What is serious debt?

daithi09

I was just thinking back to an add I heard(english tv) that said "If you are in serious debt between £5,000 and £15,000". (was one of them consolidating your loans things)
Would people now, in Ireland still consider this as serious debt? I'd imagine most ppl are in more like the €150,000 area, atleast those who bought their property in the boom!?
What is the average personal debt?

jased10s

Try more like 300K + and you would be getting close.

Crazy Horse 6

All depends who you owe it to. You would'nt want to owe a drug dealer or loan shark a couple of thousand euro.

Cookie_Monster

serious debt is any amount so that you cannot cover what is due monthly

noxqs

Depends on several factors. But serious debt would at the very least be a level where the interest on the loan is a very high percentage of the monthly repayments.

Say you owe 150,000 at 3.76% interest. That's 470 euros per month in interest only. To properly chip away at the loan itself, a rule of thumb is that the payback should be twice the interest charged per month (in the initial phases of paying down the mortgage balance). So in this case, ideally paying back 940 per month. Any ability less than that would be a serious debt problem.

A 5,000 euro credit card loan at a typical APR of 15% would cost 62.5 euros per month - a 15,000 euro loan costs 188 euros per month - in interest only.
Which would mean 125-376euros per month in repayments, ideally.

Add the cost of rent/mortgage/living expenses to that and debt can be a serious problem even in small ranges. And I've seen APRs on credit cards near 20% and above. So could very well be much higher.

later12

Cookie_Monster wrote: »

serious debt is any amount so that you cannot cover what is due monthly

That, or a debt whose repayment restricts your ability to meet basic needs based on your stream of income.

Simple enough definition, some of the answers here are a little perplexing. There is no inherent figure at which point a debt becomes serious, or less serious.

Littlehorny

Depends how thick your neck is! Some people worry about owing a hundred others don't worry if they owe a hundred million.

Frank Black

If you’re looking for a figure like that ad you reference gave, then there is none. Whether debt is serious or not will entirely depend on your own personal circumstances and will include factors such as you income, your assets, your other monthly outgoings, your employment prospects and your stage in life – i.e. how close you are to retirement.

orangebud

National debt grew from 25% in 2007 to 44% in 2008, 65% in 2009.

When Ireland took on the penal EU, IMF and ECB bailout in 2010, it lept again to 96% of the GDP.

The IMF predicts Irish national debt will increase to 111% in 2011 and 120% in 2013 in optimistic scenarios.

No sign then of Ireland returning to the bond market anytime soon.

Yup thats what i call debt!

2nd bailout coming soon

http://www.imf.org/external/pubs/ft/scr/2011/cr11109.pdf

Tora Bora

Dunner, Mcnamara, Seanie, Drumm, et al, owe hundreds of millions to billions between them. But shure aren't the swanning around like prize peacocks.:cool:

Meanwhile our justice system has been known to send little old ladies off to the slammer, for failure to pay the auld TV, licence.


Moral of the story is ..........

later12

......that little old ladies should apply for the free television license.

Inverse to the power of one!

Debt is serious, but our society is now geared to ignore this reality. The same mistakes of the last few years will be repeated in a generation or two, sooner then you think should you live that long. Debt to acquire that which your income wouldn't otherwise justify is now a global meme, China's property bubble is next.

But at the end of the day, debt is the ultimate Ponzi scheme, money filters from the masses who give away their future earnings for reward today towards the few at the top who produce nothing other then more debt which further re-enforces their place.

Why anyone would partake is beyond me, 5 years ago I was a fool for not buying a house, today I am a few hundred thousand richer relative to those who did. The math is simple.

Liam Byrne

daithi09 wrote: »

I was just thinking back to an add I heard(english tv) that said "If you are in serious debt between £5,000 and £15,000". (was one of them consolidating your loans things)
Would people now, in Ireland still consider this as serious debt? I'd imagine most ppl are in more like the €150,000 area, atleast those who bought their property in the boom!?
What is the average personal debt?

Not sure what the "average" is, and if it's €150,000 then I'm thankfully way below it, but my view is that "serious debt" is whatever you cannot pay back reasonably comfortably.

So while I have a hefty debt, I know what it was spent on and am happy with that, and I know that I can pay it back.....as long as the Government don't wallop me with lots of new taxes that screw my careful budgetting; of course, with the Government protecting those who were the most careless while doing their utmost to ensure that those of us who were damn careful and sensible end up getting into "serious" territory, that could all change soon.

No debt should (a) be unaffordable or (b) last longer than whatever item it was incurred for.

Inverse to the power of one!

Liam Byrne wrote: »

No debt should (a) be unaffordable or (b) last longer than whatever item it was incurred for.

Yet most debt incurred is in violation of at least one of these standards(However I'm being extreme in that freedom lost is counted as unaffordable in terms of lost opportunity). Go one further and debt utilized for profitable enterprise is probably less then double digits as percentage of the whole.

The common understanding and utilization of debt is not rational.

vibe666

anything big enough that you can't laugh it off?

CiaranC

Cookie_Monster wrote: »

serious debt is any amount so that you cannot cover what is due monthly

Its only "serious" if you give a ****.