Essential costs rise 25% while incomes stagnate, driving debt crisis
(InvestigateTV) — American families are carrying record debt loads as essential living costs have surged faster than income growth over the past four years.
The average U.S. family carries more than $268,060 in mortgage debt, and the average credit card debt is about $6,523 per household, according to Motley Fool Money.
Personal finance expert Joel O’Leary with Motley Fool Money said rising debt isn’t about luxury spending but survival as families struggle to cover basic expenses.
“Essential costs have just gone up. Housing, groceries, utilities, insurance, these have all increased, say, 20, 25 percent in the last four years,” O’Leary said. “And our incomes have not kept up at that same pace. So, it’s created this gap that we’ve got to fill and people are filling up with debt.”
For homeowners, mortgages typically represent the largest portion of household debt, O’Leary said.
He recommended homeowners shop around for insurance annually, noting many people overlook potential savings by bundling insurance with mortgage payments.
“Shopping around for insurance is something that a lot of people overlook because it could be bundled with their mortgage payments,” O’Leary said. “But shopping around can actually get you a cheaper rate for the same policy. So that’s something I encourage everyone to do every year or so. Refinancing could be an option in 2026. People’s credit scores could have improved since they got their first mortgage.”
O’Leary said refinancing could lead to cheaper rates and lower monthly payments for qualified homeowners.
For managing multiple debts, he recommended creating a comprehensive list of all obligations rather than avoiding the problem. Once debts are catalogued, consumers should schedule minimum payments to avoid missed deadlines and focus extra money on paying down one debt at a time.
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