American families are more in debt than ever before, totaling $15.24 trillion. American households are carrying record amounts of debt as home and auto prices surge, Covid infections continue to fall and people get out their credit cards again.
The average U.S. household with debt now owes $155,622, or more than $15 trillion altogether, including debt from credit cards, mortgages, home equity lines of credit, auto loans, student loans and other household obligations — up 6.2% from a year ago.
The median household income hit $79,900 in the first quarter of 2021, according to the U.S. Department of Housing and Urban Development. That's almost $35,000 more than it was in 2000. But the typical American household now carries an average debt of $145,000.
Average household debt increased.
More than three-fourths of all American households hold some form of debt. Credit cards are the most common type of debt, followed by mortgages and car loans. Nearly half of households have credit card debt, 40 percent have mortgage debt and 37 percent have car loans.
Consumers in the United States had 15.24 trillion dollars in debt as of the third quarter of 2021, the majority of which was home mortgages, at 10.44 trillion U.S. dollars. Student loan debt was the second largest component, totaling 1.58 trillion U.S. dollars. Why is consumer debt important?
A good goal is to be debt-free by retirement age, either 65 or earlier if you want. If you have other goals, such as taking a sabbatical or starting a business, you should make sure that your debt isn't going to hold you back.
Even though household net worth is on the rise in America (at $141 trillion in the summer of 2021)—so is debt. The total personal debt in the U.S. is at an all-time high of $14.96 trillion. The average American debt (per U.S. adult) is $58,604 and 77% of American households have at least some type of debt.
While the average American has $90,460 in debt, this includes all types of consumer debt products, from credit cards to personal loans, mortgages and student debt.
That means most American adults either carry a mortgage, owe on a car, face monthly student loan payments, roll over charges on their credit cards—or all of the above. And yet, over half of Americans surveyed (53%) say that debt reduction is a top priority—while nearly a quarter (23%) say they have no debt.
Federal borrowers aged 25 to 34 owe an average debt of $33,570. Debt among 25- to 34-year-olds has increased 6.1% since 2017. 35- to 49-year-olds owe an average federal debt of $43,208.
Debt tends to peak somewhere around middle age. As a whole, this suggests that Americans tend to pay off debt going into retirement and tend to keep debt balances low in retirement, especially people over age 70. For those under age 30, the largest source of debt is student loans.
The average credit card holder in the U.S. had $5,668 in credit card debt in Q2 2021 — that's 1% higher than Q1 2021's $5,611 average. From the first Q1 2020 to Q2 2021, the average credit card debt per cardholder decreased by $766 or 12%. The average cardholder had $6,434 in Q1 2020.
Most lenders say a DTI of 36% is acceptable, but they want to loan you money so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you are carrying too much debt.
A recent report showed that nearly 80% of Americans are in debt—that's 8 out of every 10 people you know! And how many times have you heard one of these money myths: You need to have a good credit score!
“If you want to find financial freedom, you need to retire all debt — and yes that includes your mortgage,” the personal finance author and co-host of ABC's “Shark Tank” tells CNBC Make It. You should aim to have everything paid off, from student loans to credit card debt, by age 45, O'Leary says.
Millennials have 3.49 million borrowers who owe $20,000 to $40,000 in debt. Generation X have 1.66 million borrowers who owe $40,000 to $60,000 in debt. Baby Boomers have 0.63 million borrowers who owe $40,000 to $60,000 in debt. The Silent Generation have 0.38 million borrowers who owe $20,000 to $40,000 in debt.
Bottom line, if your credit card debt is only a little over $2,000, don't worry about it. I'm sure you'll get sick somewhere along the line and owing $2,000 will seem quaint.
Increased Savings
That's right, a debt-free lifestyle makes it easier to save! While it can be hard to become debt free immediately, just lowering your interest rates on credit cards, or auto loans can help you start saving. Those savings can go straight into your savings account, or help you pay down debt even faster.
If you're carrying serious credit card debt — like $15,000 or more — you're not alone. The average household with revolving credit card debt — that is, debt that they carry from one month to the next — had more than $7,000 worth of revolving balances in 2019. That's just the average.
Good debt is often exemplified in the old adage “it takes money to make money.” If the debt you take on helps you generate income and build your net worth, then that can be considered positive. So can debt that improves your and your family's life in other significant ways.
The federal net debt rose by $253.4 billion in 2020 to reach $942.5 billion or 42.7% of GDP, compared with 29.8% in 2019.
What is the 50-20-30 rule? The 50-20-30 rule is a money management technique that divides your paycheck into three categories: 50% for the essentials, 20% for savings and 30% for everything else.
He is ... the most indebted man in the world. Jérôme Kerviel is learning one of life's harsher lessons: It stinks to be $6.3 billion in debt.
Members of Generation X have the highest average credit card debt at $7,155, followed by baby boomers and millennials, according to credit bureau Experian's latest consumer findings.
In short, when you become debt free, you will experience freedom and relief in your financial life. You will know what it's like to make money and keep it. You will build savings with ease, and accomplish financial goals quicker than ever.