Amidst high inflation and rising interest rates across the United States (US), a metric that continued to increase was the number of people willing to take debt.
In this post, we summarize the recent situation regarding non-mortgage debts and list the top ten states in the US with the highest average personal debt.
FIRST, LET’S LOOK AT THE NUMBERS
According to the Federal Reserve Bank of New York, household debt rose to $16.51 trillion in the third quarter of 2022, which, in turn, boils down to an 8.3% increase (led by mortgages) from the same quarter compared to the preceding year.
Owing to the surge in delinquencies on personal debts coupled with a substantial rise in outstanding bank card balances (which now stand at US$851.4 billion, an 18.1% increase from the previous year), the average debt per American has soared to a staggering US$39,759.
SCHOLAROO’S RECENT REPORT
Scholaroo conducted a study that analyzed the average personal debt in all 50 States to take a deeper look at the situation. The Personal Debt-to-Income Ratios Across U.S. report found that Georgia, Maryland, and Texas have the highest average debt per person, totaling $45,430 and surpassing the national average by 14.26%.
On the other hand, Minnesota, Oregon, and Indiana have the lowest average personal debt among states, standing at $35,484.
TOP 10 STATES WITH THE HIGHEST AVERAGE PERSONAL DEBT
Here is the ranking of the 10 states with the highest average personal debt (Overall ranking in descending order, with #1 considered the highest):
1. Georgia: $45,778
2. Maryland: $45,663
3. Texas: $44,850
4. North Dakota: $44,271
5. Mississippi: $43,345
6. Florida: $43,339
7. Arkansas: $43,257
8. South Carolina: $43,177
9. Virginia: $43,074
10. Alabama: $42,904
WHAT’S THE MATTER WITH GEORGIA AND MARYLAND?
One contributing factor to high debts in Georgia could be a considerably lower median household income in the State ($65,030, which falls below the national average of $69,021). The State’s VantageScore credit score is also below the US average (676 compared to 696).
In Maryland, on the other hand, the state’s high cost of living is to be blamed for the situation. Regardless of a significant median household income of $91,431, Maryland bags the second position in the above-mentioned list. Why? Because, with a 24% higher cost of living than the national average, it happens to be the seventh most expensive State to live in.
HOW CAN ONE PAY OFF THEIR DEBT FAST?
Let us now walk you through a few ways to pay off your debt fast:
- Get A 0% Balance Transfer Credit Card: You may transfer your existing debt to one of these cards and can work to pay down your balance without worrying about interest for a certain introductory period.
- Get A Debt Consolidation Loan: When you go for this, you get to combine all your debt into a single manageable payment. Once your expenses are streamlined, you automatically have to pay less interest.
- Explore Different Debt Payoff Methods: See which payoff method (snowball, avalanche, etc.) works best in your case and proceed accordingly.
IS GROWING DEBTS ALWAYS A BAD SIGN?
Not necessarily. Although the numbers might sound alarming, experts think that growing debts isn’t always a bad sign.
Contrary to the usual belief that an increase in people resorting to debt is directly linked to a rise in overall financial struggles, there are instances where the reality on the ground may be quite the opposite.
Sometimes, growing debts can be a sign of confidence. When people experience continued growth in their wages and lesser risks of unemployment, it’s only natural for them to feel confident about their finances. This, in turn, urges them to take bold steps to fulfill their long-lost dreams (like starting a new business, renovating their homes, or traveling to offbeat destinations)!
