How much do we owe, on average? Enough for everyone to own a home in Kansas.
A Federal Reserve survey found that Americans aged between 35 to 44 have more than $133,000 in personal debt. In 2017, the total debt Americans were burdened with topped $13 trillion dollars, more than half the size of national debt itself.
The previous record for American debt in 2008 was just $280 billion dollars, a massive increase in just a decade’s time. While huge, the number is unsurprising, perhaps, after a decade of extremely low borrowing costs.
The study detailed the amount of debt, types of debt and the age tiers upon which the debt is carried.
Fro instance, people aged under 35 owed significantly less debt than people over 35. The survey found that people aged 35 to 64 found their debt increasing every decade.
Then, debt levels taper off between the ages of 65 to 75.
According to the Federal Reserve study, people under the age of 35 are saddled with debt in the amount of $67,400. Those aged between 35 to 44 have debt amounting to $133,100.
Americans aged between 45 to 54 are in debt to the tune of $134,600. People aged between 55 to 64 have less debt, owing about $108,300.
The elderly, those aged between 65 and 74, owe about $66,000 in overall debt.
Finally, Americans of advanced age, aged 75 and up, owe about $34,500.
Such debt is being amassed by Americans through a variety of sources, such as credit card debt, car notes, student loans, mortgages and so on.
In fact, Americans have amassed mover three times more in student loan debt compared to a decade ago.
Experts believe that, among other reasons, rising levels of American debt can be tied to rising standards of living.
The rising costs associated with having a family is another factor.
John R. Salter, professor of financial planning at Texas Tech University, concurs. “The trend tends to follow when people have children and those kids’ needs,” Salter says.
“We see that rise in debt at the time most people are looking for bigger homes to get more space for their family, buying cars for their children, or paying college tuition for them,” continued Salter.
Additionally, Salter said that such rising levels of debt is voluntarily assumed by people as their personal finances can withstand the cost.
According to Salter, people assume more debt as they become more professionally established in their careers.
Professionally people over 35 also tend to negotiate for promotions, raises and higher overall pay. So as people tend to make more money, they likewise assume more debt.
Experts are concerned by the rising levels of debt. Younger people assuming more debt now will accrue more later, compared to the elderly of today.
Worse, they likely will face much higher interest rates.
“Younger people are taking on debt at a higher rate and paying it off at a lower rate,” said Lucia Dunn, an economics professor at Ohio State University.
“When they reach age 75, the debt picture for them will look a lot different than what we currently see. When you project out these trends, it is not so optimistic,” said Dunn.