The State of Debt in America

Americans rely on debt to fund major milestones, bridge financial gaps, and, at times, survive unexpected hardships. From mortgages and student loans to credit cards, debt is deeply woven into the fabric of our economy.

Per the latest data from Business Insider, the average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. This reliance on borrowed money highlights the importance of learning to manage it effectively.

Debt and How it Works

Debt, in its simplest form, is borrowed money you agree to repay—often with interest. While it might seem straightforward, the way debt works can be compared to sailing on the open ocean:

• Positive Debt: When we are taught skills to assess the winds, we can capture their strength to move upwards through ocean currents. For example, taking out a home equity loan to invest in property renovations that increase the home’s value or fund a child’s college education can create long-term financial benefits.
• Negative Debt: When we don’t know how to navigate the winds or use them to cut through currents, debt can instead act as an anchor cast into the waves, weighing us down, stuck in place. For example, high-interest payday loans can create cycles of dependency, making it harder to escape financial strain.

The Racial Divide in Debt

Racial inequity shapes how debt is both obtained and assessed. For white families it has often served as a tool for wealth-building through access to credit and opportunities like homeownership, business financing, and education.

While Black families have experienced debt differently as high-interest loans and predatory lending. Sociologists Louise Seamster and Raphaël Charron-Chénier term this as Predatory Inclusion, “where lenders and financial actors offer needed services to black households, but on exploitative terms that limit or eliminate their long-term benefits.”

We offer valuable products and services to help combat this inequality in debt and rectify historical inequalities.

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• 💵 We developed CashPlease, our short-term personal loan for emergencies, to bridge the gap between paychecks, help avoid overdrafts or pay-day loans, and potentially boost your credit score by reporting on-time payments to all major credit bureaus.
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Through our campaigns like OneTransaction we champion financial education like Improve My Credit Score which helps us leverage financial instruments to our community’s benefit.

These 5 strategies further help us prioritize building financial wellness and developing financial practices that we can pass down from generation to generation—shifting the wealth divide.

5 Debt Management Tips

#1. Know Who You Owe and How Much
Start by listing all your debts, including creditors, balances, interest rates, and due dates, to have a clear picture of your financial obligations. Use our Money Management tool to track your loans and build your debt payoff plan.

#2. Reassess Your Relationship with Credit
Credit can be used to build your credit score, improving your chances of securing a loan, or it can accumulate on a credit card with interest that snowballs out of control if not paid off. Understanding how credit works is key to using it as a tool rather than it using you. Learn how to positively navigate credit in our article Cash vs. Credit.

#3. Prioritize High-Interest Debt
Focus on high-interest debts first, using methods like the avalanche strategy to minimize interest costs and accelerate repayment. If you have been targeted by predatory lending practices, paying down high-interest debt reduces financial strain and helps you address the rest of your debt sustainably.

#4. Consolidate Your Debt (With Caution)
Debt consolidation simplifies repayments by placing multiple streams of debt in one loan with a fixed monthly payment and can lower your interest rate. It’s essential to use it wisely to avoid accumulating new debt and assess whether you can sustainably manage making the monthly payments.

#5. Negotiate with Creditors
Many creditors are willing to negotiate lower interest rates, waive late fees, or restructure payment plans if you inquire with their teams. A quick call could save you hundreds or even thousands of dollars, freeing up more resources to tackle your remaining debt.

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• 😌 Our Financial Wellness resources work to put you on a path towards improving your relationship with money and wealth mindsets. Explore more, find wellness today.
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These tips take you past the numbers—helping you see the bigger picture on how debt affects your ability to make money moves, save, and build a future of financial wellness.

By prioritizing what matters most and leveraging tools like negotiation, consolidation, and credit awareness, you can turn debt management back into your favor.

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