We’re a nation driven by debt. Just about everybody has debt. It’s the way of life. People have student loan debt, credit card debt, mortgage debt, auto loan debt…the list could go on and on forever. And while not all debt is a bad thing, the simple fact is that the average American has too much bad debt. Even worse, we’re bad at saving.
A new study shows that the average person isn’t saving nearly enough for retirement. Needless to say, having a lot of debt and only a little in savings is a recipe for financial disaster.
But just how bad is the consumer debt problem in this country? Check out these 10 mind-blowing statistics:
1. The average household has $15,185 in credit card debt.
Credit card debt is some of the most crippling debt you can have. With the average credit card interest rate typically in the mid-to-high teens and, in many cases, much higher, digging your way out of credit card debt can be incredibly challenging. The easiest way to avoid credit card debt is to not buy something you can’t afford.
2. Over the last decade, credit card debt has increased by $76 billion nationwide.
In 2002, the amount of credit card debt across America was $769 billion. By 2012, that number had climbed all the way to $845.8 billion. While this is slightly down from a peak of $1.005 trillion in 2008, the nation’s credit card debt is starting to slowly climb again.
3. The average household has $31,509 in student loan debt.
The college debt crisis is crippling the economy. According to Forbes, two-thirds of students who graduate from American colleges do so with some level of debt. The average graduate completes school with over $26,000 owed in student loans.
4. The nation’s total student loan debt is more than $1.2 trillion.
While this goes hand-in-hand with the last statistic, it’s so shocking that it deserves its own place on the list. Student loan debt is at an all-time high, eclipsing the $1.2 trillion mark. That’s 6% of the overall national debt, and it has a significant impact on economic growth and interest rates.
5. The average household has $147,133 in mortgage debt.
With the nation just barely rebounding from the recent housing crisis, this really might not be all that surprising. However, the fact is that many people take out a mortgage without fully realizing what they’re getting into, causing this debt to become incredibly damaging.
6. On average, $14.2% of family income goes toward paying off debt.
That’s a pretty significant chunk of the average family’s income that goes toward making debt payments. Just think about what you could do with 14.2% of your income if it wasn’t going toward paying off your debt!
7. 13.8% of families devote 40% or more of their income toward debt payments.
When you’re spending more than 2/5 of the money you bring in to pay off your debt, getting by day to day can be almost impossible. As a result, you might end up taking on even more debt, digging yourself deeper and deeper into the hole.
8. American consumers owe a total of $11.13 trillion in debt.
Consumers are over $11 trillion in debt. That’s trillion with a “t”! While this is down 2% from last year, the simple fact is that our debt as a nation is far too high, and it’s a problem that we need to start addressing seriously on a personal level.
9. 75% of Americans don’t have enough savings to cover their bills for 6 months.
What makes the debt problem even worse is the fact that the average person just doesn’t save enough money. A deficiency in savings means a lot of people live paycheck to paycheck, with no safety net. This leads to the need for more lines of credit, meaning digging deeper and deeper into debt.
These 9 statistics make one thing alarmingly clear: we have a serious debt problem. Of course, everybody needs a little cash from time to time. The good news is there are alternatives to taking out a traditional loan.
You don’t have to use your credit score to get a loan. Some potential alternative loan options include borrowing from relatives, asking for an advance from your employer, or taking out a car title loan where you borrow against your car (TitleMax.com does a good job of explaining how this type of loan works).
So, how does your debt stack up against the average American’s?
1 comment
Getting into credit card debt is a nightmare and even more so because there so many SCAMS and pitfalls relating to getting the right type of relief. The debt industry is a minefield: this includes debt counseling, debt consolidation, settlement, and those involved in debt collection.
I recommend that if you are in severe debt, then pursue a dual strategy of:
a) Learning about the debt industry
b) Get help from people who used to have the problem but now don’t.
c) Find and hire an experienced consumer rights attorney.
Comments are closed.