Household Debt Approaches Record High

America loves a good comeback story, like Robert Downey Jr. overcoming all sorts of addictions to become one of Hollywood’s biggest stars or Martha Stewart emerging from jail to become queen of a homemaking empire or Tom Brady and the Patriots rallying from 25 points down to win the last Super Bowl.

But there’s a brewing comeback story that nobody can cheer for: Debt is back!

After a near cataclysmic appearance at the start of the Great Recession, debt was supposed to have fizzled, sort of like the Falcons did in Super Bowl LI. Unfortunately, debt’s demise was short-lived.

According the recent reports, the sea of consumer red ink is about to be bigger than ever.

Household debt jumped to $12.58 trillion in February of 2017, just less than the record high of $12.68 trillion set in 2008. A new record – somewhere in the $12.75 trillion range – will be set this year.

It’s hard to truly grasp a number like that, but here’s a little context:

  • $1 million would be a stack of $1,000 bills four inches high.
  • $1 billion would be a stack of $1,000 bills 364 feet high.
  • $1 trillion would be stack of $1,000 bills 63 miles high.

Now multiply that by 12 and not even Downey, Charlie Sheen, Ozzy Osbourne and the Grateful Dead in their partying primes could get that high.

How did the Debt Monster grow that much? Financial reforms halted the runaway mortgage debt that marked that 2008 financial meltdown, but the ensuing years have seen a flood of automobile and student-loan red ink.

“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different,” said Wilber van der Klaauw, senior vice president of the New York Fed.

The worst re-composition is credit card debt, which increased 4.3% in the fourth quarter of 2016. With the average APR approaching 15%, that means U.S. consumers are throwing away billions of dollars in interest charges.

That money could be going a lot of better places, like an emergency fund. Since wage growth has been lackluster during the economic recovery, millions of Americans have had to re-think their financial plans to avoid a debt-caused disaster.

It’s doable, but the sheer numbers say it’s hard.

According to a 2016 Federal Reserve Board report, 46% of Americans could not cover an emergency expense costing $400 or more. Nearly 23% of them experienced an unexpected medical expense they had to pay out of pocket, and almost half of those people are still paying that bill.

Nearly one in five Americans have nothing – zero, zip, nada – set aside for emergencies, according to a study released in April 2017 by HomeServe USA, a home repair service.

Most Americans are living paycheck to paycheck. They ignore that squealing sound every time they hit their car’s brakes. They can only hope their air conditioner doesn’t break, or their bodies don’t break or some other expense doesn’t tumble out of the sky like the meteor that hit the Earth and wiped out the dinosaurs.

Unfortunately, hope isn’t a good insurance policy.

I found that out a few weeks ago when a bathtub starting filling with a brown sludge. Then the toilets started to overflow with the same distinctive liquid. Then the kids started screaming that the house was being possessed by a demon.

That diagnosis wasn’t too far off.

A plumber came out discovered the sewage line had been strangled and cracked by roots from an oak tree in the front yard. Repair bill: $5,500.

I suddenly knew how the dinosaurs felt.

I had enough emergency savings to avoid having to finance the bill or – God forbid – put it on a budget-destroying credit card. In that regard, I’m luckier than millions of Americans.  A 2016 Federal Reserve study found that 20.5% of people who had unexpected financial hardships made less than $40,000 a year. They are in no shape to dodge a meteor.

“A key consideration regarding household finances and overall economic well-being is the ability to withstand financial disruptions,” the report said.

Unfortunately, millions of American families aren’t in a good position to withstand any kind of disruption. One emergency could ruin their financial lives, or at least send them scurrying from debt collectors.

Many have found help with debt management plans. A financial counselor at a nonprofit credit counseling agency works with lenders to reduce interest rates on credit cards and other debts. Instead of paying a stack of bills each month, your debt is consolidated. You make only one monthly payment to the debt management company, which distributes the funds to your creditors.

In a country that loves resurrections, debt management programs let consumers stage their own little comeback stories. They can then relax and know that when emergencies hit they won’t be caught up sewage’s creek.

In his 40-plus-year newspaper career, George Morris has written about just about everything -- Super Bowls, evangelists, World War II veterans and ordinary people with extraordinary tales. His work has received multiple honors from the Society of Professional Journalists, the Louisiana-Mississippi Associated Press and the Louisiana Press Association. He avoids debt when he can and pays it off quickly when he can't, and he's only too happy to suggest how you might do the same.


  1. Lamagna, M. (2017, April 8). U.S. households will soon have as much debt as they had in 2008. Retrieved from
  2. (2016, May) Report on the Economic Well-Being of U.S. Households in 2015. Retrieved from
  3. (2017, February 16) Household Debt Increases Substantially, Approaching Previous Peak. Retrieved from