American Debt is on the Rise

Debt Sucks….

It sucks because you know you did it to yourself. You kinda want to go back and kick young-you into being smarter.

While any debt is irritating, student loan debts are especially bad. Our student loans have been our constant companion since graduating. They are like an evil relative that has moved into your life and won’t leave. Or a very expensive car payment for a vehicle that you will never get to drive. It feels like we will never be rid of them sometimes.

Getting out of Debt Slowly but Surely

My husband and I are recent transplants to Texas. One of the reasons that we moved was to lower our cost of living so we could pay off our debts faster, especially our student loans! Cost of living in Texas is much lower than the east coast, and our salaries only changed slightly. Plus the weather is better. NO SNOW!

Moving is kind of a big change and isn’t for everyone. We left behind family and friends, but our goal of getting out of debt faster was important to us.

Inspiration to be Smarter

Articles about people getting out of debt alway catch my eye, especially the ones where people pay off massive amounts of debt. I like to listen to the Dave Ramsey podcast to hear the debt free screams. I like to read blogs where people talk about their journey to pay off debt. It inspires me to be better and smarter with money.

Articles about people being STUPID with money also draw me in. I know some of that “stupid” is in me too. Its good to scare yourself into being smarter sometimes.

Debt in America

Business Insider released an article (Americans have 12.58 trillion dollars in debt) about household debt in the US. Total debt increased over 200 billion dollars at the beginning of 2016. Uh oh…. I took a look at the report from FRBNY to see what it said:

“Aggregate household debt balances increased substantially in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt remains just 0.8% below its 2008Q3 peak of $12.68 trillion, but is now 12.8% above the 2013Q2 trough.” – FRBNY, Quarterly Debt and Credit report 2017

That is a lot of debt!

Check out this graph from the same article. All of that red is student loan debt! Look how it increases steadily since 2003. 10% of the debt in America is student loan debt…Car loans only make up 9%.

Ugh! Some of this debt it mine! Graph from the Federal Reserve Bank of New York 2016 fourth quarter report. Click here for full report.

The fact that there are a large number of mortgages in the US doesn’t really surprise me. I imagine that very few people have their mortgage paid off. I am surprised by how low credit card debt is! I would have definitely expected it to be higher than 6%.

Still, its a little alarming to see that household debt number slowly edge its way back to pre-2008 numbers. Do you look at this graph and cringe a little? Does it inspire you to work harder to get rid of pesky debts?