Americans increasingly rely on debt to fund their lifestyles and manage day-to-day needs, but that debt comes at a price. The more money individuals devote to paying down debt, the less they’ll have to invest for retirement and other important financial goals, like building an emergency savings fund or putting children through college.
The growing reliance on debt is attributable to several trends, including higher costs for big ticket items like paying for college and purchasing a home, as well as low interest rates and easy access to various types of credit. The result? The three main types of debt – mortgage debt, student loan debt, and auto loans -- have all substantially grown over the past few decades.
- Mortgage debt in the U.S. hit an all-time high in late 2019 and by the first quarter of 2020 stood at $9.71 trillion, roughly double the mortgage debt held in 2003.
- Student loan debt now stands at $1.5 trillion1 -- twice what it was a decade ago and five times more than it was in 2003. 2
- Today, 85% of new vehicles are financed with a loan or lease, and 55% of used vehicle are purchased with financing.3