Having a plan to manage debt can keep people on track for their long-term goals
According to Northwestern Mutual’s survey, 33% of US respondents’ monthly income goes toward paying debts off, exclusive of mortgages. Besides, 13% of Americans expect to be in debt for the rest of their lives.
The data highlights there are some positive indications that suggest Americans have been making progress in managing and decreasing debt over the last years.
For instance, the total average debt among those who have it has been slowly declining from over $38,000 in 2018 to $29,800 in 2019 to $26,621 this year.
What is more, 67% of the respondents with some debt have a specific plan to pay it off. Meanwhile, only 26% of Americans report having no debt.
The survey also found that among 42% of the US respondents who report having a credit card debt, the average amount is $5,400.
This way, 52% of that debt went toward paying for essentials like rent, utilities, and groceries. Meanwhile, 36% was for discretionary expenses such as entertainment, vacations, or dining out and 11% was used for educational expenses.
Besides, 30% of US adults either always or often pay the minimum payment on their credit card bills. The just cover the interest without paying down any principal
Meanwhile, 33% pay more than a 15% interest rate on their cards, whereas 9% don’t know what interest rate they’re paying.
At the same time, 12% of them expect to spend from 11 to 20 years in credit card debt. Only 7% expect their credit card debt to last more than 20 years.
We’ve reported that 46% of Brits are currently in some form of debt. They name increases in household bills, raised rent/mortgage repayments, and credit card interest as the main causes of debt.