I came across some personal finance statistics on LendEDU’s website. Seeing data like this makes me scratch my head because I know living without debt is not some pipedream. I know you can live without taking on more debt whether making $100,000 or $30,000. I’ve seen it and have worked with people in both categories. When I see that U.S. adults have an average of $29,800 in non-mortgage debt, I wonder why but also feel bad for them knowing it doesn’t have to be that way.
Now, LendEDU is a site that sells debt products. Some of them have their place like a 15-year fixed mortgage or a personal loan when you are upside down on your vehicle and want to sell it to get rid of a large portion of your debt. LendEDU also has some good articles like the one on how to take out a personal loan (for when you are selling the upside-down vehicle that’s causing you to stay broke). There’s a lot of other products you don’t need so reader beware.
I want to point you to their personal finance statistics page. They have aggregated personal finance statistics from various sources that you can use to see where you rank with the general population.
Median Household Income
Where do you rank when it comes to income? The median is where half is above, and half is below. If you have a $55,000 household income in the Tampa-St.Petersburg-Clearwater, Florida, area, then you make more than half of the households living in that area.
The median income per age group increases with the age group. Half of the households age 25 and up should be able to be debt free or at least working on becoming debt free. Half of the households age 25 and older make about $70,000 or more! Living debt free should not be an issue once you know how to build wealth.
Average American Debt
U.S. adults have an average of $29,800 in non-mortgage debt. Like income, debt increases as people age. Lifestyle creep. Old habits are hard to break, but it doesn’t have to be this way.
I like how only 15% think they will be in debt for the rest of their life. However, 77% of home buyers use a mortgage to buy their house, and almost that many Baby Boomers and Silent Generationer still have their home mortgage. Is anyone paying off their debt? Having the thought of paying off your debt is good to have, but it seems that not many have a plan to do it.
Average American Savings
According to these personal finance statistics on LendEDU’s site, 4 out of 10 Americans would have to borrow money to cover a $400 emergency. I know from working with people that some of them are above the median income of $62,000 who do not have at least $400 saved.
The personal savings rate in the summer months of 2019 was around 8%. This is a start, but if you want to retire with money, you need to be saving much more. Get rid of your debt, save your emergency fund, and start saving 15% of your income.
Of non-retired working adults, only 36% think their retirement savings is on track. What are you other 64% doing about it? Get out of debt so that you can save more. Get on a plan so that your retirement savings can get on track.
Only 41% of Americans keep a budget. Is it a wonder why 29% say they don’t make enough money to cover normal expenses or that 17% say they aren’t able to pay their monthly bills in full or that 15% of families reported spending more than they receive in income? When 60% of Americans have no plan for their money, is it a wonder that the median retirement savings is only $63,000?
The average payday loan borrower makes $30,000. That means many people are making more than $30,000 who use these loans. I’ve worked with couples who were making over $80,000 and couldn’t stop using payday loans. It’s not just the poor who are using these.
Look at the interest rate on these loans! Almost 400% APR a year! For every dollar you borrow, you pay four dollars in interest. If you use these loans, can you imagine how much more money you could have if you quit borrowing money like this?
The reason for going through these personal finance statistics is so that you can see how normal debt is. When budgeting is not normal, debt is normal. When debt is normal savings is not.
Stop going through life living on payday loans. It’s killing your finances! Stop going through life with no budget. Determine what you want your future to look like and get on a plan to get there.