Debt is part of the average American's life, and you can start to accumulate it as young as your 20s. New findings from Experian's 2020 State of Credit report show that the average Gen Z consumer (ages 24 and younger) has about $10,942 worth of debt, not including mortgages.
Here's a look at how much nonmortgage debt Americans have by age group, and the average non-mortgage per capita debt for each group: 18-29-year-olds: $69 billion total, $12,871 average. 30-39-year-olds: $1.17 trillion, $26,532 average. 40-49-year-olds: $1.13 trillion $27,838 average.
The average American debt totals $59,580, including mortgages, auto loans, student loans, and credit card debt. Debt peaks between ages 40 and 49, and the average amount varies widely across the country.
“That's because the best balance transfer and personal loan terms are reserved for people with strong credit scores. $20,000 is a lot of credit card debt and it sounds like you're having trouble making progress,” says Rossman.
Lots of people have credit card debt, and the average balance in the U.S. is $6,194. About 52% of Americans owe $2,500 or less on their credit cards. If you're looking at $5,000 or higher, you should really get motivated to knock out that debt quickly.
A common rule-of-thumb to calculate a reasonable debt load is the 28/36 rule. According to this rule, households should spend no more than 28% of their gross income on home-related expenses, including mortgage payments, homeowners insurance, and property taxes.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
The Standard Route. The Standard Route is what credit companies and lenders recommend. If this is the graduate's choice, he or she will be debt free around the age of 58.
Debt eases for those between the ages of 45-54 thanks to higher salaries. For those between the ages of 55 to 64, their assets may outweigh their debt. However, many still owe more than they have saved and must delay retirement as a result.
How much is the average Australian in debt? According to a study from Invezz, Australia's household debt is the fifth highest in the world, at about $86,000 per household. Given that the average available income is only $42,554, the amount of debt owed by households is a whopping 203%.
But as a general rule of thumb, a debt/income ratio of 10% or less is outstanding. If it's between 10 to 20%, your credit is good, and you can probably borrow more.
Financial experts typically recommend saving up three to six months' worth of necessary expenses in order to have a healthy, fully-funded emergency account. So, there's no specific number that a person in their twenties needs to have in their emergency fund — it should be based on their necessary monthly expenses.
Generally speaking, a good debt-to-income ratio is anything less than or equal to 36%. Meanwhile, any ratio above 43% is considered too high.
That's another reason those who are debt-free might be happier and healthier. They might be better able to afford unexpected health challenges, many of which require money to solve. They might have the means to pay for good health insurance, pay for a therapist, or sign up with a personal trainer.
Debt can be good or bad—and part of that depends on how it's used. Generally, debt used to help build wealth or improve a person's financial situation is considered good debt. Generally, financial obligations that are unaffordable or don't offer long-term benefits might be considered bad debt.
Between mortgage loans, credit cards, student loans, and car loans, it's not uncommon for the typical American to have one or more types of debt. The ones who are living debt-free may seem like a rarity, but they aren't special or superhuman, nor are they necessarily wealthy.
Credit Karma members closest to midlife carry the most average total debt. Generation X averages $61,036 in debt, followed by baby boomer members, who have an average total debt of $52,401.
So, given the fact that the average credit score for people in their 20s is 630 and a “good” credit score is typically around 700, it's safe to say a good credit score in your 20s is in the high 600s or low 700s.
Many people would likely say $30,000 is a considerable amount of money. Paying off that much debt may feel overwhelming, but it is possible. With careful planning and calculated actions, you can slowly work toward paying off your debt. Follow these steps to get started on your debt-payoff journey.
FAQs. Is $2,000 too much credit card debt? $2,000 in credit card debt is manageable if you can make the minimum payments each month, or ideally more than that. But if it's hard to keep up with your payments, it's not manageable, and that debt can grow quickly due to interest charges.
The simplest way to make this calculation is to divide $10,000 by 12. This would mean you need to pay $833 per month to have contributed your goal amount to your debt pay-off plan.