Published in: Credit Cards | Nov. 7, 2019
Most Americans Have Debt -- and It's Costing Them a Lot More Than Money
By: Christy Bieber
Debt is causing Americans to delay major life milestones. Here are just a few things that we're putting off.
Most Americans have a lot of debt. In fact, according to a recent survey conducted by Merrill Edge, around 73% of mass affluent Americans of all ages have non-mortgage debt. ("Mass affluent" Americans meet certain requirements for investments and income, including having at least $50,000 in investable assets or at least $20,000 in investable assets with annual incomes of at least $50,000.)
All this debt comes at a huge cost. And it isn't just the interest that close to three-quarters of Americans are paying to their creditors. Millions of Americans are putting off important life goals that could significantly improve their happiness.
If you're one of the many who feels your debt is impacting your dreams, it's important to try to find solutions so you can achieve the things that matter -- even though it may not be easy.
Americans owe a lot of money on different kinds of debt
According to the Merrill Edge survey,
- 43% of mass affluent Americans who are in debt owe money on credit cards,
- 36% have auto loans,
- 20% have student loans, and
- 15% have taken out personal loans.
Many of these Americans owe a small fortune. 46% of those who are in debt owe more than $20,000 and 18% owe at least $50,000. And this doesn't include mortgage debt, which could add hundreds of thousands of dollars to the total.
This debt comes at a huge cost
Unfortunately, this debt causes millions of Americans to delay important life milestones. According to the same survey from Merrill Edge, 68% of Americans are abstaining from a life goal to pay off more debt. This includes
- 43% of Americans who are putting off going on vacation,
- 37% of Americans delaying the purchase of a vehicle,
- 30% delaying the purchase of a home,
- 27% putting off a move to a more expensive city or neighborhood,
- 19% delaying having children, and
- 15% putting off getting married.
While delaying a vacation may not be the end of the world, putting off some of these other life milestones could have serious adverse consequences. Delaying having children, for example, could make it more likely you'll need costly fertility treatments later. And putting off the purchase of a home might cause you to miss out on years of building equity that could improve your net worth.
And, of course, delaying these milestones could also have a significant cost to your happiness and well-being. Even missing out on that vacation could increase the chances of burnout and make you less satisfied with your life.
What can you do if you're drowning in debt?
If you owe a ton of money, you may feel as though you have no choice but to delay these objectives. But you can take steps to get control of your debt so you feel more ready to hit important milestones.
One option is to consider refinancing your debt. Refinancing could reduce the interest you're paying on the debt you currently have. And if you take out a new refinance loan to pay off multiple existing debts, you could potentially also lower your required monthly payments.
If you refinance to a fixed-rate loan at a reasonable interest rate, you'll know exactly when you'll become debt-free -- unlike, for example, if you have credit card debt and pay only the minimums as you continue to charge on your cards. Knowing when you'll have your debt paid off could let you better plan for when you'll be ready to have kids or get married.
And having a payoff schedule could give you the confidence to take some of these steps sooner -- especially if you've lowered your interest rate and monthly payments and made payoff more affordable.
Making a debt payoff plan to pay off debt early could also give you the confidence -- and cash -- to do some of the things you want in your life. So could choosing the right payment plan for your student loans. For example, that might be an income-driven plan that caps payments at a percentage of your income.
Finally, you can also consider finding ways to reduce the debt you owe, such as selling the car you have and downgrading to a cheaper one without a loan or with lower monthly payments.
Don't let your debt interfere with your life goals
Owing thousands can be a major source of stress -- and avoiding getting into a ton of debt is the best approach. You don't want to put off life milestones because you need to pay your creditors.
If you already have a lot of debt, though, you don't necessarily need to give up the things that matter. By being smart and strategic about how you handle your debt, you may find that you can afford that vacation or that baby after all. And your life may be a whole lot better for it.
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