Debt Has Been Our Dirty Secret Long Enough

Almost everyone has debt, but no one wants to talk about it. It’s time we do, however, if we’re ever going to get out of it.

According to the New York Federal Reserve, in the first quarter of 2016, the total U.S. consumer debt (including mortgages, auto loans, student loans, and credit cards) stood at $12.25 trillion.

As important, we’ve reached the largest increase in mortgage debt since the beginning of the Great Recession.

In 2015, the average household debt totaled $130,922, and pays a total of $6,658 in interest per year, that is 9 percent of their average household income ($75,591), according to a recent study by NerdWallet.

Its American Household Credit Card Debt Study analyzed data from several sources, including the New York Federal Reserve and the U.S. Census Bureau, then commissioned an online survey of more than 2,000 adults.

One reason debt has grown so dramatically is that the growth in the cost of living now outpaces the growth in our household incomes.

In the last 12 years, the growth in median household income was up by 26 percent, while our cost of living increased by 29 percent, according to the study.

There’s also been a change in the way we think about debt. In the past, people bought cars, and sometimes houses, for cash.

Today, credit is king. In U.S. households that carry credit card debt, the average amount of that debt is $15,762.

And many of those households don’t even realize the extent of their debt.

Debt isn’t always bad. A student loan can lead to a higher-paying job, for example. But credit card debt, with its high interest rates, can prove very costly over the long term.

Debt should be paid off as quickly as possible. And while that will require many of us to adopt a new perspective, the end result can be life-changing, in a good way.