I have the perception that alot of Americans take loans/are in debt, is that true?

40 comments

  2. Yes it is true. We need cars, but they are too expensive to buy outright so we take out loans. We need houses, but they are too expensive to buy outright, so we take out loans. These are pretty normal facets of life.

    The credit card debt is a bad thing, though, in that people end up leaning on credit cards for everyday expenses they can’t afford otherwise.

  3. Yes. It is true. Most people can’t afford to buy a house or a car without a loan and a huge part of the population is in tons of credit card debt

  6. Well of course. Debt is the American way! (Sarcasm) We even get scores on how well we manage debt, and if we have none, it has a negative(!) impact on our score.

    Most people I know have a car note, a home loan, and credit cards. Some also have student loans, personal lines of credit, maybe even a second home or a boat they’re paying off.

    A lot of people don’t live within their means. They want a certain lifestyle, which may mean weekly trips to the salon, a huge SUV, fancy clothes, and vacations in the Caribbean. Those of us who pay their credit card balances in full every month, own their cars outright, and don’t have unused rooms in their homes seem to be in the minority — in upper middle class and upper class circles anyway. For everyone else, debt is a reality because very often wages don’t keep up with the cost of living.

  7. Yes, a lot of people have student loans, mortgages, car payments, etc. People also use credit cards.

  9. Yes, it’s true. Debt isn’t necessarily a bad thing. Borrowing money at a low interest rate is a very effective financial tool.

    Most people have loans for their homes, about 85% of new cars are financed. Most Americans don’t choose to live with their parents until they’ve secured enough money to pay cash for either. We value independence and need vehicles, so low interest financing is extremely normal.

    Consumer debt, like credit cards, is an entirely different conversation. Many people do go into consumer debt because they are not good at managing their finances.

  11. Yes. It’s true. Not all are huge or deep in debt. But most adult Americans have debt to some degree. And at least once in a person’s lifetime they will more than likely apply for a loan

  12. A LOT of Americans are in debt for various reasons. Plenty of which is avoidable, which is what I imagine you’re getting at.

    Financial responsibility isn’t something commonly taught in school here. 18yr olds routinely go to big universities and take out loans in excess of 100k, and most of them don’t even realize how impactful that is.

    Aside from Universities, I see people constantly taking out car notes for no reason, other than to have a brand new BMW that depreciates by 20% as soon as the title gets signed. The need for Americans to be noticed and have nice things will lead them to spend outrageous amounts of money that they simply don’t have.

    I’m an American myself and there’s plenty of people here who manage money well, dont get me wrong….but for every person who invests and saves, there’s 2 more buying brand new cars to impress their family and friends.

  13. I know very few people without any debt

    I have a mortgage, and am debt free otherwise, but that mortgage is still $300,000 of debt

  14. Yes, almost everyone has debt of some sort since most people need financing for houses and cars. But usually when an American says “I’m in debt”, it means they have “bad” (predatory) debt like credit cards, paycheck advances, huge student loans, etc. Unfortunately too many people here suffer from this kind of debt and it takes a long time and a lot of hard work to come out of.

  15. Home loans (mortgages), car loans, and student loans are the most common. It’s also common to use a credit card for day to day transactions and pay it off every month. These usages are seen as normal and not inherently alarming if you can afford to make the payments and are responsible.

    Debt that is seen as bad: maxing out credit cards and falling behind on payments. Taking out payday loans or other personal loans.

  16. My daughter used to be a bank teller and she said that most customers were broke with loans. She said it surprised her but most people do not have much money at all.

  18. I’d say it’s sort of true. Too many people are idiots and aren’t responsible with money. Having this said, Sweden (where you’re from) has a higher household debt on average than the US does. So maybe we should be asking you this question.

  19. Haven’t seen anyone mention medical debt yet, so I’ll bring it up. It doesn’t tend to be as monstrous as house loans or student loans. But it’s something many Americans still struggle with, and it serves as a major deterrent for many more Americans when it comes to getting procedures done. Sometimes you get unlucky and what was supposed to be a simple, affordable procedure becomes more complicated and out of the range you could afford. Happened to me during a financially strenuous time of my life and ended up in collections for it. Other times, when you do have insurance, their negotiations with the healthcare companies may not go your way, and you can end up with expensive surprise bills months after the event happened. At least many healthcare providers are less likely to report medical debt to the major credit bureaus than other services. And then there’s systems like the UVA hospital which tried things like putting liens on people’s homes for medical debts of the deceased.

  20. Yes for student loans and car loans (financed) and house loans (financed) and sometimes medical debt (it’s less than what Reddit thinks) and credit card debt. If you pick a profession that has a high salary like doctor then those student loans do pay off. Credit cards in the US give you cash back so it’s beneficial to use as long as you pay the full amount owed per month.

  22. Yes unfortunately and credit scores are actually used for other things besides determining someone’s credit risk, such as your home insurance rates your auto insurance rates and even whether you can be employed sometimes depends on your credit score

    So there’s a huge incentive to take out loans here to obtain a good credit score, even when you don’t need a loan. If you don’t take out any loans, but pay all your bills and have no debt you will have a low credit score, and be looked at as sort of a second class citizen not to be trusted by companies.

    Like even when I pay cash for a used car they check my credit to make sure my check don’t bounce lol.

  24. Here is an example: rent a $100,000 house for $700/mo over 30 years and you own nothing in 2052. Buy a house for $100,000 and make a monthly house payment for $700 and you own the house in 2052. And the house will be worth maybe $300,000. That’s a good deal to me.

  25. According to this source, 77% of Americans have debt.

    [https://www.ramseysolutions.com/debt/average-american-debt](https://www.ramseysolutions.com/debt/average-american-debt)

    Personally, I don’t have a car loan or home mortgage. In the USA, many people are able to deduct their mortgage interest from their federal taxes.

    I have a credit card that I use for purchases and get 2% cash back from my purchases. When the balance is paid off in full each month, there is no interest charged. I pay off my balance every month. For those who carry their balance, the interest rate is very high (>15%).

  28. Absolutely. Probably 90% or more carry debt.

    Not leveraging any tools of credit/debt is disadvantageous in the modern economy.

  29. In a way yes but not really. Its a massive country with a huge population and very active market which can make things seem like its happening alot more than it actually is

  30. Everyone I know is, with the exception of two people who may also be but I just don’t know their finances. I’ve got maybe 6k in medical debt. A couple of other small things too but that’s a big chunk of change.

  31. Only for items that increase my credit score – no credit card debt if that is what you are asking about

  32. Yea. I took out my first loan at 17. I wasn’t old enough to drink. But I was old enough to take out 10k to pay for college. Sad really.

  33. I would say most people live outside their means. Debt basically. New car or a home most certainly is going to put you into debt. Car being necessary and a home also a need but an investment. There are many many people who are in debt for recreational things like motorcycles, boats, a second car. Alot of people are in debt for medical bills. Some people need the new iPhone every week and go into debt for that. College education? Debt. Wanted to redo your kitchen? Second mortgage? Debt. I could keep going. But I can count the amount of people I’ve known that own all their shit outright on one hand. Maybe no hands. In the USA you are born into debt. And if your lucky enough to get an inheritance and wanna pay off your debts, not so fast. Uncle Sam wants his share of that too. The guy that won a billion dollar lottery had to pay something over 600,000,000 million in taxes. Upfront. Did he win or did Uncle Sam? The best part is nobody talks about it. We’re all convinced we’re millionaires down on our luck at the moment. So if it’s been awhile since you’ve had a good fucking, deal with the IRS or an American bank. They won’t let you down

  34. For me, yes. I got really sick in between insurances (of course it was when I started my job after grad school but in the 30 days prior to the insurance kicking in).

    Medical debt sucks dude. I’m from upper mid class family but my parents has already helped me so much…..I couldn’t.

  35. You are forced to take a loan to get a credit score so you can get better deals on loans for other items you may want or be forced into purchasing.

  36. Most of us start out with $0 dollars, our parents can rarely help beyond a couple hundred or couple thousand if we are lucky. Some folks have rich parents, some have wild mindsets and skills that allow them to not have to take on debt.

  37. Yes—basically the major difference between poor people and the middle class is the middle class’s ability to float their lifestyle on debt.

  38. We take car loan which get us to our job and house mortgage where we sleep so it is productive debt.

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