In one of the most powerful economies on earth, debt affects the majority of Americans.
All types of debt can be dangerous, but high-interest credit card debt is the worst. Seventy-four million Americans have more of it than savings. Households with revolving credit card debt carry nearly $7,000. Then there’s the explosion of student loan debt, which only adds to the monthly budget constraints that so many Americans feel. The total amount of student loans has increased from $600 billion to $1.5 trillion in just 10 years. The average student loan debt out of college is $37,000.
Even with a decent, steady income, it can take decades to get out of the hole. It can also alter the trajectories of various life aspects.
Is debt affecting these areas of your life?
Mental State
Debt can drag financial lives to rock bottom, but that’s arguably the lesser of two evils when considering all the emotional effects of debt. Depression, anxiety, anger, and embarrassment all stem from carrying outstanding balances. These feelings infiltrate our moment-to-moment thoughts and damage our self-esteem.
The best ways to improve your mental health when dealing with debt are to join a support group, such as Debtors Anonymous, and commit to some type of debt-relief plan. A support group gives the negative cyclical thoughts in our head a place to go and helps to understand that this problem isn’t unique to us.
Similarly, an action plan provides hope and gives us motivation to make progress. Whether it’s following a repayment strategy like the debt snowflake method or working with consolidation and settlement services like Andrew Housser’s Freedom Financial Network, our outlook on life improves when we address debt.
Marriage
People are increasingly careful with whom they choose to marry these days. The divorce rate is 39 percent and has decreased gradually since the oft-cited 50 percent divorce rate in the 1980s. While Millennials do tend to be more selective of partners, debt also keeps them from feeling like they’re ready to settle down.
Per 2018 census data, the median age for getting married is 30 for men and 28 for women, an increase of two and three years respectively from 2003. The number of folks aged 25–34 who lived with an unmarried partner in 2018 was 15 percent.
Debt is causing people to push back their marriage plans, and it’s still wreaking havoc on existing marriages. Money is the number one reason married couples fight, and expectedly, the top cause of disagreement that leads to divorce.
Homeownership
Homeownership in itself is a significant source of debt for many people. But because a home is both an investment and a shelter, the debt is viewed more positively.
However, there’s nothing positive about a mortgage if other types of debt make it unmanageable to pay. Faced with the choice of keeping shelter or paying a debt that isn’t tied to anything, the mortgage understandably wins. But it’s debtors who lose, as their unsecured balance climbs.
In other cases, people are past the age of living with roommates but can’t afford the high one-bedroom prices in cities like San Francisco, Seattle, Los Angeles, and New York City. The kicker though is that these cities offer some of the best opportunities for young professionals.
Kids
One in five American women don’t have children. Some of this is due to more opportunities for women in the workforce, but student loan debt and the timing of the Great Recession are major influencers as well.
It’s also just plain expensive to raise a kid in the U.S. From 2000–2010, the cost of having a kid increased by 40 percent. In 2015, data showed that American parents spend $233,610 on a child from birth to age 17. This doesn’t even include college if the parents are able and inclined. No wonder we’re seeing young professionals in cities across the country choosing to hold a leash instead of a stroller handle.
Everybody’s debt situation differs, but the effects of owing money have predictable consequences. From enjoying a healthy mental state to achieving financial security and starting a family, debt can put our lives on hold. There are several ways to tackle debt. The most important part is to decide on a plan and stick to it. Time is of the essence!