As the cost of living continues to climb, Americans find themselves drowning in a sea of debt, struggling to stay afloat. A recent analysis of the 50 largest cities in the United States unveils the extent of this financial crisis, shedding light on the average non-mortgage debt and the cities most burdened by this economic struggle.
According to a study conducted by LendingTree, an online lending marketplace, the average non-mortgage debt across these 50 major cities amounts to a staggering $39,713. This figure includes various forms of debt such as auto loans, student loans, credit cards, and personal loans.
Breaking down the numbers, the study reveals that auto loan debt takes the lead, averaging at $13,718, followed by student loans ($11,661), credit cards ($7,789), and personal loans ($5,411).
LendingTree’s analysis, based on 75,000 anonymized credit reports of their users between January and March, offers valuable insights into the debt landscape across America.
Surprisingly, LendingTree’s chief credit analyst, Matt Schulz, expected the non-mortgage debt to be even higher. He notes, “Considering that the average price of a new car is about $50,000 and that many people likely juggle auto loans, student loan debt, and credit card debt simultaneously, $40,000 hardly seems outrageous.” Schulz acknowledges that while $40,000 in debt is concerning and can have significant impacts on people’s lives, it is not surprising given the exorbitant cost of living in today’s world.
Atlanta Takes the Lead as the Most Debt-Ridden City
Among the 50 largest cities, Atlanta tops the list as the most debt-ridden metropolitan area, with residents carrying an average non-mortgage debt of $45,891. Following closely are Dallas ($45,541) and Washington, D.C. ($45,337).
The study further reveals that residents of Washington, D.C., and Atlanta hold the third and fourth-highest student loan debt totals, respectively, with amounts of $16,107 and $15,819. Dallas, on the other hand, holds the third-highest auto loan debt total at $16,644.
Schulz sheds light on Atlanta’s predicament, attributing it to the city’s lower-than-average income compared to other major American cities. He adds, “That less-than-stellar credit means that when you do get a loan, you’re probably not going to get the best terms, so that new car you want to buy may be even more expensive than you thought.”
Rounding out the top 10 debt-ridden cities are Austin ($44,541), Raleigh ($44,262), Memphis ($43,741), Baltimore ($43,456), Charlotte ($43,279), Nashville ($43,079), and Orlando ($42,876).
San Jose: The City with the Lightest Debt Load
In contrast, the study identifies San Jose, California, as the least debt-ridden city, with residents carrying an average non-mortgage debt of $32,260. Sacramento, California ($32,604), and Minneapolis ($34,776) follow as the cities with the least consumer debt.
Sacramento and San Jose also boast the smallest student debt totals, with amounts of $7,028 and $7,323, respectively. Meanwhile, Minneapolis holds the second-lowest auto debt total at $10,602.
Schulz explains, “I’m not surprised that these cities are at the top of this list, especially San Jose. Yes, it’s an absolutely expensive area to live in, but it’s also one of the highest per-capita income areas in the whole country. That gives residents there a little more financial wiggle room, even with the high housing costs.” He further notes that Sacramento and Minneapolis benefit from slightly higher-than-average incomes, which significantly impact their debt burdens.
Managing Debt Amid High Inflation
While Americans grapple with mounting debt burdens, the challenge is exacerbated by rising inflation. Recent reports indicate that consumer prices in the United States continued to rise in April, with measures of underlying inflation remaining high. This suggests that the journey towards more affordable prices is likely to be slow and tumultuous.
As inflation rates surge, individuals are forced to navigate their debt obligations carefully. Mortgage rates, auto loans, credit card borrowing, and business loans have all been affected by the Federal Reserve’s series of rate increases. Consequently, managing debt becomes a crucial aspect of financial well-being.
In these turbulent times, individuals must exercise prudence, seek financial advice, and adopt strategies that help alleviate debt burdens while safeguarding their economic stability.