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The average American has $ 52,940 in debt for mortgages, home equity lines of credit, auto loans, credit card debt, student loans, and other debts like personal loans.
Data from Federal Reserve Bank of New York Household Debt and Credit Report breaks down the average amount of debt Americans owe by type, age, and location of borrowers. The data was collected from a random sample of approximately 5% of Americans with information on the credit report.
Here’s what the average American owes.
Average US debt by type of debt
Here is a breakdown of the total amount, according to the Federal Reserve Bank of New York Household Debt and Credit Report from the first quarter of 2021.
Mortgage debt is the most important debt of most Americans, far surpassing other types. Student loans are the second largest type of debt listed in the data.
Average U.S. Debt by State
Where a person lives tends to have a big influence on the amount of debt they accumulate.
While some parts of the country have higher house prices and the cost of living it may be lower in other states. Residents of California, for example, tend to have higher average mortgage balances than many other states with more affordable housing, such as Texas and Ohio.
Here is the average debt by type for residents of each U.S. state, according to New York Federal Reserve Board 2019 data. Scroll right to see total debt amount.
Average U.S. Debt by Age
Debt tends to peak in middle age. Overall, this suggests that Americans tend to pay off debt in retirement and tend to maintain low debt balances in retirement, especially those over 70. For those under 30, the main source of debt is student loans.
While age-separated 2019 data was not available, Insider took 2017 data from the Federal Reserve Bank of New York who specified the total debt by age group and divided it by the number of people in each age group to find the mean.
It should be noted that this calculation distributes the debt over the entire population, including those who do not have this type of debt. Debt per person can be higher if it is calculated only on the basis of the population with this type of debt.
Here’s how the average debt balance breaks down by age group. Scroll right to see more data.
In this data, it should be noted that the low average HELOC mortgage and balance rates for people 29 and under are caused by low homeownership rates. According to Census Bureau data, only 34.4% of Americans under 35 owned a home, while 60.3% of Americans aged 35 to 44 owned a home in the first quarter of 2017.
How to start paying off debt
If you want to pay off some of your debt, here’s where to start:
Choose a reimbursement method and set a goal
Whichever method you choose, the first step will be to take stock of everything you owe, the total amount you owe, and the interest rate. Then you can start prioritizing what you owe.
Two popular strategies are the avalanche of debt and the snowball of debt. Debt snowball tackles smaller debt first to build momentum, then working on larger debt, while debt avalanche first focuses on paying down debt at higher interest to reduce the amount you pay overall.
Consider consolidating or refinancing when interest rates are low
For borrowers with credit card debt and other relatively small debt with high interest rates, consolidate your debts could make them more manageable. Debt consolidation Loans consolidate all of your existing debts into one debt, with one monthly payment and one balance. You could pay less interest on a debt consolidation loan than on a credit card, especially when interest rates are low.
Refinancing might be a smart move for people with larger debts, like mortgages, private student loans, and auto loans. Refinancing replaces your current loan with a new loan and can often help lower the interest rate. With interest rates now much lower than they were in the past, refinancing could be a smart decision to reduce your interest costs and reduce your debt.