With the overall consumer debt exceeding $17.3 trillion in the third quarter, Q3 2023, the personal-finance website WalletHub has posted its rankings of the States with the Largest and Smallest Debt Increases, based on recently released data from the Federal Reserve.
California Stats
Increase in California Debt: The average debt in California increased by $13,061,926,687.50 in Q3 2023.
Average California Household Debt: The average household in California owes $235,375 in debt.
California Rank: California’s debt increase ranks as the second highest in the nation.
National Stats
Face Value: Household debt is at a record high ($17.3 trillion), but when you adjust for inflation, the total is seven percent below its peak from 2008.
Projection: U.S. households will end the year with $350+ billion more debt than they started with, WalletHub now projects.
Household Average: The average household owed a total of $145,319 at the end of Q3 2023, only $13,631 below WalletHub’s projected breaking point for household finances.
Total Debt to Deposits Ratio: The ratio between total household debt and deposits has been going down over the years, and it is still below pre-COVID levels as well as roughly 53 percent below the peak from the early 2000s.
Total Debt to Assets: The ratio between total household debt and assets has been dropping steadily, reaching 9.8 percent in Q3 2023, which is about 42 percent below the peak.
People in Hawaii added the most debt per household during Q3 2023, according to the new WalletHub report, which compared the 50 states based on data from TransUnion and the Federal Reserve. West Virginia had the smallest household debt increase.
“The average household in Hawaii added $1,093 to their debt in Q3 2023, which puts the state at the top of the list for debt increases this quarter,” explained WalletHub Analyst Cassandra Happe. “Hawaiians owed a total of $115.7 billion by the end of the quarter. By comparison, the overall debt for California was a staggering $2.9 trillion, but the state has a much larger population contributing to that figure, putting their debt increase at $988 per household. The debt increase for Coloradans came in at $978 per household, with a total debt of $482.3 billion for the state.”
For the full report, visit https://wallethub.com/edu/states-with-largest-and-smallest-debt-increases/129889
Largest Increase per Household
Hawaii came in at number one, followed by California at number two; Colorado, Utah, Washington, Maryland, Massachusetts, Virginia, Idaho and Oregon rounded out the top 10.
Smallest Increase per Household
Michigan came in at number 41 on the list, with the rest of the top 10 in the smallest increase category including Kansas, Alabama, Louisiana, Ohio, Arkansas, Kentucky, Oklahoma, Mississippi and, the state with the smallest overall increase, West Virginia at number 50.
Residents in many other states saw substantially lower household debt increases than Hawaiians, Californians, and Coloradans.
“Oklahomans added $419 to their debt per household, while Missippians had an increase of $383 per household,” Happe noted. “Yet the Mountaineers in West Virginia added a mere $375 per household to their debt, the smallest increase overall.”
With overall consumer debt topping $17.3 trillion and banks decreasing their physical footprint, it’s clear that many Americans are taking advantage of the variety of loan opportunities available on the market today.
“Technology has made it so we can easily borrow money anywhere, anytime. This is extremely convenient, but it can also come with a price,” according to Happe. “In just a few taps, consumers can access funds that would otherwise take days to get, but they also add to their overall debt in the process.”
Tips for Managing Your Debt
Create a Budget: Your budget should outline your income, expenses, and debt obligations to create a clear picture of your financial situation. Look for places where you can reduce spending, such as canceling streaming services you no longer use or going out to eat less often, and funnel those savings to your outstanding debts. Once you have a plan, follow it as best as possible and review it periodically for additional cost-cutting opportunities.
Negotiate a Lower Interest Rate: Reach out to your lenders and ask if they can lower your interest rate, saving you money in the long run. You may be able to negotiate more favorable terms if you have a good payment history with them. Another WalletHub survey found that 18 percent of people who asked for a lower regular APR received one. Your issuer may be unable to lower your rate, but it doesn’t hurt to ask.
Refinance or Consolidate Your Debt: If you have multiple high-interest loans or credit card balances, consider consolidating your debts with a lower-interest personal loan or a balance transfer card with a 0 percent intro APR. If you take advantage of a 0 percent intro rate credit card, make sure to pay off your balance before the card’s high regular interest takes effect. You can use WalletHub’s balance transfer calculator to help plan how to leverage the best balance transfer offers.
Increase Your Income and Avoid New Debt: You may be able to add some additional cash flow with a part-time job or side hustle, or you can consider a different job altogether that offers better pay. While paying down your existing debts, avoid taking on new debt if possible. This will help to keep your financial situation from worsening.
Seek Professional Help: If you’re overwhelmed with debt and can’t see a way out on your own, consider seeking advice and assistance from a credit counseling agency or financial advisor. They can provide you with guidance and help you create a debt management plan for your specific situation. Some non-profit organizations also offer credit counseling and financial planning services for free or at a reduced rate.
