The average 30-something American owes around $26,500, according to Debt.org, Understanding the state of household debt in the U.S. is arguably more important than ever.
Credit rates have been historically high over the last couple of years. Debt stats also illuminate broad economic trends and individual financial health.
Let’s take a look at the top 10 states grappling with the highest levels of household debt and dissect the reasons behind these staggering figures.
If you’re wondering where Floridians rank in household debt, it depends on the survey and stat. A survey of the highest debt-to-income ratio by USAFacts.org found Florida to be one of the highest.
Business Insider placed Florida at 6 in a ranking of the highest personal debt. The following ranking combines data from Credit Karma and the Motley Fool.
- California: Average Debt – $99,000 The Golden State tops the list with an average household debt of $99,000. With its skyrocketing real estate prices, it’s no surprise that the lion’s share of this debt is tied up in mortgages. Additionally, the high cost of living pushes residents to rely on credit cards and personal loans, further escalating the average debt.
- Hawaii: Average Debt – $92,100 Hawaii comes in second with an average debt of $92,100 per household. The island paradise’s isolated location contributes to high costs for goods, services, and housing. Tourism-driven economies often see larger disparities in income, and Hawaii is no exception, leaving many residents to bridge the gap with debt.
- Virginia: Average Debt – $90,800 Virginia ranks third with $90,800. A robust housing market, fueled by its proximity to the nation’s capital, accounts for a significant chunk of this debt. However, Virginia also sees high levels of student loan debt, indicating an educated populace potentially straining under the cost of higher education.
- Maryland: Average Debt – $89,300 With an average of $89,300, Maryland comes in fourth. Similar to Virginia, its close ties to Washington D.C. create a competitive real estate market. Maryland also faces a rising cost of living, contributing to increased credit card usage.
- Texas: Average Debt – $87,100 The Lone Star State comes in fifth. Texas experiences a wide wealth gap, and despite its reputation for affordable housing, the rapid urbanization of cities like Austin and Dallas has driven up property prices.
- Colorado: Average Debt – $86,500 The Rocky Mountain State ranks sixth, with households shouldering an average debt of $86,500. Colorado’s booming tech and cannabis industries have ushered in a surge of new residents, increasing demand for housing and inflating real estate prices.
- New Jersey: Average Debt – $86,300 New Jersey takes the seventh spot with $86,300. The state is known for its high property taxes, which compound with substantial mortgage debts. Proximity to New York City also contributes to elevated living costs.
- Washington: Average Debt – $85,600 Washington, with an average debt of $85,600, ranks eighth. Its tech-driven economy, spearheaded by giants like Amazon and Microsoft, has led to a prosperous but expensive housing market. Furthermore, residents grapple with student loans and auto debts.
- Alaska: Average Debt – $85,300 Alaska ranks ninth with an average household debt of $85,300. The state’s unique geographical challenges result in higher living costs. Alaskans also face high credit card debts, potentially due to the necessity of purchasing goods from afar.
- Massachusetts: Average Debt – $85,200 Rounding out the top 10 is Massachusetts, with an average debt of $85,200. The state’s prestigious educational institutions mean hefty student loans, while its desirable coastal cities drive up housing prices.
So, why do these states bear the brunt of household debts? A few common threads emerge:
Housing Market Trends: In many of these states, the real estate market plays a pivotal role. Rapid urbanization and the influx of lucrative industries make housing both a prized and pricey asset.
Cost of Education: States that are home to numerous academic institutions, such as Massachusetts and Virginia, often see residents grappling with substantial student loans.
Cost of Living: States like Hawaii and Alaska have unique geographical considerations that push up the cost of living, while others like California and New Jersey are burdened by their proximity to economic hubs.
Wealth Disparity: Several states on the list have a stark contrast between affluent and low-income residents, leading to an overall rise in debt as people seek to bridge financial gaps.
In a world where financial stability can sometimes seem like a tightrope walk, keeping an eye on these trends is crucial. These states, while offering opportunities for prosperity, also come with a cautionary tale about the double-edged sword of credit and debt. Understanding these dynamics is a step towards fostering financial health, both at the macro and micro levels.