American debt is at a record high, with overall consumer debt at $13.3 trillion and credit card debt at an all-time high of $834 billion as of the last quarter of 2018. 

Meanwhile, rent prices in highly populated cities are also regularly hitting all-time highs. On average, the median rent on a one-bedroom apartment in New York City is now $2,980 a month while its San Francisco counterpart goes for $3,700.

Silhouette of woman leaping freely in meadow amid flock of birds.

Image source: Getty Images

Even with a decent income, it can be hard to keep your head above the water, financially speaking, in the country’s more expensive cities. This is especially true if you’re saddled with student loans or paying off credit card debt. The good news is that if you can relocate to a different area, a good-paying job paired with a lower cost of living could dramatically improve your financial standing. We’ve compiled a list of five states where paying off your debt is easier.

How we chose the states

To determine which states give you the best chance of paying off your debt, we looked primarily at states that balance a higher household income level with a lower cost of living. Secondarily, we also considered the year-over-year change in consumer debt levels in each state.

  • Affordability: We used a combination of cost of living and housing prices provided in the  U.S. News & World Report Affordability Rankings to prioritize states that are generally more affordable.
  • Median household income: We looked at median household incomes in each state as detailed in the 2013-2017 American Community Survey from the U.S. Census Bureau. For context, the state with the highest median household income is Maryland at $78,916 and the lowest is Mississippi at $42,009.
  • Year-over-year change in average debt paid: We used a consumer debt study to examine the change in overall debt in every state from last year to this year. Most states experienced an increase in average consumer debt, but we chose states with some of the lowest debt increases and one (New Jersey) where debt actually decreased. For reference, the biggest increase occurred in Colorado, where average debt increased by $3,536. The state that paid off the most debt was Oklahoma, where average debt decreased by $1,399.

1. Nebraska

Nebraska’s housing market and general cost of living make it a great option for those looking to transition to a more affordable area. It also has an unemployment rate of 2.8%, one of the lowest in the nation, increasing the probability that you will find a sustainable career in this Midwestern state.

Affordability ranking: 6th most affordable state

Median household income: $56,675

Average debt change year-over-year: $657 increase

2. North Dakota

North Dakota offers both the rugged outdoors and thriving urban settings, giving you diverse options for settling down. It is one of the more sparsely populated states but boasts major industries like food and agriculture, energy and natural resources, and advanced manufacturing. North Dakota ranks high for both affordability and household income, giving you more bang for your buck to help pay down your debt.

Affordability ranking: 11th most affordable state

Median household income: $61,285

Average debt change year-over-year: $1,863 increase

3. New Hampshire

This Northeastern state has one of the highest median household incomes across the country and only saw a minimal increase in average consumer debt last year. New Hampshire offers outdoor activities for all seasons, helping to attract over 1.3 million residents and a consistent tourist base.

Affordability ranking: 26th most affordable state

Median household income: $71,305

Average debt change year-over-year: $740 increase

4. New Jersey

New Jersey may be ranked lower for affordability than our other picks, but it has the second-highest average household income in the nation. It also is one of the few states that actually saw average consumer debt decrease last year.

Don’t let the Garden State’s size fool you, either. There are plenty of places to explore, including more than 100 miles of coastline to take advantage of.

Affordability ranking: 34th most affordable state

Median household income: $76,475

Average debt change year-over-year: $792 decrease

5. Wyoming

Wyoming is home to Yellowstone National Park and many other natural wonders. With a population of less than 600,000, it’s a great option for those looking for an escape from the hustle and bustle of city life without necessarily taking a huge dip in income. Wyoming’s median household income is higher than the national average.

Affordability ranking: 28th most affordable state

Median household income: $60,938

Average debt increase or decrease year-over-year: $511 increase

By strategically choosing where you live, you may be able to pay down your debt more quickly and set yourself up for financial freedom.