At the end of Q2, household debt in America raised to $16.15 trillion. This jump was largely driven by the rise in mortgage balances across the nation. Credit card and auto loan debt are also climbing in the United States. So, what is the average American (like you and me) supposed to do if we want to pay off our debt? It seems impossible. The best advice I can give you is do you best to continue to avoid debt when possible.
Debt In The United States
The staggering numbers don’t stop there either. Overall delinquency rates continued to rise in Q2 as well, albeit moderately. Researchers said that they will be more concerned if they see the overall delinquency rates rise drastically or return to pandemic levels.
Some more of the jaw-dropping figures can be found listed below.
- Mortgage debt went up to $11.39 trillion.
- Credit card balances climbed up by $$6 billion.
- New auto loans increased by $33 billion.
- The interest rate for a 30-year fixed-rate mortgage skyrocketed up to 5.74%.
“All debt types saw sizable increases, with the exception of student loans,” regional Fed bank’s researchers said of the increases. This is due to increased borrowing, which can be attributed to the higher prices everyone is the nation is seeing.
How To Avoid Debt Right Now
It may seem impossible to make progress on your debt-free journey right now. You are not alone in feeling that way. Many people have had to take on debt to be able to keep up their bills or cover emergencies due to the economy. A large number of people had already emptied out their practically non-existent savings during the pandemic. So, when something comes up, they are taking out loans or swiping cards to cover the cost. How do you avoid doing that when everything seems to be working against you right now?
- Re-establish your emergency savings (and then some).
- Don’t treat debt as an option. Take it off the table completely unless it is life-or-death.
- Delay gratification. If you put off gratification, it can help you avoid debt. You will take the time to think your purchases over and save the money rather than making impulsive decisions.
- Continue to focus on long-term goals. With everything going crazy in the world of finance right now, it is easy to focus on the short-term. I implore you to keep your eyes on your future and keep working to build your dream. That means avoiding debt!
- Downsize your life where it is possible. The price of everything has gone up recently. It’s more important than ever to stick to your budget and be frugal where you can to save money.
Readers, what are you doing to avoid credit cards and loans right now with household debt in America on the rise? Let me know in the comments!
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Amanda is an editor and writer. She has a passion for sharing information that helps people and communities to better themselves in some way. In addition to writing online, she also freelances for local newspapers in her hometown of Charlotte, NC.