A new report from the Federal Reserve Bank of New York shows that American households have accumulated the amount of debt that they held during 2008. In that unfortunate year, when the Great Recession hit, American households held about $12.68 trillion in debt. Now, nearly ten years later, American households hold about $12.73 trillion in debt. What may surprise you is that this time around, there isn’t much fear of a collapse nor does it seem like this is necessarily a sign of bad things to come.
From 2008 to 2013, household debt steadily declined as people tightened up financially and did what they could to shed debt. Since 2013, household debt has been increasing. Of the debt that American households now carry, about 71 percent of it is in housing (such as mortgages and home equity loans.
The remaining 29 percent is tied up in student loans (10.6 percent), car loans (9.2 percent), credit cards (6 percent), and “other” forms of debt (nearly 3 percent).
Debt will always be something that we need and that we utilize to acquire things that we want. The key to using debt wisely is having control over your spending and impulses, while also making sure you’re saving enough to pay off your debt in a timely manner.
If this can’t be done or isn’t done, then there are options for those who are hurting financially. A bankruptcy filing can go a long way in clearing out your debts and putting you on a path to a healthy financial future.
Source: New York Times, “Household Debts Makes a Comeback in the U.S.,” Michael Corkery and Stacy Cowley, May 17, 2017