Average Debt from (2020-2024)
Since 2020, the average American household has faced significant financial hardships due to various factors. Unprecedented job losses, reduced work hours, and business closures have led to a sharp decline in income levels for many families. Moreover, the rising costs of essential goods and services, such as healthcare, housing, and education, have further strained household budgets.
The lack of adequate savings and emergency funds has left numerous families vulnerable to financial instability, forcing difficult decisions regarding expenses and priorities.
Additionally, mounting debt burdens, including credit card debt and student loans, have amplified the financial challenges faced by millions of households across the nation.
Based on 174,035 data points pulled from the calculators mentioned above, we managed to understand a couple of trends.
Key Findings:
- The average debt shows a fluctuating trend over the years.
- While there is an overall decreasing trend, there are minor fluctuations in average debt from year to year. For example, there is a slight increase from 2022 ($46,783.48) to 2023 ($48,080.00), followed by a slight decrease in 2024 ($51,081.18).
- Despite the overall decreasing trend, there is a notable increase in average debt from 2023 to 2024. This rebound suggests a potential reversal in the downward trend or the onset of a new phase in the debt dynamics.
- The data shows that the average debt does not decrease consistently every year. Instead, there are fluctuations and variability in the debt levels from year to year, indicating the influence of various economic and financial factors.
Income - Debt Ratio
Note:
This is not an ITD, but it shows the relative total household income divided by the total unsecured debt of a household. We capped the income at $500,000 to reduce any noise in the data from outlier numbers.
An example is if a user stated that they have $40,000 of unsecured debt and an annual income of $50,000 then the ratio would be 0.8.
Key Findings:
- Gradual Decline: There has been a gradual decline in the income-debt ratio over the years. Starting from 0.75 in 2020, it has been consistently decreasing, reaching 0.66 in 2024.
- Stabilization: Although there is a decline, it's noteworthy that the rate of decrease has slowed down or stabilized in 2024 compared to the previous years. This could indicate a potential stabilization in the financial health of the entity being analyzed.
- Overall Stability: Despite fluctuations, the ratio has remained relatively stable over the years. The changes are within a relatively narrow range, suggesting a consistent financial management approach.
- Potential Concern: The slight increase in the ratio from 2023 to 2024 could be a point of concern, indicating a potential deviation from the declining trend observed in the previous years.
Why People File Bankruptcy (2020-2024)
Based on 150,720 data points, credit card(s) interest rates have increased significantly in recent years and Americans are facing the downside of it with credit card(s) interest rates being the common reason for financial hardship.
Below is a table showing several reasons, in percentages, of why people are seeking bankruptcy:
Key Findings:
- Economic Strain: Increased credit card interest rates, reduced income, and inflation indicate widespread economic pressure on individuals, affecting their ability to manage finances and maintain purchasing power.
- Employment Challenges: Job loss and wage garnishment reflect periods of economic instability, resulting in layoffs, unemployment, and legal actions for debt repayment.
- Personal Crises: Divorce and medical expenses signify the financial strain associated with marital dissolution and healthcare costs, respectively, highlighting the impact of personal crises on individuals' financial well-being.
- Unforeseen Financial Burdens: Unexpected expenses and foreclosure underscore the challenges of coping with unforeseen financial obligations, such as emergency costs and mortgage payments, leading to potential loss of assets.
- Diverse Financial Challenges: The 'Other' category indicates a range of additional financial hardships such as “children's expenses”, “the recent loss of a family member”, “loan repayments”, and “paying for accidents that insurance won’t cover” reflecting the complexity and diversity of financial struggles faced by individuals during the 2020-2024 period.
To clarify things further, let’s take a look at the statistics on why Americans do indeed consider bankruptcy and debt relief within the last 4 years.
The credit card interest rates experienced significant escalation between 2020 and 2024. Although reduced income has gradually decreased over the last four years, however, it remains the second main reason for seeking out debt relief.
Bankruptcy by State in 2023
Key Findings:
- States like California, Florida, Texas, and New York have large numbers in both years, suggesting they might have significant populations or are centers of certain activities.
- Texas and California, in particular, have notably high counts in both years.
