American Debt

Look at some statistics that have been compiled.

Debt Source	Amount	Amount per Household
Credit Card Debt	$1.058 trillion	$8,265
Student Loan Debt	$1.52 trillion	$11,875
Auto Loan Debt	$1.3 trillion	$10,625
Mortgage Debt	$8.94 trillion	$69,844

The household numbers are based on there being 128 million households in the U.S. Total these numbers up and you find on average every American household is $100,609 in debt. That number probably went up a few dollars since you started reading this. To put this number in perspective, in 2017 there were roughly 150 million tax returns filed with 124 million of those making less than $100,000 per year. Granted there are household made up of people living together as roommates that would file separate tax returns but based on these figures it would seem that 80% of Americans owe more than they make in a year. That's only on average.

Since there are households out there with no credit card debt, no student loans, no car payment and no mortgage, there has to be the other extreme also. I'm sure there are people that owe more than they make in two or three years. I'm sure of this because I used to be one of those people. At one point my ex-wife and I had a mortgage on a small condo, about $25,000 in credit card debt, two auto loans and student loans. These totaled well over what we made in two years. We were both college educated and had good jobs, just no money left over after paying our bills and no money in savings to cover unanticipated expenses.

We came to the decision that we didn't want to live like that. It takes time, a lot of time, and a lot of commitment. We started with the credit card debt, no more new credit card debt and putting more on the credit card with the highest interest rate while paying the minimum on the others. At the same time we paid ourselves first, putting a little money in a savings account for emergencies. Most months it was only $10 or $15 but it was a start.

During this time we would reward our efforts once a month by ordering a pizza to have at home. We cooked almost all our own meals, and they weren't lavish dinners either. Once that first credit card was paid off we celebrated by cutting the card in half and actually going out to dinner with a bottle of wine. Finally some success, without the first credit card to pay each month there was more money to pay on the second one so it didn't take as long.

After a year and a half or so, we started attacking the student loans. All the credit card debt was gone so again we had extra money to get rid of the student loans, one by one just like with the credit cards. When the student loans were gone we celebrated with a short weekend vacation and actually stayed in a hotel.

All this time still paying ourselves first. By the time we had about $500 in our emergency fund we needed it to replace a hot water heater in the condo. With money in hand we went down to Home Depot and bought a new hot water heater that I installed, the emergency fund paid off. It was a long day since this was the first hot water heater I had ever installed, but by the end of the day we both got hot showers without going back into debt.

I stayed with this philosophy after my first wife and I divorced, by then I was working on never having a car payment again. It finally paid off. Shortly after that I married my second wife and I gradually brought her around to seeing the benefits of a potential no debt future. Finally, it's all paid off. The debt we have could be paid off in with about one month worth of salary and the emergency fund would last us over six months.

I hope this doesn't come off as bragging, it's not meant that way. It's meant to show that it can be done. In fact there is a man named Dave Ramsey that has made a career of teaching these same principles. When my ex-wife and I started this we had never heard of it and now I look back and wish I had thought to try to monetize this process.

I listen to Dave Ramsey on the radio often and while I may not agree with him 100% on everything, I can't fault any of his teachings either. Dave has developed catchy slogans like "Giving you financial advice your grandmother would give you." He teaches those "baby steps" of paying one credit card and letting it "snowball" into the others. If you really want to know what freedom feels like, stop waiting on the government to take away your debt (which I personally don't believe will ever happen), get rid of it yourself.

You don't have to believe me. On Dave's radio show people call in with testimonials and will tell you about the freedom they now feel after working through Dave's program. Other's will call in wanting advice on their financial situation so you will see there are people out there probably in worse financial condition than you are. When these people call in you may have already guessed, they get advice just like their grandmother would give them.