Burdened by Debt: The Best and Worst States at Managing Debt
by Credible.com, Feb 15, 2018
How does your state rank in terms of debt management? A new study by Credible exposes where people are best (and worst) at managing their credit card bills, student loan debt, and housing costs.
Read on to see how your financial profile compares to the average person in your state—and across state borders.
Key highlights
Michigan, Arkansas, Delaware, Kentucky, and Missouri have the highest scores in the U.S., with low debt-to-income ratios: on average, Michigan residents in this dataset spent just 25.3% of their monthly income on credit card, student loan, and housing payments—the lowest percentage in the U.S.
Hawaii, Washington, Colorado, Oregon, and Montana came in towards the bottom of the list with the highest average debt-to-income ratios: Residents of Hawaii spend, on average, 36.2% of their monthly paychecks on credit card, student loan, and housing payments—the highest percentage in the nation, and over 43% more than residents of Michigan
Monthly credit card payments were highest in Minnesota ($241/month), Hawaii ($238), Nevada ($234), New Jersey ($231), and Connecticut ($231)
Conversely, those in Mississippi ($154), Louisiana ($157), Washington, D.C. ($160), Arkansas ($174), and South Carolina ($181) spend the least on paying off credit card debt
The data showed average student loan payments to be highest in D.C., Maine, Massachusetts, Alaska, and New Jersey, and lowest in Mississippi, Louisiana, Alabama, Wyoming, and North Dakota.
Financial health is relative
On average, Americans included in this dataset paid $207 on their credit card debt, $370 on their student loans, and $906 on their housing each month, while taking home an average salary of $60,671.
But what’s the special sauce that makes some states’ residents so much better at debt management than others?
Well, it depends.
In Michigan, for example, cost of living plays a large role. Low average monthly housing payments relative to average income (combined with lower than average credit card and student loan payments) push the state up the rankings.
At the other end of the spectrum, some states rank lower because of particularly high payments made in one category or another.
Residents of Hawaii, for example, pay the second highest amount on monthly credit card bills and fourth highest amount on housing costs and their average income isn’t high enough to offset those costs.
- $207 -- Average monthly credit card payment of all Americans included in this dataset
- $370 -- Average monthly student loan payment of all Americans included in this dataset
- $906 -- Average monthly housing payment of all Americans included in this dataset
One in five borrowers is a homeowner
Mortgage debt can increase a resident’s debt-to-income ratio. The vast majority of the 540,000 borrowers included in this analysis are not homeowners but nearly 19% have one or more mortgages.
Of that group, the average housing payment increases to $1,705, nearly double the average housing payment for all borrowers, a group that includes renters, homeowners, and people living with parents….
read … Credible.com
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