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How much debt do Americans have?

Despite the roller coaster that consumer confidence has been on, Americans continue to borrow at record-setting levels. Overall consumer debt reach $13.3 trillion in the fourth quarter of 2008 according to Experian. Revolving debt (credit cards, Home equity loans, and other credit line) accounted for $4.1 trillion of the total. Here is a look at hoe some of the debt creaks down:

  • Credit card debt hit an all time high $834 billion

  • Mortgage debt also set a new high of $9.4 trillion

  • Person loan debt reached $291 billion, and grew faster than any other kind of debt.

  • Auto loan balances reached $1.27 trillion, another all-time high

As you can see, while debt has climbed in all areas, mortgage debt accounts for the vast majority of the money borrowed by Americans. That’s good news in a sense” mortgage are generally considered good debt, because a mortgage your investment.

it is an investment that also serves an immediate purpose (you live there). But mortgage are not always good debt. Spending more you can afford or taking a loan at an above market interest rate can lead to foreclosure and losing you investment.

Its also worth noting that the housing market showed signs of cooling in 2018. Existing home sales fell by 6.4% in December, and overall 2018 sales fell by 10.3% compared to the previous year according to data from the National Association of Realtors.


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Be careful

Just because you can borrow money does not mean that you should. Credit card companies and mortgage lenders may be willing to extend credit to you, but its important to know what you can afford and what you can handle.

When it comes to a mortgage, the 28/36 rule provides a basics baseline. The idea is that your loan payment (including taxes and insurance) should not exceed 28% of your pre tax income.

Those are guidelines not hard and fast rules. You should consider how stable your income is, and how much of an emergency fund you have should your financial situation change. In general it’s the best to plan for a rainy day even if you don’t expect one to come.


When it comes to credit card, you need to understand your own behavior. Its great to have a large pool of available credit if you can trust yourself to only use it as needed, not just because you want to buy something. Having available resources in reserve takes discipline, and if you don’t have that then its best to keep your credit lines tight.

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