Debt is something that I’ve been fortunate enough to have been able to manage without too many problems. Technically I have been a debtor ever since I started university in 2002, when I borrowed a student loan to cover my living costs. That loan still stands; it’s paid back through the tax system so a small amount of money is deducted from my salary every month, but after 13 years I still owe about as much as I did in 2005 when the last payment came through. That’s because of interest, and a period of time where I wasn’t earning enough to repay. At least it’s a loan where you only repay if you can do so; no-one will chase me for missing payments, it won’t affect my credit rating and eventually it’ll be wiped off if I haven’t paid it back completely before I retire.
On top of my student loan, I have a couple of other debts. The main one is our mortgage – it’s so-called ‘secure debt’, although it’s only really secure from the lender’s point of view. If we default on our payments, then our lender can re-possess our home.
For this reason, we also have insurance policies that pay out in case of critical illness, or if either of us passes away. Whilst this increases the cost of the mortgage, it gives us some peace of mind.
Our mortgage is by far the biggest debt I think we’ll ever have. It’s a six figure sum, and we’ll probably be still paying it off into the late 2030s.
Our remaining debt is credit card debt, which is a few hundred pounds at the moment. The past few months have been really expensive for us, what with buying a car, working on home improvements and getting ready for the baby. So far, the car seat for the baby has been the single most expensive thing; we’ve been lucky in that we’ve been able to inherit a pram and got a second-hand cot for a low price. Right now, I’m able to pay off a couple of hundred pounds a month which is bringing the total owed down, but I’m still having to pay interest.
I suppose I should be fortunate that we’re able to keep up with our debt payments, and we’re not in a situation where we’re at risk of defaulting. Nor do we have lots of open lines of credit that all need managing. I feel sorry for those that are stuck with thousands of pounds worth of loans, or who have to set aside huge chunks of their monthly income just to service their debts. I’m just pleased that we’re lucky enough not to be in that situation.