A few months ago read an article that was disturbing. It was shared on Facebook by my friend Jessi Fearon.
The article ranked each state by the amount of debt the average citizen had in relation to their income. There are 13 states in the United States that have debt that exceed the debt carrier's household income.
One of those states is where I live — Alabama. According to this report the average citizen in the state of Alabama had an average NONMORTGAGE debt that was 8% above their household income.
This was just non-mortgage debt. Of course, the mortgage is, for most people, going to be above their annual income. This was cars, student loans, credit cards, personal loans.
And I am not naive to the fact that life happens. But when you consider that over half of Americans are living paycheck to paycheck, and then a bulk of them are in debt that exceeds their annual income, that's horrifying. (source)
The article talks about how, after the recession in 2008, people quit borrowing money. They weren't putting as much on credit cards. They weren't buying new cars. But now that the economy has sort of bounced back, people are borrowing more. And they're borrowing more now than they did back then.
According to the Federal Reserve, Americans have — are you ready for this? — $12.8 trillion in household debt. And this is so disturbing: Out of every $5 that Americans make, $1 goes to debt. (Source)
How are you ever going to get ahead?
Stop the cycle.
Stop the cycle of borrowing money.
I put this out on my Facebook page and somebody asked how much of that was student loans. In 2016, the average student loan was $36,000. That's a lot of money. It is not an insurmountable amount of money. My husband and I were in $36,000 in debt. We paid it off in two years on one income. So it's not like that's beyond the realm of possibility.
But can you imagine having more debt than money that you'll make in a year? And I don't think these people are stupid. I don't think they're uneducated. I totally believed that life has happened to them. I don't want that to happen to you.
We need a plan.
You need a plan. We all need a plan. Even people who are out of debt need a plan.
I realize that I'm getting a little frantic about this. But it is very upsetting and disturbing to me because I don't want people to feel like they have to live their life in debt. I don't want people to feel like they have to live their life every month making payment after payment after payment.
Guys, I cannot tell you how amazing it is to live a life payment-free. The only payment we have every month: our mortgage.
So what can we do to get out of debt?
1) Make a budget. If you've never made a budget before don't feel overwhelmed. Here is a great post to get you started.
2) Come up with a plan, some goals for yourself and take things one day at a time because I really don't want any of you to be a part of these statistics. And I'm totally not judging you if you are.
Tell me, are you among those numbers? Is your state among those numbers?