80 Percent of Americans Carry Some Debt

Photo (cc) by quaziefoto

Americans view their debt as a necessary evil, according to a new report from the Pew Charitable Trusts.

Overall, 80 percent of Americans are carrying some form of debt, including mortgage debt, the report says.

When asked about their attitudes toward nonmortgage debt, 69 percent of Americans said they consider debt necessary in their lives but would prefer not to have it.

Meanwhile, 85 percent said they believe other people use debt to live beyond their means.

The report, titled “The Complex Story of American Debt” and released last week, is based on Pew’s analysis of:

  • “The Survey of American Family Finances,” which was commissioned by the nonprofit and conducted in late 2014.
  • “The Survey of Consumer Finances: 1989 to 2013,” which was conducted by the U.S. Federal Reserve Board.

Americans’ conflicted feelings about debt coincide with a trend of generally rising household debt in recent decades, according to the report:

One of the biggest shifts in American families’ balance sheets over the past 30 years has been the growing use of credit and households’ subsequent indebtedness. In the years leading up to the Great Recession, the average household at the middle of the wealth ladder more than doubled its mortgage debt.

Although Americans’ debt has decreased since then, housing — which still is the largest liability for most households — and other debt remain higher than they were in the 1990s, and student loan obligations have continued to grow.

Pew breaks down Americans’ indebtedness as follows:

  • Mortgage debt: Carried by 44 percent
  • Credit card debt: 39 percent
  • Car debt: 37 percent
  • Education debt: 21 percent

There are significant differences in the amount of debt carried by various generations, however.

For example, baby boomers (defined as people born between 1946 and 1964) hold more housing debt than the generation that preceded them, the so-called “silent generation” (people born between 1928 and 1945), according to the report:

In fact, boomers had more mortgage debt in 2013 than they did in 1995, and as they approached retirement in 2013, they carried nearly double the housing debt that the silent generation held at the same age.

Members of Generation X (people born between 1965 and 1980) — many of whom purchased their homes when prices ran up before the recession of 2007-2009 — have more mortgage debt than other generations at similar ages:

The typical Gen Xer in his or her mid-30s had more than twice the mortgage debt that boomers had at the same age.

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