Why High Debt Could Mean Financial Stability - Say what? The average American has $53,850 in total debt, 70 percent of which is mortgage debt – but debt is spread unequally across the U.S., according to the Urban Institute and the Consumer Credit Research Institute, which released a report on debt in America Tuesday. States with pumped-up home values and high personal income are typically the ones where Americans carry the highest debt loads, while lower-income states tend to be low debt. What matters even more, though, in assessing the financial health of Americans isn’t how much debt they have, but the type of debt they carry. Here are the five states where Americans carry the highest average total debt: 1- Hawaii: $83,810 in average total debt; 80.3 percent of this is mortgage debt 2- Maryland: $76,583 average total debt; 76.8 percent mortgage debt 3- Colorado: $74,340 average total debt; 76.3 percent mortgage debt 4- Virginia: $74,279 average total debt; 76.6 percent mortgage debt 5- Washington: $74,279 average total debt; 76.2 percent mortgage debt Here are the five states where Americans carry the lowest average total debt: 1- Mississippi, $31,065 in average total debt; 54.3 percent of this is mortgage debt 2- West Virginia, $33,970 average total debt; 56.9 percent mortgage debt 3- Arkansas, $37,162 average total debt; 61.1 percent mortgage debt 4- Louisiana, $38,077 average total debt; 60.1 percent mortgage debt 5- Oklahoma, $38,639 average total debt; 60.4 percent mortgage debt Mortgage debt is typically heavy in states where the median price of a house is higher, and where average household income is higher. In those states, a jumbo mortgage won’t likely negatively affect people’s personal finances and ability to save, since owning a home helps build equity and usually allows people to benefit from a tax standpoint. For instance, in Hawaii, the state with the highest total debt, the median price of a house is $503,850, the highest in the country; average household income there is $83,006. “Houses are more expensive, so the mortgage is higher but the value of the house is higher, too,” Josh Bivens, director of policy and research at the Economic Policy Institute, told The Fiscal Times. “The non-mortgage debt levels are perhaps more indicative of financial distress.” If non-mortgage debt is taken to help people improve their economic positions, such as student loans (in moderate amounts, of course), it’s an investment in the future. Those with student loans will likely get a job after college and pay that debt back, even if slowly.
Posted on: Fri, 01 Aug 2014 16:28:41 +0000
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