Home » Household Debt is Rising Again and it’s Not Okay

Household Debt is Rising Again and it’s Not Okay

Yes, you heard it right, my friends. Household debt is rising again, with total household debt reaching $12.58 trillion dollars at the end of 2016. Debt totals jumped by $460 billion this year alone, the highest jump in nearly ten years. Our previous “record” for household debt in America was $12.68 trillion. But for some reason, the experts don’t think this is too terribly bad.

How Household Debt is Rising

Let me break down the increases in consumer debt by type. Here’s the scoop:

  • Mortgage loans increased to the highest level since the Great Recession, topping out at $8.48 trillion
  • Student loan balances rose by $31 billion in the 4th quarter alone, topping out at $1.31 trillion
  • Auto loans increased by $22 billion
  • Credit card debt $32 billion to hit a high of $779 billion

But it’s all okay, because delinquencies are down. The delinquency rate is only 4.8% instead of recession levels of 8.5%, and bankruptcy filings were down as well, by 4% compared to 2015.

It’s All Okay – Until You Can’t Make the Payments

For years Rick and I lived with the “We can afford the payments so it’s all good” attitude. Until we couldn’t and it wasn’t “all good” anymore. Then the stress levels associated with our debt went from “high” to “bubbling over”. We were sad, scared and angry. We had to watch our budget like a hawk watching its prey just to make the minimum payments. We had to say “no” to our kids about everything. And it sucked big time.

Then came the first years of trying to pay it off. Two steps forward, one step back. One step forward, ten steps back. Because we’d gotten ourselves in SO deep (can you say “65% DTI”?), we struggled to survive in a big way. It took creative finances, overtime and side hustles to get through the month.  And those were the good months.

Many times we added more debt to our debt load because we had no choice – the monthly expenses simply outweighed our income even on a shoestring budget because we had so many minimum payments to try and make.

Then two years ago we had some major family crises, and our debt ballooned to all-time highs because we had extra emergency expenses on top of our regular above-our-means expenses.

Thankfully, after a year and a half of very, very hard work, our DTI is manageable and we are breezing our way to being consumer debt free. But not without a LOT of pain and stress on our whole family.

Lesson learned? Debt SUCKS. And you can’t guarantee that you’ll always be able to make those minimum payments. Read this not-so-happy story for more on that.

If you’re struggling with debt – or even if you’re making the minimum payments “just fine”, I encourage you to pay off your debt as soon as you possible can.

History shows that whenever people get overconfident in the economy and start spending on credit like crazy people, that something happens and it all comes crashing down in a major way.

It happened preceding the Great Depression, and it happened preceding the Great Recession. I pray it doesn’t happen again, but I know that if it does, our family will be prepared. Will yours?

Here are some links to some great articles that will help you turn your finances around, destroy your debt and build financial security.

6 Reasons to Start Paying off Debt Now

Debt Payoff: How to Zap Doubt and Discouragement

How and Why You Should Get Out of Debt

Six Lies Broke People Believe

If You Want What They Have, Do What They Do: 21 Traits of Millionaires

Six Mistakes Broke People Make

Want Something More? Then Do Something Different!

What to Do if You’re SERIOUS About Getting Out of Debt

Overwhelmed by Debt? Here’s How to Start

Recommended Reading: The Richest Man in Babylon: Now Revised and Updated for the 21st Century (Paperback) – Common

Friends, do NOT fall for the lie that it’s okay to live life above your means and keep your family drowning in debt. Instead, imagine a life like this:

  • Imagine a life where you “owe no man” anything and as such are not tied to your job because you are not tied to your minimum payments.
  • Imagine a life where you have tens of thousands in savings and can take advantage of spontaneous vacations, opportunities to give – A LOT, and the ability to buy what you need without depending on a bank
  • Imagine a life where you don’t even think about money, where it no longer has to be a priority to work your budget. That’s what happens when you increase your financial security – you just simply stop caring about money because it’s no longer a desperate need in your life.
  • Imagine a life where you are free to pursue whatever dreams come your way without having to think “how can I/but I can’t afford it.”Recommended Reading: Spirit Driven Success: Learn Time Tested Biblical Secrets to Create Wealth While Serving Others!This is the reality of a debt free, financially secure life. And it’s awesome. Won’t you join the debt free, financially secure group of people who experience this type of a life every single day? 


  1. Kathy says:

    Another sad fact is that once again, banks are being encouraged to allow low down payment mortgages and the old “liars” loans that got people so far over their heads and created the prior housing bobble burst. I guess some people never learn

    • Laurie says:

      Yes!!!!!!!!! It’s so frustrating. It only causes more people live on the edge of paycheck-to-paycheck. So good to “see” you here, Kathy!

  2. Aaron says:

    Come on Laurie – it’s good for the economy! We have to spend more to make sure everything keeps churning along.. (wink, wink).

  3. Awesome post. I look at outstanding debt at work as a predictor for possible risk for the bank. I think something that would be beneficial to look at is year over year change in debt. Yes, the numbers you list are staggering, but if it isn’t a huge change year over year, then it may not be a problem (for America I mean, individually, people should try not to get into debt and if they are in debt, get out of it!!)

  4. Managing minimum payments is NOT a financial plan. We did this for years, and there was much stress associated to this behavior. Once we decided to take action, live within our means and dump our debt the stress was going and we were able to build wealth.

  5. Jayleen says:

    Yes! We have temporarily joined the ‘owe no man’ club! It is a great feeling! So great that I’m a little nervous about leaving the apartment we are renting for another mortgage. We are saving like crazy though! It is amazing the debt that we, as consumers, hold in general.

  6. We’ll be contributing to this statistic, as we’re about to take on a new $280k mortgage. :/

    But we’ll be selling our current home and one of the rentals, so our total debt load will only be going up slightly, and I suppose that’s balanced out by investing the equity from those homes. (There is an outside chance we’ll someday pay down or pay off the mortgages with our investments, but I think the right thing to do is to just keep the funds invested.)

    Generally, I think debt is a very bad thing for the populous at large. We’ve personally come around to the idea to use leverage to invest, but that kind of arbitrage play is not for everyone.

    The simplest & maybe best advice is just to avoid consumer debt altogether.

    • Laurie says:

      Well, and you guys have a really low DTI too, even after the mortgage, and that makes such a difference. I know that many of today’s mega spenders are pushing the limits like we once were.

  7. Josh says:

    My wife & I try to share these same statistics with our family & friends as much as possible as they are the people we can influence the most because of our physical relationship.

    I sometimes wonder how these stats keep ticking up after the Great Recession. Altohugh it’s a somewhat stark comparison, I’m reminded by the Israelites in the Desert. They had everything and still grumbled and ultimately got to spend an additional 40 years. Even though we are not physically wandering through the desert for a lifetime, we are human like they were and have our own travails & “Groundhog Days.”

    • Laurie says:

      Yeah, I know so many people who were like “We are GOING to change our ways” after the Recession, and now those fears and tears are long forgotten. For us, though, they are still fresh in our minds.

  8. Though we still have a mortgage, getting rid of all the other debt (and building savings) has been life changing. The stress and worry about making ends meet in the event of a job loss or emergency is virtually gone. And, this is only one of the many benefits we’ve experienced.

    It’s worrisome that debt is on the rise. And that is why we’re all here telling our stories. Even if we reach just one person each day, or even each week, it’s worth it! 🙂

    • Laurie says:

      You guys also have a really low DTI, Amanda, and that certainly makes a difference. Praying we can all at least impact one person to move toward debt freedom!

  9. It’s so hard to believe that household debt continues to rise despite the obvious risks involved. I wonder if it’s a case of, “It won’t happen to me?” or a case of consumer addictions? If I look back to my own years of denial, I’d have to say it’s probably a combination of the two – along with the power of marketing – and of the “experts” who say it’s all OK – because delinquency rates are down (!)

  10. For all the hype about millennials being less materialistic, more debt averse, etc. I had hoped U.S. household debt would be going down. At the same time, I’m hardly surprised. Our culture is so amenable to debt, it’s hard to stand against the grain and say no to having more than you can really afford. That’s awesome you’ve gotten yours under control–you’re such an inspiration that it’s never too late!

  11. I wonder if the debt increase at the end of 2016 was from holiday shopping? It’s good to see that people are overall able to pay off debt, but the Great Recession delinquencies largely came from mass unemployment.
    But yes, don’t believe that debt is normal! It’s all fun and games until you or your partner loses income for any reason. I know people say “Why are you paying off your debt?” and my answer is “Why aren’t YOU?” I’ve never regretted having less debt and it’s been wonderful in so many ways.

    • Laurie says:

      “Great Recession delinquencies came largely from mass unemployment.” Yes, but it was the living above the means that is what was a huge cause of people not being able to pay their bills after the layoffs. No debt and a healthy emergency fund will help change that.

  12. It’s crazy how quickly people forget! Everyone got concerned and dropped debt 2008-2010 but then started building it back up again. Will it take another financial meltdown to remind everyone? I sure hope not, but if it continues on the current path, the debt issues just might cause another meltdown. 🙁

  13. It’s so disheartening to hear that debt is climbing again. Making the minimum payments is not a plan, it’s just survival mode. Thanks for sharing your debt story and your resources. I’m sure they will help some out there who are ready to hear it.

  14. katscratch says:

    Mine’s going down! 🙂

    Do you think there’s even more of a cultural shift toward debt being ok now? I feel like before the housing crash my friends/coworkers weren’t keen on having debt but it was seen as something that had to be done to achieve a house, car, etc. Now I’m hearing statements more along the lines of people deserve the house and cars after living “lean” for several years, and the debt doesn’t bother them the same way.

    I hate being in debt. Haaaaaate. It’s been 18 months since I went from a very low DTI (13%? I need to write this down somewhere so I remember!) to over 60% and I am still in shock that I let it happen so EASILY. I just can’t imagine being in a position to think I needed more house or more car just because the economy is “better”!

    • Laurie says:

      Yay! Us too! We had a very similar situation. It is frightening how quickly one’s DTI can go from safe to emergency. We too used to trust in the economy – no more!

  15. That’s a terrifying thought! I thought the same thing about how people are spending so freely these days. I have plenty of friends doing that who look at me like I’m living like a hermit or something. I guess everyone has forgotten about the recession.

    • Laurie says:

      A wealthy hermit. 🙂 I agree – I think they’ve totally forgotten how tough times were during the recession. So many people were in such dire straits, now they’re content to risk it again!

  16. It is sad that household debt is rising and that many think it’s the norm and so it’s okay. My co-workers treat debt as a natural part of life and continue living if it’s not a problem. It’s dangerous to have that mindset because any emergency or setback can have big consequences.

    • Laurie says:

      Yes!!! It just doesn’t take much to get one from “making the minimum payments just fine” to “Oh crap, we’re in big trouble.”

  17. Dawn Hild says:

    In the beginning of my 40 year marriage, we got in over our head too. We weren’t doing much extravagant, but it was the whole debt to income ratio problem. Our income was quite low back then. And it is amazing our quickly “the little things” can add up when using a credit card. Long story short… about 25 years ago we change our ways. Shifted our thinking from accumulating things to enjoying simple pleasures with family, friends and each-other By eliminating all our debt- including our house, vehicles, and consumer credit, we were able to retire at 55 and live comfortably on my husbands pension. Now we are able to explore our options for chapter 2 in our lives. Moral of the story… options multiply when you eliminate debt..

    • Laurie says:

      Dawn, thank you so much for sharing your story – you and your husband have proven that you can turn things around! SO happy for you. Congrats!!

  18. Mrs. Groovy says:

    To repeat Aaron, C,mone it’s good for the economy! Which really means it sucks for the individual. One way to grapple with debt is to ask yourself “who benefits from my debt?” When you can admit it’s not you then get mad and do something about it.

    • Laurie says:

      LOL, I know!!! I love the idea of asking “Who benefits from my debt?” That question really can help one to face the true burden that debt is. I just might write a post on that. 🙂

  19. Mr. SSC says:

    I think it could be a cultural mindshift that debt’s okay and everyone forgot about 2008. I mean, come on, it was almost 9 years ago, that’s like a decade ago… lol One of my co-workers boyfriend totaled his paid off car. Instead of using his $7k payout to get a $7k or less car, he took out a full loan on a new car for $16k and just lived off of the $7k. His part time job doesn’t even cover the payments, much less his part of rent or utilities. She seemed fine with it and even co-signed the loan for him. Aye yi yi….

    I went through that same issue of figuring out how to balance my minimum card payments with my income and some months I didn’t make headway on any of the cards. 1 Broken collarbone later and they’re all skyrocketing because I’m out of work for 12 weeks with no emergency savings. Okay I had $1k, but that lasted all of about 4 weeks. When I could get back to work I was 2 months behind one verything and it took almost 8 months to get back to normal from that incident.

    It just takes 1 little wave to mess you up when you’re barely treading water.

    • Laurie says:

      Oh my gosh! What a powerful story, Mr. SSC. We had a similar situation when Rick was laid off. Just coasted along on credit cards spending until he got a job 7 months later. Not going back there again, and I know you guys aren’t either!

  20. Michael says:

    Great post, Laurie! Spending money that we don’t have is a crazy thing to do. How could negative cash flow ever be a good thing? I was in deep credit card debt. We dug our way out of it and hope to never go there again.

  21. Francis John says:

    Thank you so much for sharing your experience and wisdom!

    It’s inspiring and empowering younger people like myself to dich the debt lifestyle. I know for sure I will never be satisfied with debt.

    Thanks again for sharing. 🙂

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