Average American Household Has $90,000 In Debt

What in your opinion is adequate savings?

 

The tier 1 level of debt is considered to be the most healthy:


This schema separates mortgage and personal debt. Everyone has to pay a housing cost, whether it is rent of mortgage based. The healthy personal debt level is <15%; housing cost should be <25% (whether mortgage or rent). Transportation, which includes vehicle loan payments, gas, maintenance, etc should be <10%.

Obviously, the lower these percentages are, the more resilient to shocks you are. But everyone has to have somewhere to live and a car to get to work.

 

Well yeah because he's a racist loon with nothing better to do.

 

Collateral and non-collateral debt are completely different animals.
Home equity can dramatically shift quickly.
What do you think an average middle class home costs? What is a good interest rate currently?

 

How do you handle your financial transactions now?

 

In most cases that $90,000 is almost certainly the mortgage on the family home. Many Americans choose to purchase a home rather than rent an apartment. It's as good an investment as any, especially since when paid off the homeowners no longer have to pay rent.

 

Yes mortgage is significant debt but, it is not unusual. The basis of the article is that the amount of debt is unusual....But....They include mortgages which is not unusual. That's all. I call B.S. on it.

 

I have $0 in debt, including my home and cars. Does that make me special?

 

personal debt is a lot different from national one. I guarantee you if you had credit card debt equal to 3x your income you would be struggling just to pay the interest.

 

Our idea of adequate savings might be different than others. We used a table and factored in lifestyle wants for our retirement years for things that we haven't been able to do yet because of work. There are a lot of tables to figure out what is the right level of savings depending on what your goals are.

But it is an interesting question because adequate savings is changing a lot in America since the life expectancy is changing. People are living longer and have to plan for more funds to cover those years. In addition, with the uncertainty in medical programs going forward and the rising cost of assisted living, etc...a lot of retirees are finding that they just need more money than they planned for.

 

I think school debt is a huge problem for kids too. I have friends in their early 40s still paying off loans with insane interest rates from grad school.

So many kids are just crippled with debt trying to get through school.

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lol...yea it does actually. Congratulations!

 

america can survive as debt slaves since it is resource rich but with poor quality of life, same as england where the older conservative voters voted out of the illusion of debt slavery, to save their way of life for their younger ignorant liberal minded children who didn't have the experience.

in england the race was close with all the immigrants voting for the rich to save them from the 'racists'. will america experience the same?

the illusion of debt was created by the rich as a way to redistribute wealth from rich countries to poor countries, at the expense of the middle class americans.

the rich created propaganda like good work ethic, and personal responsibility, to fool the middle class into a false sense of pride of being hard workers that will help them escape the bondage of debt.

the rich were exposed as liars with the greed that caused the bad economy, and the debt created from the rich was not from the middle class being lazy, since the best of them have debt that is hard to manage.

 

Household debt is most threatening to those who have assets.
A 30 year fixed mortgage with around 3% down is pretty typical. Mortgage rates are incredibly low now. Investing assets exceeding the necessary down payment or paying off other debt would make more sense financially.
Talking about average American household debt is silly. Someone with 150k debt in medical bills and some $150k in debt to the IRS for back taxes are in very different situations.
Most Americans spend most of life in debt.
That's why we invest in life insurance.

 

Guess you don't itemize, huh?
Do you use cash for your living expenses?

 

I wouldn't relate savings and retirement at all.
We invest in hopes of retirement.
If your HVAC dies or your transmission goes what immediately accessible dollar amount on hand is comfortable to you?
Roughly what is your annual federal tax run?

 

Who did they incur debt with for college?
Who do they owe? What rate?

 

Now I also admire your mom.

 

Maybe you're right. You know better about the state of the US economy. I just showed the article. And started a thread for discussion. I am interested in the opinion of Americans.

 

Lol. Title pawn? Ensuring Americans make wise financial choices would mean making lots of things illegal. Meth is illegal. Prostitution is. Cheating on taxes. Speeding.
Why save up to pay cash for a home or new car? Is that a wise decision in present day America?

 

The housing crash saw a quick and abrupt drop in residential property. Two identical homes side by side dropped in appraised value similarly whether you owed 95% of the mortgage or had it paid off.
Most Americans don't have flood insurance. Those whose homes were destroyed a week after financing 100% walked away with out losing much. Those who had paid off their homes lost significantly more.
You can't make blanket statements about household debt in the US. There are lots of kinds of debt. A medical debt of 100k, a $100 utility debt, and a $5k IRS debt are vastly different. The dollars of debt are misleading. A household would be most affected by the utility debt, then the IRS, lastly the medical debt. One with these three debts would pay them in that order.
If you have specific questions, I'll be happy to address them if I can.

 

having $90,000 in mortgage debt for a 3% mortgage, is not a bad thing.

 

Uh, I'm not about to tell you how much money we have. Trust me, we won't have a problem with fixing our furnace if it breaks. Thanks for the concern.

 

No. In my experience unless you have a relatively large mortgage or donate insane amounts to charity, the "standard deduction" is better.

"Cash" in the sense that they're paid with available funds, but that may be a debit card, check, etc.... Not necessarily cash money from the Fed. 

 

Do you use primarily cash to pay your utility bills?
Do you itemize?
How old is your home?
What does gas run in your area?

 

Do you want my social security number and do you want to know if I like long walks on the beach?