This is an extract from my book, The Poor Man’s Guide to Financial Freedom: A Realistic, 10-Step Manual to Building Liberating Wealth on a Low to Medium Income.
How bad are our debts?
According to ValuePenguin, the median American household owes $2,300 in credit card debt, while the mean is around $5,700. The reason for the difference is that the latter measure is pulled higher by a relatively small number of individuals who owe huge amounts. Forty-one percent of households carry some form of credit card debt.
Curiously, it is the households with the lowest net worth – $0 or negative – that have the highest credit card debts. These are presumably poor or disorganized people who have borrowed themselves into, or tried to borrow themselves out of, trouble.
The next poorest group, with a net worth of up to $5,000, have the lowest credit card debt, and the amount of debt goes up steadily by each wealth category from there so that the households with the most owing on their credit cards are actually the richest – those with a net worth of over half a million dollars. Those households with higher incomes also tend to have higher credit card debts[i] – apparently that high income still doesn’t allow them to meet all their wants, so they Read More