The Sad Truth About Most Americans' Personal Finances


Have you ever heard someone say they just want to be normal, or have you ever said it yourself? I bet you have (I have a few times). But the truth is that maybe you don't.

Are you one of these people who have ridiculous amounts of debt in your life? You’re far from being odd, you’re normal.

What's normal these days? New data show that an average of 80 percent of Americans are in debt of some kind. Whether it’s a home mortgage, student loan, car loan, credit card, or other consumer-type loan, Americans are largely drowning in debt. It’s beyond time to change.

80.9 percent of Baby Boomers, 79.9 percent of Gen Xers, and 81.5 percent of Millennials are in debt. The debt rate for Millennials makes sense (as many of us have bought into the idea that college is the only path to success, and we took out copious amount of student loans). But the fact that so many Gen Xers and Baby Boomers are still beholden to creditors is concerning.

Consider this: Boomers are now in their 60s and 70s. They have had more than 40 years of work to earn a living and save money. Yet they are still being held down by the ball and chain. What is going on with that?

Astonishingly, Boomers have more credit card debt than Millennials. The average amount owed by Millennials on a credit card is about $4,868, while for Boomers it’s $7,175, and for Gen Xers it’s $8,291.

I'm a Millennial. I’ve got some student loans left, but once those are done in the next few months we will be aiming to stay out of debt for good. The only thing we ever plan on doing a loan for would be a house (the only debt that is not financially detrimental). As for everything else, appliances, furniture, cars, etc., we’ll be paying cash upfront for everything.

You might ask how one can do all this. Buy a car with cash? Is that even possible? Well, yes of course. But it requires certain kinds of behavior with money. Not everyone will want to do these things, but if you want to be successful, you have to do what works.

First, make a budget and stick to it. Tell your money where to go. When you control your money, you’ll find that you seem to have more of it. (I’ve written on this before, for more discussion on budgeting).

Second, get out of debt as fast as you can. Debt is what kills wealth-building potential. When you can pay yourself instead of the bank or Sallie Mae, you’d be amazed at how much money you’ll actually find.

Third, an emergency fund is essential. If that fund is built up, it will help to ameliorate the effects of expensive issues that inevitably come up in life, meaning that you won’t have to go into debt to pay the bills. (Three to six months of expenses is a good range to have in mind).

Fourth, be sure to save, save, save, and save some more. Saving is what builds wealth. You can’t make money by spending it all! You have to behave with what you have, or as Dave Ramsey says, “Act your wage!”

As a final thought, let me say this: in America, normal is broke. I want to be weird and have every intention of doing so. What about you?