Rachel Cruze Shares Comparison Of The Average American's Finances – How Do You Compare?

Personal finance expert Rachel Cruze recently shared several stats outlining the average American's finances, including income, debts and savings. She typically isn't an advocate of comparison culture, but understanding where you stand compared to the average American on finances can offer a helpful perspective. 

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Average Annual Salary

The average annual salary in the United States is $61,900. Cruze emphasizes, "Your income is your most powerful wealth-building tool." Whether your income is above or below the average, the key is how you are using your income. 

Are you living below your means? Do you have room in your budget to save, invest, or pay off debt? Income is crucial to financial health, as it allows for flexibility in savings, investments, and spending decisions.

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Personal Debt

Personal debt in the United States amounts to $17.5 trillion. The average American adult has an individual debt of $66,772, including student loans, credit cards, and other forms of debt. 

Cruze states that where you compare to others' debts can be a wake-up call. If you have much more debt than this, it might be time to take a good, hard look at making changes. 

The average American has $6,501 in credit card debt, and eight out of 10 adults have at least one credit card. Cruze warns that credit cards can be a “slippery slope,” often leading to more debt and high-interest payments. She advises cutting up credit cards to avoid falling into this trap, despite the allure of rewards programs.

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Car Loans

Car loans account for another significant portion of American debts, with 35% of households having a car loan, and the average car loan balance equating to $36,357. Monthly car payments for new cars average $738, and used cars average $532. 

Cruze made it a point to say that while many people in the personal finance world disagree on credit cards, student loans, mortgages, and investments, the vast majority seem to agree that car loans are a "rip-off to the average American."

She suggests avoiding car loans altogether and that if you can't afford to pay off a current car loan within 18-24 months, you should get rid of the car and pick up a cheaper one – even if that means taking out a smaller loan to get rid of the larger one. 

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Mortgages

Mortgages account for the largest portion of debt – roughly 70% of all American debt. The average American's mortgage is $145,833, with a monthly payment of $2,006. Cruze urges listeners to only take out a mortgage if they can manage their monthly payments and advises paying a good down payment to help make these payments more manageable. 

Student Loans

Student loans are the fastest-growing debt in America, with the average borrower owing $38,290. Cruze points out that student loans can impact major life decisions, such as investing in retirement, buying a home, or even getting married. If you have student loans, Cruze encourages you to become motivated to pay them off, as they can linger for years and affect various aspects of your financial life.

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Savings

Cruze didn't go into specifics about the average American's savings. She said it's hard to compare averages on savings and investments because these numbers are so unique to each individual's circumstances – like age and what stage of life you're in. But she did state that "savings and investing have to be a part of your financial plan, and it is going to help you." 

Cruze emphasizes that these numbers are only averages and that while it's easy to get caught up in comparisons, it's important to assess your financial health to make the best decisions for your future.

Trying to get in better financial shape? Consider talking with a financial advisor to create a personalized plan for your financial objectives. 

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