Average non-mortgage debt reaches $ 23,325, study finds
It is not uncommon for consumers to take on a certain amount of debt. But not all debt is created equal.
Mortgage debt is generally considered the healthy type to have. A mortgage eventually allows you to own an asset that can increase in value over time.
Credit card debt, on the other hand, is a dangerous type. It can cost you dearly in interest and damage your credit score. And most of the time, the items you load on a credit card won’t gain value over time.
So how much non-mortgage debt do Americans have? According to Northwestern Mutual’s 2021 Planning and Progress Study, U.S. adults aged 18 and over who are in debt have an average of $ 23,325 off their mortgage.
At first glance, this may seem like a lot. But in reality, this represents a decrease from previous years. In 2020, that average was $ 26,621 and in 2019 it was $ 29,800.
Yet among those surveyed, the main source of debt outside of mortgages was credit card debt, which is not a good type of debt. Unsurprisingly, 18% of those polled were forced to defer their retirement savings due to debt, while 14% postponed buying a home.
If you’re sitting on a pile of non-mortgage debt, the sooner you get rid of it, the less interest you spend on it and the less likely it is to hurt your finances in the long run. Here are some tips for getting rid of your debt.
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1. Consolidate it to make it cheaper to repay
Debt consolidation could help you lower the interest rate on your debt and make it easier to get rid of it. You have a few options in this regard. First, you can see how to do a balance transfer, where you move your various credit card balances to a new card with a lower interest rate (or, ideally, an introductory interest rate of 0%). Or you can consider getting a personal loan, using it to pay off your credit cards, and then paying off that loan over time.
2. Follow a strict budget
Budgeting could help you start spending less and saving more. The result? Extra money to reduce your debt. If you are new to budgeting, you may want to consider experimenting with different apps to see if any of them are useful to you.
3. Find a side job
If your current salary is heavily monopolized by the cost of living, then a second job could be your ticket to getting out of debt sooner. There are so many opportunities to make money on the side, so think about what works best for your schedule. If you can’t commit to working preset hours in the evenings or weekends, find flexible employment. Something you can do at home, like web design or data entry, might work well.
While it’s a good thing that consumers have less non-mortgage debt than in previous years, they still have a lot. The sooner you can get rid of this debt, the better your financial prospects will be.