How Much Debt Is The Average American In? | CreditShout

How Much Debt Is The Average American In?

By Dan Rafter / November 3, 2019
How Much Debt Is The Average American In?


Credit Shout may collect a share of sales or other compensation from the links on this page.

While everyone has their own opinion on “debt,” there’s no denying the fact that Americans have problems as it pertains to debt. Do you have more or less debt than the average American?

Based on data collected in 2018 by Northwest Mutual, the average personal debt exceeded $38,000 and that’s not accounting mortgage loan balances. 

The same report also found that Americans are twice as likely to owe between $5,000 - $25,000 than they were to have that amount of money saved.

The report brought to life some very interesting facts. In total, only 23 percent of Amercians carried no debt at all, meaning 77 percent of Americans are carrying debt.

While families carried a high debt, the report found that all groups have a problem with debt. 

With nearly 8 out of 10 people carrying debt, it’s no surprise that “debt reduction” was one of the top listed financial priorities for the year. Still, there’s a huge debt problem in the United States and there’s no clear solution for many of them.

Sure, we can say, “pay off mo0re of your debt.”

With high interest rates soaring, it’s tough for them to get ahead, even to catch up. 

It doesn’t matter if you owe more or less than other Americans, having high interest credit cards and loans can have a negative impact on your finances. Understanding why Americans are in debt can help you avoid being in debt yourself.

If you are in debt now, it can also help you begin taking the right steps to get out of debt. 

Why Do Americans Have So Much Debt?

So, why do Americans have so much debt in the first place?

There’s not a single reason why, there’s a number of different factors that are beyond our control.

Let’s look at a few examples.

  • Healthcare - The cost for healthcare has drastically increased in past decades.
  • College - The cost of college are at all time highs, student debt is a huge issue facing young adults.
  • Housing - Less people are buying homes due to the rising cost of housing.
  • Groceries - The bare needs like food and water have increased also.
  • Utilities - Utilities are another area where we can see cost have increased.

While we’re seeing increasing cost for all of these, income has barely gone up. Now, in the last few years, income has seen substantial gains.

Americans are making more money, but the years prior had seen very little growth. While everything cost more today, income hasn’t closed the gap.

One of the big elephants in the room is Americans just don’t have the extra income to put a dent into their debt.

After all, this is how the banks make money and interest rates can be high. 

Can Americans be “smarter” with their money? Absolutely, there’s no question about it, spending habits play a big role in your finances.

If you’re spending more than you make, you’re going to have problems. 

Recent surveys have shown that Americans allocate the same amount of money on paying debt as travel.

That money could go on your debt versus being used to travel.

If we can do this and be mindful of the scenario, we can pay off our debt.

One exercise that can help you is tracking everything you spend.

Do this for 30 days and at the end of the period, you’re going to see how much you spent.

More importantly, you’re going to see areas where you could save money to pay off debt or save.

Now, what can you do to get out of debt?

What You Can Do To Work On Your Debt

What You Can Do To Work On Your Debt

For all of you that are in debt, building a payoff plan can be one of the best ways to get your financial house in order.

  • What Debts Are Priority: What are the most important debts you need to pay? For example, mortgages and student loans have little interest rates. You need to focus your attention to high interest credit cards and loans, these are what you need to pay off first.
  • Budget To Get Out Of Debt: If you’re only paying the minimum payment on your credit cards, it’s going to take you a lot of money to get them paid off. Get them paid off as quickly as possible.

  • You May Want To Refinance:

  • Extra Payments:

  • Consider Help: If you feel you need help, don’t be afraid to ask for it. 

Once you’re out of debt, the real challenge begins as you now have credit available to use.

However, we don’t want you to end up in debt all over again.

You can start a savings account and just use it for emergencies. We hope we never have to use it of course, but there’s peace-of-mind knowing it’s there.

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site

Leave a comment: