Why Americans Are Drowning In Debt

On August 24, President Biden announced the cancellation of $10,000 in federal student loan debt for most borrowers. But student loan accounts for less than 10% of household debt in America, which reached $16.15 trillion during the second quarter of 2022. And debt is likely to grow even further due to soaring inflation. 43% of Americans are expected to add even more debt within the next six months. So why are so many Americans in debt today and what impact does it have on the U.S. economy?

Policy plays a vital role in keeping household debt in check. Experts say outdated procedures such as wage garnishment, in which an individual's earnings are withheld for the payment of a debt, are in dire need of a policy update. A survey found that about 7% of workers in America had their wages garnished, according to the most recent study in 2016.

The government can also play a potential role in reducing certain kinds of borrowings, such as medical debt that is currently held by roughly 23 million Americans.

Watch the video to find out more about why household debt is rising in America.

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Why Americans Are Drowning In Debt

[Sampson-jhyq]

The U.S. economy can actually get better if only the govt can start making better decisions for the sake of it's citizens, cos' they've really made life more difficult for its residents. Hyperinflation has left the less haves bearing the brunt of the burden. Its already eating into my entire $620k retirement portfolio. Like where else can we invest our money with less risks?

[kortyEdna]

Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?

[darnellcapriccioso]

Last year, more than 140, 000 jobs were slashed from public and private tech companies as they were forced to confront rising inflation and a tumultuous stock market.

[KacieLehman]

With around $120k invested in Palantir stocks, any suggestions for additional stocks to diversify across various markets? Looking for a well-rounded portfolio that balances risk aversion with returns meeting yearly inflation concerns.

[razojacqueline]

I am an American without debt but I think this is also the reason why I am so behind everyone when it comes to owning a house. Everything I have right now is mine. I don’t owe anyone a penny but this means I need to work for years or months to get what I need.

[scottarmstrong]

Inflation hits people a lot harder than a crashing stock or housing market as it directly affects people's cost of living that people immediately feel the impact of. It's not surprising negative market sentiment is so high now. We really need help to survive in this Economy.

[PatrickLloyd-]

The U.S. economy relies on ongoing credit and debt generation for sustenance. The Federal Reserve is expected to increase the money supply, leading to further debt accumulation for the average American. Meanwhile, foreign nations continue to desire the U.S. dollar, despite their own economies facing significant challenges, some even worse than that of the U.S. This situation raises concerns about who will ultimately bear the consequences of these economic dynamics.

[erichkraetz]

The worst part about this recession is that consumers are racking up credit card debt. In April alone, credit card debt went up 20% while rates have doubled in a year. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse is near.

[talented]

Nobody could have predicted the dollar's current state two years ago. The United States continues to make the same mistakes that have led to the dollar's current state. Thus, there is no assurance that the dollar's growth will not rise beyond initial projections.

[Wolfi]

Our economy drifted slowly over to a debt based economy. No saving needed to buy nice things. Banks and politicians love it. Debt slaves are easier to use and herd. Independent people are not. Why is managing a budged and basic economics not taught in public schools? Because bankers and politicians want the tax and debt cattle as dumb as possible.

[oneiljerry]

America is currently plagued by the hydra-headed evil duo of inflation and recession. The worst part about this recession is that consumers are racking up credit card debt. In April alone, credit card debt went up 20% while rates have doubled in a year. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse has indeed begun..

[checkforme]

Inflation is causing a lot of issue in the world ranging from food shortages, diesel fuel and heating fuel shortages, baby formula shortage, shortage of and price of available cars, the price of housing. It's all coming together and could lead to real disaster.

[aa]

If she has $240k debt, why buy a gas guzzling car and a condo in a affluent area? It means she needs financial education more than anything else

[dougcrawford]

"There's no reason to panic about the state of household debt in America." Translation = It's a friggin' crisis for everyone but the banking industry.

[micheallancelot]

A weak dollar can signal an economic downturn, making me to ponder on what are the best possible ways to hedge against inflation, and I've overheard people say inflation is a money-eater thus worried about my savings around $200k

[bernadofelix]

The most important thing that should be on everyone's mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the world. This is still a good time to invest in various stocks, Gold, silver and digital currencies. I never imagined that a few thousand dollars per month would add up. However, it is. I've made around $870, 000 since 2020.

[darex]

Financial illiteracy, easy debt and the whole medical thing. Add in student debt, you have a recipe for disaster.

[alohatraveler]

this woman is a horrible example on how to deal with debt. Her lifestyle is a roadmap on how to stay trapped in debt forever. Instead of saving and paying off her debt like the rest of us had to, she's adding to her debt and complaining about the consequences. She shouldn't be featured on a story like this as a victim. She's a social worker. Pay the debt you incurred and live within your means. I don't understand why so many women get these masters degrees in areas that don't pay high salaries and then live like they make a lot more than they actually do. Stop adding to your debt while having high loans. Pay them off first!

The government can't save you. Save yourself and take responsibility for your actions. Learn how to save and be responsible, not live outside your means and hope the government will save you from your bad behavior. Very misleading story from CNBC, suggesting that people don't have alternatives to adding huge amounts of debt. They do. Our societies do a terrible job of educating youth on how money and debt actually work.

[AddilynTuffin]

Debt sucks a$$, but a college degree is worth it IME vs the alternative. A lot does have to do with the career and degree obviously (Philosophy vs. Engineering degrees) and ability to get a salary to pay back loans. I had been struggling with debt for years. Those credit card companies really get you in college when you think you know a lot but really don't know crap. My only debt TODAY is around $100, 000 left on our mortgage but that is because we live VERY frugally. Which is why I'm looking to enter the market now and ride along as the economy gets. Building a $550k portfolio. Any stock recommendation?

[keltenbleich]

My parents told me never to make debts. They repeated this all over again and again. Today I´m a grown man and I have a car and a house, but no debts, thanks for their wise reminders: You should always save money, and then buy what you want.