How old will you be before you are debt-free?
Millions of people miscalculate the age when they will be debt-free, a new report shows. They underestimate the number of years they will be paying off mortgages, loans and credit cards by more than a decade, it suggests. On average, people will not be free of repayments until the age of 69 – the age many will retire and no longer be earning.
That is 12 years older than the age most people anticipate they will have paid back all their loans, which is an “unrealistic” 57 years old, said the report. Today’s 18-year-olds may not be financially free until they are 74 if they plan to buy a home in their lifetimes.
The research was by peer-to-peer lending site Zopa and the Centre for Economics and Business Research (in the UK). Zopa co-founder Giles Andrews says part of the problem is that people are borrowing money later in life. He said: “In the meantime, some people think that their unsecured debt is going to be cleared by the time they are in their mid-thirties or forties, and that is simply not happening. They are not clearing their debt before they get involved in the biggest purchase of their life which is buying a house.”
House prices are rising (but only in some areas and falling in others), according to the Halifax (in the UK), and outpacing wage growth meaning mortgages are lasting longer. Consumer credit is also increasing rapidly, as it remains convenient and fairly easy to access. This may be adding up to a lifetime of debt.
Households in the UK now owe about £49,000 each, including home and other loans! That’s 17.6% more than before the financial crisis in 2007, the research says. Zopa conducted the survey of 2,005 UK adults in January 2016. Information on the level of household debt, both unsecured and mortgage, was obtained from the ONS Wealth and Assets Survey.
Will you run out before your money? Contact me now if you need help because if your money runs out first, you are in big trouble!