Exploring The Debt We Have As A Household

Almost all of us will have some form of debt that we’re paying off. From the ‘better’ ones, such as a mortgage or student loans, to credit cards and buy now pay later schemes.

Life is getting more and more expensive, and at the moment, I can’t imagine life without having some form of debt. As it is we may still be paying off our mortgage when we hit 60. But it’s becoming more and more common. And according to The Money Charity the average household debt in the UK is almost £66,000.

It’s easy to see how people fall into debt, especially if they’re not good at managing their money. I’m an organised and money savvy person, I budget, and I know what we spend our money on, but even we have some debt that I’d rather not have. But that’s life now, and it’s normal as long as it’s within your means.

I’m going to explore the debt we have as a household.

The ‘good’ debt, aka our mortgage

A mortgage is the most common type of debt for people with a home. In an ideal world, I’d love not to have a mortgage, but it’s not feasible unless I win the lottery.

We bought our house at the start of 2020 with a decent deposit, thanks to me selling my shared ownership property. We took out a 35 year mortgage, meaning we’d finish paying when we were 65 and 66. But one of my priorities after our wedding and honeymoon is to start overpaying, even just a little bit. Then we can bring down the interest we’ll pay and pay it off earlier.

We currently owe around £280,000 on our mortgage, which is quite a scary amount of money.

Our loans

Luke and I have loans we’ve taken out with Zopa over the past few years. Again this is debt I would rather not have, but they’re for things we needed and couldn’t afford otherwise. We chose Zopa as they had the best rates when we both applied. And they have good apps and ways to overpay if you want to.

Luke’s Zopa loan is for his work van as it worked out better interest wise to take out an independent loan than car finance. So this is our equiviliant of vehicle finance, just in another format. It’s unlikely that we’d ever be able to afford to buy a vehicle out right, so this will likely be a recurring loan. Once this is paid off, we’ll probably do the same for my car, etc.

Then my Zopa loan was to pay for the battery for our solar. We had planned to save the money and add on the battery in a few years, but with the price of energy, it just made financial sense to do that. This means when we’re generating more solar than we need to power the house, it’s saved to use at night/ when it’s not sunny. But it also allows us to fill the battery at much lower costs at night.

So the loan will save us more money than the interest we’re being charged.

Some temporary debt

Back in November 2021, we paid a company for some new back gates as we didn’t have any, and it was not just ugly without them but a security risk. Unfortunately we ended up being scammed, and the company took ours (and lots of others money), and then closed the company.

We are going through the process of small claims, which isn’t providing too successful. But while this was all happening, we needed to get some gates, but we were out of £2,500. To allow us to do this, I took out a small Monzo loan to pay for the gates. I hope we’ll get a pay out and clear it off in one go; keep your fingers crossed for us.

Our American Express credit cards

We use our credit cards semi regularly for big purchases (even when we have the cash) to gain the reward points. We always pay off our credit cards in full and don’t think we’ve ever paid interest on the balance. But it’s a small amount of recurring debt that we have.

At the moment, we’re spending a lot on our wedding, and although we have the money budgeted and saved, it’s sometimes easier to put it on the credit card.

What household debt do you have?

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