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Average American Debt – How do You Stack Up?

by Kevin Mulligan

Do you want to know what the average amount of debt is in America? The media certainly thinks so. I know you’ve seen headlines like the following:

“Average American debt spirals out of control!” 

“Average student loan debt crushing graduates!”

“Thousands of home mortgages are underwater and will be foreclosed on!”

Despite these eyeball-grabbing headlines, finding concrete data on the true average debt load of an American isn’t a simple process. There is some data from the 30,000 foot view that talks about overall total indebtedness, and some reports that focus on one specific area like student loans or mortgages. Finding overall debt load isn’t easy.

Thankfully, I’ve done some of the hard work for you by sifting through some exciting Federal Reserve reports.

But first, some guidelines.

Guidelines for Making Calculations Based on Economic Data

First, the data used isn’t going to be absolutely 100% foolproof. This is data that has been compiled by governmental (or quasi-governmental) organizations. Expect rounding errors and the like. Nonetheless, the data is what I would consider to be close enough in terms of accuracy for our purposes.

Second, the word average is often misused. An average is just that, an average of all data points. For our purposes calculating the average amount of debt in America takes a wide paintbrush to paint the entire country with one level of debt. It is inevitable. (Finding the median data would be much more beneficial, something I wasn’t able to easily do.)

Third, the average amount of debt in America has consistently risen over time due to three reasons:

  1. Inflation. When you compare an average debt amount in 1950 to one in 2012, there is going to be a big difference just based off of inflation alone. (More on this in a moment.)
  2. Consumer spending. Over the last 50 years consumer spending has risen from being 62% of GDP to about 70% of GDP. As the economy becomes increasingly more consumer spending oriented you will find more consumers in debt. (There’s a great breakdown of consumer spending as a percentage of GDP dating back 1929 over at AllFinancialMatters.)
  3. Ease of credit. Credit cards are a relatively new invention, joining the scene in the late 1960s at the earliest. Revolving credit is dangerous and can lead to astronomical interest rates if you mismanage the debt, which in turn leads to much higher levels of debt. (Credit cards also help fuel our consumer spending.)

Lastly, finding consistently accurate numbers about average or even total debt is extremely difficult. Some articles write of personal debt, which usually means everything but real estate (so credit cards, car loans, student loans, and so forth). Federal Reserve reports break things down into revolving and non-revolving debt, and then furthermore break that data down into the types of institutions holding the debt.

Here’s a point on how confusing it can be to figure out, especially with inflation:

According to a 2010 article from MainStreet.com the average American personal debt in 1940s and 1950s was less than $2,000. The same report links to an article in The Atlantic that states the 2010 total personal debt (non-real estate) is about $10,168. (The same article shows a total debt of $1,186 in 1948.) The key here is the article adjusts backwards for inflation so that the $1,186 amount is comparing $1,186 in 2010 dollars to $10,168 in 2010 dollars. In other words the actual amount of total debt in 1948 would have been lower — about $130 in total debt– but the value of that $130 dollars in 2010 would be $1,186.

Confused yet?

Nonetheless, let’s take our best guess at the average American’s debt level.

What is the Average Debt of an American?

The answer depends on what type of debt you’re talking about. A report from the Federal Reserve Bank of New York pegs total debt for all Americans at $11.44 trillion in the first quarter of 2012. Here’s what that looks like:

Average American Debt - Total Debt Balance and its Composition

Image from the Quarterly Report on Household Debt and Credit,Federal Reserve Bank of New York, May 2012 (pdf).

To get the average debt per person, you just need to divide $11.44 trillion by the population. The US Census Bureau has a Quick Facts page that estimates the 2011 population to be 311,591,917. While that number won’t give us a 2012 estimate, for our purposes it is close enough in calculating the average debt per person.

Total Debt

The average American has a total debt of $36,714.69. For a family of two it would be $73,429.38.

Mortgage Debt

The average American has mortgage debt of $26,434.58 ($52,869.15 per family). This is a good example of the problems that occur when dividing by the total population and using averages is tricky. Approximately 68% of people in America own homes (or have titles to homes that they pay mortgages on). Some have huge mortgage balances while others are almost done paying their homes off. If you spread the debt over just homeowners then the total mortgage debt per person would jump to $38,874.38.

HELOC Debt

The average American has HELOC debt of $1,835.73 ($3,671.47 per family).

Auto Loan Debt

The average American has car loan debt of $2,202.88 ($4,405.76 per family).

Credit Card Debt

The average American has credit card debt of $2,202.88 ($4,405.76 per family).

Student Loan Debt

The average American has student loan debt of $2,937.18 ($5,874.35 per family).

Other Debt

The average American has other debts totaling $1,101.44 ($2,202.88 per family).

Surprising Results

Again, dealing with averages and spreading the total indebtedness of the nation across the entire population means people that don’t have any debt get to carry some of that debt with the average. You might find some of the numbers above surprising: mortgage debt seems lower than what headlines would have you believe, as does student loan and credit card debt. I’ve read articles recently pegging student loans at about $25,000 per student — but that is for people that actually have student loans. Not everyone will have a specific debt above, but the averaging means it lands on their shoulders.

Sources: Census.gov, CNN Money, NewYorkFed.org, FederalReserve.gov, WestEgg.com.


Published or updated September 20, 2012.
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{ 1 comment… read it below or add one }

1 Kevin H

This is obviously not sustainable in the long run, but capitalism is based on a credit system.

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