Most Americans now say that financial success means debt
For most Americans, being financially secure means being in debt.
Nearly 3 out of 4 adults (74%) now say inefficiency is an important part of how they define financial success, according to a survey by the Financial Times released last year. A bank survey found that Americans prioritize having debt over other traditional life milestones like getting married or buying a home.
“The financial landscape of the American people is changing in profound ways,” Daniel Brown, executive vice president at Keybank, said in a statement. “It shows that the measure of success is not wealth alone, but also the ability to live on credit and prepare for the future.”
Keybank surveyed more than 1,000 US adults aged 18 to 70 in July for the Bank’s seventh annual report. By 2025, Americans say they feel more financially stressed than they did a year ago, with 50% reporting financial stress by 2024.
Americans’ feelings of financial success are also declining, keybanks said. Only 39% of adults say they feel more financially successful than they did five years ago. The rising cost of living is largely blamed, with respondents particularly struggling with food and housing costs, as well as credit card debt.
Since the beginning of 2020, the cost of living has increased by about 26%, according to data from the Department of Labor. Both food and housing costs have risen about 30% since then.
Meanwhile, the Federal Reserve Bank of New York says the US debt has risen to $18.6 trillion, of which $1.2 trillion is credit card debt.
How to be (bad) free
While some Americans dream of the days of having zero debt, it’s important to remember that not all debt is created equal. Some debts may be “good credit.”
Adrianna Adams, a certified financial planner at the Money Domain, previously told the money that good credit includes loans that increase your net worth, significantly improve your life and / or provide future value. A loan, for example, is a big debt, but it’s a good one that often increases in value and provides a roof over your head.
At least some credit is required to build credit, To be able to get a mortgage first.
However, Americans are right to be wary of debt, especially debt such as payday loans or credit card balances.
Getting rid of debt – especially bad debt – takes proper planning. First, you must list who you owe, your monthly payments, total amounts and annual percentage rates (APRS). The Consumer Financial Protection Bureau has a helpful credit shopping worksheet that you can use as a template.
First, you’ll want to make sure you’re looking at the lowest monthly payments on all of these loans. Then you’ll want to decide between the two most popular Pay-Off-Off-Off-Off strategies: snow credit or avalanche credit.
The Debt Snowball method prioritizes the debt with the lowest balance, while the debt-to-credit ratio prioritizes the debt with the highest APR first.
In some cases, debt consolidation can be a savvy move to simplify your debts into one monthly payment. For example, you may be able to get a lower interest rate on a single debt consolidation loan than you were paying across several credit cards.
Alternatively, you can extend the length of the loan by paying less every month (but then it appears that the less payment has been observed.
Whichever method you choose, you’ll want to adjust your budget accordingly to accommodate additional debt payments in a way that keeps you motivated and on track to pay off your debts, or eliminate bad debt altogether.
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