Home > Managing Debt > How Much Debt Do I Have?

Comments 0 Comments

Most of us can quickly rattle off our monthly debt payments without hesitation. We know how much we pay on our mortgage, car loan or student loans. But when it comes to the total amount of debt we owe? We often don’t respond as fast, because we just don’t know.

“We have truly become a monthly payment nation,” says Christopher Viale, president and CEO of Cambridge Credit Counseling. “Many consumers are unaware of their total indebtedness because, when they take on a new debt, their only concern is whether the monthly payment can be squeezed into their budget.”

But the total numbers matter. A lot. If you haven’t added up your debt, you probably have not created a plan for digging out. And you don’t likely know how much that debt is costing you, both in terms of interest charges, as well as the “opportunity cost of tying up so much of (your) earnings,” says Viale.

Confessing Debt

But fessing up — whether it is to yourself, a financial planner or a credit counselor — can be terrifying. Karen McCall, founder of the Financial Recovery Institute, has seen this first hand with many of her clients over the years. In her book, Financial Recovery, she writes:

When people come in for financial counseling, I can see how hard it is for them to “confess” how much they owe in credit card and other consumer debt. I use the word confess intentionally, because people have often hidden the amount that they owe from people they love and from themselves. They’re ashamed and talk as though they’re confessing to a heinous crime.

How Do You Compare?

According to Experian’s fourth annual State of Credit study, the average debt in the U.S. is $27,887. For many people that includes a combination of credit cards, auto loans, student loans and personal loans.

Generation X carries the highest average balance at $30,039. Baby boomers are next, with an average balance of $29,317 followed by millennials at $23,332 and the Greatest Generation (ages 66 and older) at $23,245.

Those figures don’t include mortgages or medical debt not listed on credit reports, which can add substantially to the total. One study, for example, found that 26% of American adults have unpaid medical bills that are past due.

Getting a Grip

If you’re feeling overwhelmed by debts scattered among various credit cards and loans, keep in mind there are free tools that can help you tally your debt without triggering a severe case of math anxiety.

For starters, your credit report is a great source of information about your debts. Your balances from your most recent credit card statements should be listed, along with many other debts such as student loans, mortgages, auto loans and collections accounts. You can get your free credit reports once a year.

And a tool like Credit.com’s free Credit Report Card will not only show you how much you owe, but will also show you how your debt compares to that of other consumers. More importantly, you’ll find out how your debt is affecting your credit scores. You’ll get a grade for the “debt” listed on your credit report. Anything less than an “A” means you may have some work to do there.

When adding up your debt, don’t forget to include balances for debts that don’t appear on your credit reports. These may include:

  • personal loans from friends or family,
  • medical debts you are paying off directly to the hospital or provider, or
  • business debt that you are personally responsible for but is not listed on your reports.

It’s All In the Planning

Once you’ve tallied the totals, you can create a plan for getting out of debt. Don’t underestimate the power of a plan.

Chase Blueprint, for example, is a tool that allows cardholders to create a debt payoff plan for their balances and monitor their progress online. It’s been remarkably successful. More than 3 million plans have been created since 2009, and 91% of Blueprint customers pay more than their minimum payment every month, compared with 40% of all American credit cardholders. Even more encouraging is the fact that 90% of Blueprint customers stay committed to the plans they set up.

When you start setting up your plan to get out of debt, you may find that you can do it yourself, with the “debt avalanche” or “debt snowball” methods or something in between.

Don’t throw in the towel if the numbers seem daunting. Viale says that many of Cambridge Credit Counseling Service’s clients, who want pay off their balances quickly, are surprised when their counselors suggest a debt management plan of four years or more. “But they need that space to comfortably and safely pay down their unsecured debt, simply because their other expenses have left them very little breathing room — and that’s after creditors drop their interest rates on our plan,” he notes.

If you can’t do it on your own, you can seek help from a credit counseling agency, financial planner or money coach, or even a bankruptcy attorney. With a plan, and guidance if you need it, hopefully those fuzzy numbers will turn into a clear plan — and you’ll have a get-out-of-debt success story to share!

Image: Tetra Images

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team