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How Much Debt Do Americans Have?

Older Caucasian man reviewing debt on laptop

According to the FINRA Financial Capability in the United States 2016 report, less than half of survey respondents reported that they have too much debt (more on this below).

It goes without saying that there is more than one type of debt. For example, the same report shared the following data:

  • Nearly 40 percent of respondents have home debt, such as a mortgage or home equity loan
  • Approximately 20 percent of people have some type of medical debt
  • Almost 80 percent of Americans have at least one of six types of debts measured in the study
  • 47% of credit card holders carry a balance some months, but 52% always pay off the cards in full.

In other words, if you have one or more type of debt you definitely aren’t alone. There are many other consumers in the same situation.

Do Americans Believe They Have Too Much Debt?

While some Americans feel that they have too much debt and need to take immediate action in improving their finances, others don’t share the same point of view.

The FINRA study shared some interesting findings on how Americans perceive their level of debt:

  • 40 percent believe they have too much debt right now, with 47 percent of respondents in the 35 to 54 age group feeling this way
  • 43 percent of respondents who earn $25k or less feel they have too much debt, compared to 34 percent who earn $75k or more
  • Among respondents who feel they have too much debt, only 18 percent are happy with their personal finances
  • 39 percent of respondents with a high school education or less feel that they have too much debt
  • 38 percent of respondents with a college degree or more feel that they have too much debt

These statistics show that debt can impact many people, to varying degrees, regardless of how much money they earn or their level of education.

Contact with Debt Collection Agencies

It’s one thing to carry debt, but another thing entirely to be contacted by a debt collection agency. This means that you have fallen behind on your debt to the point of a creditor wanting to know what is going on.

In the FINRA study, 18 percent of respondents said they have been contacted by a debt collection agency over the past 12 months.

Among those with unpaid medical debt, 55 percent have been contacted by a collection agency

As long as you make the minimum required payment, you shouldn’t hear from a debt collection agency. However, if you slip behind for any reason, it’s possible that you will have contact with a collector, so it’s important to reach out for help if you’re having trouble keeping up with bills.

The Role of Medical Expenses

Among those with unpaid medical debt, 55 percent have been contacted by a collection agency, the study found.

As many as 21% of Americans reported having unpaid medical bills in the FINRA study, which led to decreased financial satisfaction and have foregone things like filling prescriptions, tests and visits to the doctor for various issues.

Budgeting for Emergencies

When asked in the study if they could come up with $2,000 to pay for an emergency, 40% said they would have difficulty putting together the funds.

However, 46% said they have set aside three months’ worth of emergency funds, a number that has risen from 35% in 2009.

More than half (56%) reported having a household budget.

How to Approach Debt

While there is no right or wrong way to dig out of debt, there are a variety of strategies to consider.

For example, you may start by paying off the debt with the highest interest rate. Or maybe you start with the smallest balance, as to give yourself some momentum.

If you’re seeking a way to bring some or all of your debt under the same roof – as to save money on interest and better organize your finances – a personal loan is a common way to consolidate debt.

Personal loans are also used to cover medical expenses and deal with unexpected events such as a death in the family or a divorce.

The statistics from the study show that while debt is common, it’s not necessarily unmanageable, as 60% did not indicate they had too much debt.

Having a strategy for paying down your debt and improving your finances in the long run can help you feel good about your current situation.