment for $1000/mo and not be responsible for anything.

I mentioned in this thread somewhere that I believe we're in for another 2008 collapse. If I cannot afford a mortgage who the fuck is signing those papers? Same uneducated buyers and predatory lenders as in 2003-2008. I predict a collapse starting this time next year based on I'm high and I just woke up.

I live in the Midwest region of the United States.

$55k in student loan debt, down from $100k eight years ago. $10k auto loan. $210k on the mortgage, which I honestly can't believe I was ever approved for. No credit card debt.

There have been some very scary moments, but I've somehow managed to keep my head more-or-less above water so far.

I'm almost 3k behind because my parents forced me into choosing college or the military at 18. I wasn't remotely ready for either (was dealing with extreme gender dysphoria at the time) and I'm deeply opposed to the army but sometimes I wish I had chosen otherwise -I don't know if I'm ever fixing this. All my cash goes to survival and everything I own is constantly breaking. Poverty is a vicious, vicious cycle...

Oh that is so hard to hear!

It's crazy that parents are still forcing kids to go to college when it's been documented a billion times how often people are getting no benefit but tons of debt.

Seattle Washington area

10k in credit cards

110k in loans

430k mortgage

20k car loan

Credit cards are a little high but that's just because I just took a vacation to Japan. I feel like I'm in a good place otherwise. I was lucky enough to buy my house before the pandemic when interest rates were super low and prices hadn't yet spiked so I'm hoping to sell it in a few years when the interest comes back down. My loans are 50k I took out of my 401k as a down payment on house, 35k for a heloc to fix the house, and 20k on a personal loan.

Oh that sounds stressful. Hopefully things work out as that feels like a lot.

$27K in cc debt. Disgusting. Been dialing it in the last many months and paying off $2-3K a month.

OTOH, I may have my house paid off soon, so I got that going for me.

Honestly at that point it might be worth mortgaging the home all over again just to get rid of that debt. Even at that admirable pace and taking today's higher mortgage interest rates you'd probably end up saving $2000

None.

I have made it a point to live a debt free life as much as possible. My only debt is my mortgage. I've had a couple of car loans in the past, but nowadays not even that. I have quite enough wheels; If I buy another vehicle it'll be with cash. If I can't do that, I don't need it right now. (2 cars, 1 truck, 7 motorcycles. It's going to be a cold day in hell before my ass is out of transportation options.)

A car loan for a completely unnecessary car.

Can we afford it? Yes, with reasonable budgeting, no sacrifices needed.

Will the car appreciate? Undeniably.

Do we need a toy like this? Fuck no.

Did it anyway. I’ve been poor for such a long time it’s really hard to justify any frivolous purchase at all, but we have good jobs now. I waffle between “This is stupid” and “I’ll never get to do this again, so why not now?” Literally YOLO.

The rest of debt is “good”, like the mortgage building equity, a CC to keep credit rating good (paid off monthly).

You can't leave a comment like that and not tell the car bois what you got.

http://www.superlitecars.com/slc/

You bought a literal racecar? Hell yeah dude. Live your best life.

Hah, too old for that risky stuff. Hitting a wall at a buck twenty doesn’t sound like fun. Yeah, they absolutely are race cars, but they are built to be street legal as well. That’s the direction I’m in.

But cars don't appreciate in value...

Good on you with everything else and I'm with you 100%, but as soon as you drove that car off the lot it's been deprecating in value.

Yes they do.

You just have to pick the right car, and it’s not gonna be an off-the-shelf regular car.

If you look at all the cars that have ever existed 99/100 times that car is deprecating.

Yes, OP may have bought a classic car or something with high resale value. I was simply speaking in generalizations. The vast majority of cars depreciate in value once you drive them off the lot.

TBF you made generalizations that a) they don’t appreciate, and b) my car’s value depreciated off the lot directly to the initial statement I made that the car I purchased would appreciate.

I can assure you that these statements are incorrect in regards to my purchase. If you want to walk back your statements to not be in reference to my initial position, who were you talking to then?

I have a 1964 Lincoln Continental convertible. Cars can appreciate, I assure you.

Historically speaking they don't. I understand there are outliers for sure.

I mean if it can be paid off with fun money and doesn't ruin retirement plans, not the end of the world if the interest rate was good!

Only a mortgage.

I had student loans, but I finished paying those ~5-6 years ago.

I’m genuinely curious, what’s your opinion on broad reaching student loan forgiveness? If it happened tomorrow, would you be upset that you had payed yours off?

Not that guy, but basically the same situation. I'd be thrilled. Not having to think about those every month has been amazing. I want everyone to feel that way, even if I have to pay more in taxes to cover it.

Ditto. I'm the same as OP. Paid off student loans in 2019 and now I just have a mortgage. Let's forgive everyone's loans plz.

There's no point in getting spiteful in life, be happy for other people

Bad, as a % of annual gross pay is about 25% of one year's pay. Mostly the deficit accrued from when my ex was not working. It's smaller than it was, but not by much. But moving in the right direction at least.

Plus mortgage on the house and a separate loan for the roof we had put on when we bought it.

Hey man as long as it's getting smaller, it'll be gone eventually!

ITT: few people having any clue what the difference is between good and bad debt, or that debt is basically essential to creating wealth.

I'm just enthralled at the idea of how normalized having negative money has become. Something something dystopian

I mean most people saying they don't have any bad debt, but saying they have good debt isn't too bad! It is interesting to know how much mortgage people are carrying.

But these days even mortgages feel bad. 400k at 7% is 28k of just interest. So houses feel way out of reach with current prices/rates.

If rates go down prices go up. So doesn't feel like there is much winning for non home owners.

Housing prices, like everything, is determined by supply/demand. Interest rates are only part of the equation.

The main reason housing is high right now is because of the supply side, and that’s low at the moment because COVID destroyed the global labor market and the supply chain, so materials are sky-high, with fewer people to do the work of building.

Also, as the stock market tanks people move their money into safer places, like cash or property, hurting the supply side even more. This is what cashed up Boomers are doing (yep, we can keep blaming them).

Housing prices won’t come down until supply outweighs demand.

With how much they push for 25+ years mortgages you're going to pay way more than 78k for a 400k one.

Not sure if you mean per year but mortgages are generally going to be over much longer time periods. A couple who I know are looking to buy somewhere new and are looking at getting £400k mortgage or thereabouts. With rates as they are now, and over 25 years, they'll end up paying back £900k!

7% per year yes.

28k per year in interest on just a normal home is crazy.

Wealth is not created, it is taken.

You literally create wealth at your job.

actually, I am unstable and an incredible liability. If anything, I am a wealth-shrinking entity, like the common household Offshore Tax Shelter. Beware my economic hoodoo.

Debt free, own two paid off cars old enough to be cheap but new enough that the maintenance isn't too bad, and also they get good milage. We don't own a truck or an SUV. We rent, cook at home 90% of the time, and we're only just making it.

Same. Student debt so old it's being cancelled (pre-2000 UK student loans), no credit card, no overdraft, no mortgage.

Zero assets. But still. No debt. Which is nice.

Like £25k for a photography degree from 15 years ago. I moved to the US and paid bits of it back (it's means tested so you just tell them what you earn and they base it on that). I've been ignoring their letters because idk, I don't really want to pay it back? I remember the mandatory classes where we applied for ucas, so I feel like it's on them for shoving 18 year olds through the loan system for profit.

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I had pretty substantial CC debt about a year ago. Nearing $14k. After health issues, having to move, replace many belongings, car repairs, etc. Used a 401k loan to pay off 10k of it, and since that loan was paid off (it was over $800 a month) I've paid the rest down under $3k, and should hopefully have it paid off by either year end or spring at the latest. Currently it's sitting in 0% APR though, so it's at least not eating away with interest.

Smooth moves!

Super good job on getting that under control.

I have around 5k€ left to pay for my car, for the rest I just spend what I know I can. I have a credit card but I just keep it there for emergencies or to pay in installments when the seller doesn't allow it, everything else goes to the debit card.

Edit: for context since I just read "in the US", I'm italian. My school was 150€/year so I saved myself the school debt thing.

Went into 30k debt thanks to school and being injured and getting 1/3 of what I use to make. Had to use CC and other means which in itself was digging a bigger hole. I am 3k away from being done with fuckin debt. No house since this all happen during 08-10 fall out. 13 years. FML

Almost out of that trash debt then you can focus on your goals friend!

Hopefully things are looking up!

Hopefully but hopefully there's no 2008 2.0 either. Wouldn't wish it anybody and the new workforce.

80k€ for the house but other than that debt free and plenty of savings/investments

I guess my mortgage could be considered bad debt on account of being adjustable interest rate - this is however the most common type of mortgage arrangement in Sweden where I live. This has led to my interest rate costs going up an eye watering 400% in about a year.

I've got ~130k in loans on it. I'm in the privileged position of being able to pay it off fully if the interest rate costs start exceeding the expected returns from the stock market, though, so feel no need to shed even a single tear for me.

The Swedish housing market is a classic zero interest trap story - low interest rates combined with tax incentives and housing availability rates leading to ownership being significantly more lucrative - has led to prices skyrocketing and debt to income ratios spiraling out of control. With adjustable rates being the most common arrangement - again, due to some truly psychotic public policy - now the population that lent money to buy homes are stuck with sickening monthly payments and no way to get out of the debt, since the prices have dropped below purchase price. Not too much though, because of how crazy scarce the housing is.

Everyone loses but the banks.

I guess my mortgage could be considered bad debt on account of being adjustable interest rate - this is however the most common type of mortgage arrangement in Sweden where I live. This has led to my interest rate costs going up an eye watering 400% in about a year.

As a Dane am I envious of some of your systems like investeringssparkonto, but we have the better mortgage system. My home loan is locked in at 1% for 30 years.

You guys have had ENORMOUS immigration over the last eight years without building homes at commensurate rates. No wonder it placed pressure on housing. I don’t think your government had a realistic housing and immigration plan. I guess that’s why they were voted out. I hope things improve.

Art school degree was 80k. It's down to 40k now, still feels impossible.

None that I would call bad. Less than 10k school loans, about 3K on a new car I a bought a few years back, and 110K on my mortgage. It's all under 3% fixed rate and well within my budget though, so I'm not too worried.

That said I won't be taking out any new loans or refinancing for quite some time thanks to current interest rates.

Yeah sounds like you're in a great spot with the interest rates and balances!

I have $150k in mortgage debt on a house worth about twice that. Plus a couple more years car debt.

What really gets me is my health insurer severed relations with the county in May and I got hospitalized two weeks ago. So now I will owe the $8,000 out of network deductible. That pisses me off.

About £30k on a mortgage. I'm 49 and bought a house with my wife in 2009 for £105k, sold that for £150k. Bought another one in 2019 for £220k.

Apart from that, never really in debt. Owing money bothers me, apart from fines but I don't consider them as debt.

This is essentially the same as me. I owe around £40k on a mortgage and my wife has student debt that she'll never have to repay. Other than that zero debt. I don't do debt and I like that I'm, more or less, debt free (mortgage doesn't really count imho.)

No debt since we're only now looking for houses (yes yes, great timing, I know...) and I frankly wouldn't know what else I would need to spend so much money on that I would have to go into debt.

Well congrats on no debt! hopefully you'll find a good deal somewhere!

What's "bad" debt? What's "good" debt?

TLDR: Low interest debt that provides long term financial gain is good. Mortgage for primary residence is almost always considered good. Loans to invest into your home that increase its value and make it more reliable/long standing is good. Low interest debt to buy assets for your business is good. Reasonable loans for college is considered good.

Car loans are a bit harder because they lose value as time goes on. But a small loan with good interest is usually considered fine for a car. Buying a brand new car with a loan will almost always be bad, since you're paying interest to use a depreciating asset. But basically a car loan is always bad if it ever goes upside down, meaning you owe more on the loan than the car is worth. New cars that happens almost instantly.

Basically all other debt is bad.

https://www.experian.com/blogs/ask-experian/good-debt-vs-bad-debt-whats-the-difference/#:~:text=The%20difference%20between%20good%20debt,loans%20that%20provide%20job%20skills.

Ok!

Not in US. Have about 80k€ mortgage debt at very low interest, for renting. Totally covers my monthly payments

Oh that's great! Sounds like you're rocking.

Don't know where you live but in the US any home near a city is like 400k, so having a mortgage at low interest at 80 sounds great.

No debt is good, but a mortgage is at least not bad if it's affordable.

None. Just my house.
I have a credit card bill but it gets paid off regularly.

Only debt we have a mortgage we owe 226k on. Cars are owned outright and were paid off early. Student loans we paid off early. We generally live below our means. CC's are used for general purchasing and paid off in full each month. They are basically a stop-gap for fraud protection.

I've got 25000 on a 4% interest rate for my car and like 5000 at 0% for a student loan. Y'all Americans live in one of the worst countries

That 4% was before 2021 Q3 I bet?

Yep. June '19. I really lucked out. The car I had before that was around 6 or 7%

Approximately 1.5k

Had to replace some shit around the house unexpectedly, and credit was the only route there.

Like you, it's the only debt I have other than mortgage, though I suspect in going to end up having to take on some fire a vehicle swap soon-ish

None? A lot? The concept of debt is confusing to me because there's a moral way to look at it and a legal way. Have I ever asked for a loan or favor I later didn't pay for? No, I owe nobody anything. But legally, you have economic principles, like unnecessary medical expenses or ones which you didn't know an action of your were accumulate, which are only debts in the sense that the law says so. I owe medical providers something like a few thousand dollars (which my legally recognized debt can be rounded down to) for things like this and this, and an online course I take decided to say I owe them without telling me, though they haven't dropped me (yet).

All debt is bad.

Complete nonsense.

Whats an example of good debt?

If someone offered you a loan right now at 1% interest, you could take it, put it in a savings account, and get 4% interest. For a net gain of 3% on whatever the loan amount is. That's the most basic example of good debt.

Investment mortgage debt is good if it contributes to tax deductible claims. Owner-occupied debt is good if it’s managed properly. Both are good because you own an appreciating asset.

Credit card debt is good if you don’t hit payable interest, leaving your money to work for you in other ways.

Commodity debt is good if the market swings in your favour.

Business debt is good if it results in surplus revenue generated.

Education debt is good if it’s contributing to future and higher employment gains.

Basically all debt is good if it’s managed properly and results in a net gain somewhere.

So what im seeing is debt is only good in specifc circumstances, so it's better to not have debt

...you're claiming that because some debt is good and some debt is bad, all debt is bad? Your first statement quite literally negates your second statement.

This can only be said sincerely from a point of complete financial illiteracy.