Debt and Stress

5 minute read

Financial stress is crippling America. The federal government maintains enormous debt levels and so do its people. Many categorize debt as “good” or “bad” based on the type, rate and terms of the debt. However the debt is categorized, one thing is certain, you still have to make the payments. It’s the monthly payments that cripple. The overall situation:

Examining the types of Debt:


Although total mortgage balances have increased through the last decade due to rising home prices, associated mortgage payments have not risen in sync because interest rates remain well below historical averages.

Student Loans:

Student loan debt has increased rapidly. From 2014 – 2020, outstanding student loan debt increased from $1 Trillion to $1.5 Trillion – exponential growth. Today, the average student loan borrower owes approximately $37,584.

Average payment is $393 and median payment is $222. From the large difference in average vs. median payment I presume much of the debt remains concentrated among high balance holders – doctors and lawyers.

Auto Loans: 

Question: Is there a problem here?

Answer: Yes, there is.

Auto loan debt has increased exponentially over the last 10 years, doubling from $700 million to $1.4 trillion. Americans love their cars. These monthly payments incapacitate Americans month after month – costing us big time. For a married couple paying for a used car and new car, that’s over $900 per month in auto payments! This does not include insurance and maintenance. To make matters worse those with lower credit scores bear higher monthly payments and many in this situation struggle to afford those high payments.

Credit Cards:

Will we ever learn our lesson? Debt cripples our economy and sends us spiraling down into recession. 71% of credit card balances revolve (roll a balance) each month. So 1/3 of Americans are winning the credit card points game, the rest of us are just paying interest. The average balance on a revolving balance cards – $5897.

All this data illustrates the severity of our debt situation. Credit card and Mortgage payments have increased moderately over the last decade. Student and auto loans are real problems. Meanwhile, average wage growth has been about 2.25% (roughly in line with inflation) over that time period. When your income goes up with inflation but your overall debt payments go up much faster = financial stress. And what does financial stress cause?

Marriage problems – frequent arguments about money are the top predictor of divorce. Divorce rates in this country are 40%-50% for the first marriage and higher for 2nd and 3rd marriages. And although divorce rates have declined in the last couple decades, this mirrors a declining marriage rate.

Health problems – those with stress from high debt levels are 2x more likely to have heart attacks, 33% have hypertension, 44% have migraines, 27% have ulcers or digestive issues. Literally, killing ourselves with financial stress.

Increased substance abuse

Reduced work productivity

Impaired sleep

Increased accidents

Debt traps us in destructive cycles. Regardless of the severity of your situation, don’t lose hope. You can climb out of the pit; you just need a plan and discipline. These are the steps our household took:

1.       Know your why – What will you do with your debt-free life? Envision your financial freedom. For me it was not having to juggle bank accounts and credit cards every month. I grew weary of it. I had developed a gnawing concern that any unexpected emergency would financially harm our family. I saw no easy solutions. I wanted to be able to give generously and help others. And I wanted the elephant off my chest.

2.       Shelter – We have lived in our “starter” home for 13 years. Most of our friends have upgraded to larger and newer homes at least once over the years. But this post is not about them. For us staying in our starter home has enabled our family to claw out of a pit. Our household income has increased, yet our shelter costs have remained fixed.

3.       Transportation – At the time this post was originally written we both drove older vehicles, we’ve since upgraded my wife to a new used vehicle. My ride is a 2004 Pontiac Grand AM (they really don’t make them like they used to, in fact they just don’t make them) with 170k miles on it. My wife’s hand-me-down car – it has rear windows held up by rubber door stops, a dash that’s seen better days, fuse is blown for the radio controls (so it’s anybody’s guess as to what radio station you’re on) and the AC just went out. In the words of the great cousin Eddie, “it’s a real beaut Clark.” But not having that $400-$500 monthly car payment helped us claw out of debt and now provides financial margin in our lives.

4.       Food – We spend $1250 average per month on food. This is $3.50 per person/meal. Granted we could lower this. We eat out a couple times a week as a family and there remain some convenience foods we buy that are more costly than cooking. However, we do a great job in this area overall. I credit my wife. Even though she does not especially enjoy cooking, she provides meals and we gather as a family to eat and discuss our day. I wouldn’t trade this time for anything. There are strategies we employ when eating out. When we dine out as a family, we generally drink water, sometimes split plates, use coupons and often avoid places requiring a tip. 

Some may view these sacrifices too extreme. And it may be for them. Our family has made different choices. Before reaching debt freedom (other than our mortgage) visualization helped me stay focused for years. I listened to countless stories of others completing debt-free journeys and taking back their freedom. To accomplish that goal was a pivotal lifetime memory that I will always share with my wife and kids.

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