Table of Contents
Introduction
Look:
Talking about money can often be a difficult conversation to have.
But having discussions about debt?
Can you say… awkward?
Now:
Here at The Economic Secretariat, we are hoping to open up the conversation about finances.
We’ve taken data from the Center for Microeconomic Data at the Federal Reserve Bank of New York and compared it with data on household annual earnings.
To work out the amount of debt affecting individual households, a debt-to-income formula is used.
Here’s how it works:
Simply put, individual household debt is divided by the state’s median household income to find the correct ratio.
For example:
If a state’s household debt-to-income ratio is 0.95 or 95%, the overall households in that state would only have 5% income remaining to cover and pay off their debt.
That’s exactly what’s happening in Washington, D.C. who leads the nation in household debt.
Which isn’t surprising when you consider the median household income in D.C. is $93,000 — also the highest in the nation.
Unfortunately, just goes to show that oftentimes the higher the income, the higher the debt.
Top 10 States With Highest Household Debt
| Rank | State | Avg. HH Debt |
|---|---|---|
| 1. | Washington, D.C. | $88,450 |
| 2. | Hawaii | $74,230 |
| 3. | Colorado | $73,890 |
| 4. | California | $73,400 |
| 5. | Maryland | $72,310 |
| 6. | Washington | $67,440 |
| 7. | Virginia | $66,140 |
| 8. | Massachusetts | $65,500 |
| 9. | Utah | $62,090 |
| 10. | Connecticut | $59,840 |
In terms of paying the debt back?
Those living in Washington, D.C. are the US citizens with the highest household debt-to-income ratio at 0.95 or 95%.
To put this into perspective, this is 2.6 times higher than the 36% or less debt-to-income ratio that lenders prefer to see on an individual basis.
Top 10 States With Highest Household Debt-to-Income Ratio
| Rank | State | DTI |
|---|---|---|
| 1. | Washington, D.C. | 95% |
| 2. | California | 94% |
| 3. | Hawaii | 84% |
| 4. | Colorado | 84% |
| 5. | Washington | 82% |
| 6. | Virginia | 82% |
| 7. | Maryland | 76% |
| 8. | Massachusetts | 75% |
| 9. | Utah | 73% |
| 10. | Connecticut | 69% |
As you’d expect, mortgage debt accounts for the majority (nearly 70%) of the nation’s $14 trillion in consumer debt.
Speaking of which, Washington, D.C. plays home to the highest mortgage debt, coming in at $64,700 per capita.
Texans are splashing out the most cash when it comes to their vehicles, with the average Texan having $6,880 dollars worth of debt for their rides.
And Alaskans have the highest avg. credit card debt with $4,440 per capita.
Additionally, we also surveyed 5,000 people across the country about their opinions on debt and money.
Almost half (45%) of Washingtonians believe that getting into debt is “somewhat necessary” to survive in modern America, with just a fifth of all citizens, 21%, reporting that they have no personal debt whatsoever.
We also discovered that a third (32%) of Utahns believe that their debt is a heavy burden and wished that they never got into debt in the first place.
A quarter of Nevadans (27%) also believe that debt is unavoidable.
In terms of age and generations, despite Millennials being known for spending money recklessly, it is actually Generation X (between 40 and 55 years old) with the most amount of debt, followed by Baby Boomers (56-74 year olds).
Check it out:
Looking at the graph above, it’s no wonder why so many people are overwhelmed by debt, don’t want to talk about it, yet believe it’s a necessary part of life.
The good news?
It doesn’t have to be that way if you know how to make money online.
We hope that arming you with this data can start to encourage more open conversations about finances, while busting damaging myths about money.
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