Debt means different things to us all
Debt in modern America: What you need to know
Debt is a common part of life in modern America. In fact, the average American household owes over $100,000 in debt. While some debt, such as a mortgage, can be a good way to finance a major purchase, too much debt can be a financial burden. Whether debt is categorized as "healthy" or not, there are people who cannot control it. It's important to know your limitations and to seek guidance when you want a little more than the hope of paying down debt or leveraging debt to achieve financial success.
There are many different types of debt, including:
Mortgage debt: This is the largest type of debt in America, accounting for over 70% of all household debt.
Credit card debt: This is another common type of debt, with over half of American households carrying a credit card balance.
Student loan debt: This type of debt has been increasing in recent years, and now totals over $1.6 trillion in the United States.
Auto loan debt: This type of debt is used to finance the purchase of a car or truck.
Personal loan debt: This type of debt can be used for a variety of purposes, such as paying for medical expenses or consolidating other debts.
Why is debt so high in America?
There are a number of reasons why debt is so high in America. One reason is that the cost of living has been rising steadily in recent years, while wages have not kept pace. We discuss this all the time on the PennyWise Financial Podcast, in our blog posts, in client meetings, and in various newsletters we produce. Higher obligations have made it difficult for many Americans to make ends meet and have led some to rely on debt to finance their expenses.
Another reason for the high level of debt in America is the easy availability of credit. That could change as time goes on. Capital access will play a vital role in the overall health of the economy and the ability of families and entrepreneurs to follow their dreams. Credit cards and other forms of credit are widely available, and many Americans are tempted to use them to finance purchases that they cannot afford.
What are the consequences of debt?
Debt can have a number of negative consequences, including:
Financial stress: Debt can be a major source of stress for individuals and families. When people are struggling to make debt payments, they may feel overwhelmed and anxious.
Damage to credit scores: If people miss debt payments, it can damage their credit scores. This can make it more difficult to get approved for loans and other forms of credit in the future.
Bankruptcy: In some cases, people with excessive debt may be forced to file for bankruptcy. Bankruptcy can have a devastating impact on a person's finances and can make it difficult to rebuild credit.
How to manage debt
If you have debt, it is important to manage it carefully. Here are a few tips:
Make a budget: This will help you to track your income and expenses so that you can see where your money is going.
Create a debt repayment plan: This will help you to develop a strategy for paying off your debt. Prioritize paying off debts with high-interest rates first.
Reduce your expenses: Look for ways to cut back on your spending so that you can free up more money to pay down debt.
Get help if you need it: If you are struggling to manage your debt on your own, there are a number of organizations that can help.
Conclusion
Debt can be a serious problem, but it is important to remember that you are not alone. There are a number of resources available to help you manage your debt and get back on track financially. Being a good steward of debt is not necessarily a bad thing either.
Our latest guest on the PennyWise Financial Podcast features an author, speaker, and financial coach with a passion for helping people pay down debt. His name is Marcus Garrett and his story makes for a great listen for those who want to be inspired and learn more about his process. Click the link below to watch a clip from the show.
👇Or click below to watch the full Episode
Everyone wants to offer advice. We hope you have the right person. A trusted person to guide you on your path to achieving your goals. If you're not working with the right team or want a second opinion, we hope you consider our services. Follow our content to learn more about our process, and investment philosophy and hear real-life accounts of what our clients are dealing with and how we help them.
And that's only the beginning...Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals. Click below to listen to the latest PennyWise Financial Podcast and hear more commentary on the stuff you need to know, and much more. Check out another episode below or view our catalog of videos by clicking the button linked to our channel.
Want to learn more? Follow our latest market commentary, firm updates, or anything financial via our blog, Podcast or Vlog.
Listen on your favorite platform:
Kommentarer