Americans Are Up to Their Eyeballs in Debt – No Surprises There

consumer debt

Would you be surprised to learn that Americans are up to their eyeballs in debt? Given the fact that one out of every three American adults have been late on at least one bill in the last six months, it is a safe bet you are not surprised. What is surprising is that so few people know how to get out from underneath the heavy financial loads that seem to be crushing them.

According to the Motley Fool website, consumer debt reached a staggering $16.9 trillion at the end of 2022. That is a new record. Making matters worse is a $394 billion increase in household debt along with a $61 billion surge in credit card debt. For the record, credit card debt in America is closing in on $1 trillion.

It only gets worse when you throw in mortgages, auto loans, and other credit instruments. The icing on the cake is that a combination of raging inflation and stagnant wages has prevented most Americans from keeping up with their debts. It is a recipe for disaster.

Borrowing More Won’t Work

The Motley Fool says many Americans are turning to their credit cards just to stay afloat. Unfortunately, that’s a lousy solution to a very bad problem. Borrowing more will not work. All it does is add to a consumer’s debt via more interest payments.

Payday loans and hard money loans should also be off the table. Payday loans are no good because they get more expensive if you can’t pay them on time and are forced to roll them over into new loans. Every subsequent rollover increases the amount you owe.

As for hard money loans, they are not even an option for consumers. According to Actium Partners in Salt Lake City, UT, hard money lenders do not loan for consumer needs. They lend to commercial borrowers looking to buy real estate, expand a business, etc. If you’ve been thinking about a hard money loan, don’t waste your time. The same goes for bridge loans.

Spend Less, Earn More

The only way financially burdened Americans are going to conquer their money problems is to spend less and earn more. You cannot spend money you don’t have. All you can do is run up credit. So if you don’t have it, don’t spend it. And if you are not making enough to cover basic necessities, find a way to make more.

It sounds like such an easy solution. It is, at least in theory. What makes spending less and earning more so difficult is that so few people know how to do it. Most of us have grown up in homes that were not under severe financial stress. More importantly, we were never taught good fiscal management skills. Therein lies one of the biggest problems American consumers. We don’t know how to do it.

It Starts With a Budget

Sound financial practices that lead to spending less and earning more all start with creating a budget. If you don’t know how to prepare and live on a budget, it’s time to learn. Fortunately, doing so is not complicated. It is a pretty easy skill to master. Moreover, mastering it is arguably the most important thing you could do to get your finances under control.

Americans are up to their eyeballs in debt. It doesn’t look like this will change any time soon. However, you don’t have to participate in an ever-growing problem. Get some help by way of money management classes. Learn how to get out from under your debt by changing the way you manage your money. Anyone can do it.

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