Americans on pace for historic levels of debt in 2017


As America continues its long recovery from the financial collapse of 2008, we’ve become increasingly comfortable taking on debt. National consumer debt will near $12.4 trillion before the year is out, compared $11.7 just six years ago. And while credit card debt is on pace to surpass pre-financial crisis levels within the next two years, the biggest debt drivers are mortgages and student loans.

Of course, it’s not simply that things cost more – incomes simply haven’t kept pace with rising expenses. While median household income has risen 28 percent in the past 13 years, medical costs, for example, have risen 57 percent.

This is an especially dangerous situation for consumers. Incomes are increasing, which makes tightening up budgets feel unnecessary and unappealing. As a result, consumers are pressing forward with normal spending, despite the fact that their income may not support that kind of spending long-term. This creates a scenario where expenses feel manageable week-to-week, but is debt slowly increasing until it reaches a breaking point.

Protecting yourself

It probably doesn’t feel like your finances require a major overhaul, and in truth, they may not. But it pays to be cautious and that begins by simply paying a little more attention to the relationship between your spending and your income. To start, you might consider trying monthly or paycheck budgeting for a few cycles to get a more concise picture of how your income and expenses relate to one another. By budgeting in shorter cycles, you can more easily react and make changes if your spending is outpacing your income.

Additionally, you should do a careful review before taking on any major new expenses or debts. Even if you received a raise at work, it may not put you as far ahead as you think once all the other expense increases are accounted for. It’s not that you can’t spend money, of course, but more that you should be cautious in this particular economy.

Finally, if you don’t already, be sure to create an actual plan for paying down your debt as soon as possible. Debt is costly. Even debts with relatively manageable interest rates add up over time, so it’s always in your best interest to be as close to debt-free as you can reasonably manage. So make sure you’ve got a plan to wipe away that debt. And if you need help putting that plan together, don’t hesitate to reach out to a certified credit counselor who can help review your finances and suggest ways to get debt-free that work for your current financial situation.

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.