What's the average age that people are debt free in America?

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jiggyest

Member
Feb 28, 2008
103
0
76
Paid off my college loans before 30.
Only loan I'm carrying is a car loan. Stupidly low interest (2.2%) so I opted to get a loan and use the cash to invest for higher return.

Single. Renting. Always out on adventures, not vacations.
I value life experiences more than possession.
My lifestyle isn't for everyone.
 

edro

Lifer
Apr 5, 2002
24,328
68
91
Paid off my college loans before 30.
Only loan I'm carrying is a car loan. Stupidly low interest (2.2%) so I opted to get a loan and use the cash to invest for higher return.

Single. Renting. Always out on adventures, not vacations.
I value life experiences more than possession.
My lifestyle isn't for everyone.
hippy
You need a wife, kids, mortgage and a stack of bills... is what you need.
 

lsd

Golden Member
Sep 26, 2000
1,183
69
91
Child birth is a seriously scary ordeal. I think that experience would have made us stop as well.

That reminds me...I really should have life insurance on the wife.

I think the scariest part of the delivery process was the epidural procedure my wife elected to have. Now that's nerve racking, everything else was cake (for me not for her LOL).


As for me I'm 34 and currently have a Hilton hhonors credit card which I fully pay down monthly & rack up points and also mortgage and car payments. Mortgage 30yr 3% and car 5yr @ 1.75%. Paying off the car soon but I see no reason to rush and pay down the mortgage. In my situation since I plan on selling the house a few years down the road it makes better sense to spend the money on upgrades expectant buyers will have for this area. My next house I expect to either pay cash or have a large down payment. So I figure in next 15 years max I'll be fully debt free.
 

Ban Bot

Senior member
Jun 1, 2010
796
1
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Is it sad that this feels like a trick question?

Ha! That was my first thought, "The average age that people are debt free in America ... is never?" There is birth, but assuming the target audience is adults, specifically those that have gone into debt, a fair number are always in some sort of debt. House, car, credit cards, school loans, general loans, lines of credit, store credit, etc.

Before we bought a home we carried a credit card balance longer than a month twice in 13 years. But we are outliers as we have purchased every vehicle with cash and consciously made decisions not to be in debt. Which hasn't always been easy as I have never earned over $50k and we have 6 children. But almost everyone we know (except my wife's parents and her siblings) live in a debt cycle, and not just mortgages. Some of it is manageable, others not. Some of it is smart (right sized housing that fits employment) and some isn't (credit card debt for non-essential consumables and entertainment). Alas a lot of people take debt with them to their grave and it goes against their estate. So I guess at the average age of death ~ 77 a large segment of people have some debt until the day they die. That number of people is much higher than the "completely debt free" crowd.

So the question is a trick question in that what are your baselines? How do you factor in those who have NEVER been in debt?--give them age 0?

A better question would be, "What is the MEDIAN age the average ADULT American is debt free?"

Answer: About 77 years (i.e. average age of death).

But that isn't the same thing as liquid. Of those individuals how many are liquid at death--how many who have assets that satisfy their debts? That is a good google question. And complicated when looking at a living individual and their debt load--it isn't dissimilar to a company. If my personal Balance Sheet is + $100,000 but $300,000 of that is tied up in my house that isn't really a liquid asset. So if I have $50,000 in liquid assets (cash, short term investments) but ($250,000) of debt that could be a problem if the debt is short term debt as the house asset isn't easily tapped without selling. Which poses a problem, i.e. you need a place to live.

This is why we have chosen to live debt free as much as possible. We aren't financially stupid but debt has risks. This year we elected for long term debt (mortgage) as at this point in our life/my employment the benefit over renting for us is worth the risk in our assessment.

Obviously this forum is chalk full of 6 figure financial geniuses with financial savvy so my comments are rudimentary and approach far too conservative. But I think the takeaway on a forum like this is the typical poster in a thread like this is a couple sigmas above the average American when it comes to understanding finances and debt. The fact the posters here are thinking and engaging in financial questions shows a level of awareness more so than many Americans. It is difficult to say what is right/wrong for every individual as living circumstances are so vast but the starting point is putting the thinking cap on, become familiar with basic concepts, and being deliberate in your finances. For those in their 20s and 30s that would put you in the top 10% of your age bracket as many at that age don't put much thought into such things.
 

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
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www.slatebrookfarm.com
Most Americans become debt free on the date of their death. The rest are outliers.

Those of you who think you will be debt free by your fifties or 65 are totally forgetting the concept of offspring.
I had two boys. Expensive boys with expensive hobbies. E.g., motocross racing (brand new dirt bikes, new tires every other week, $8/gallon racing fuel, track fees, safety equipment, racing clothes, boots, etc.). Wouldn't trade the experiences I had with them for the world. And now, 2 grandchildren who I can also spoil. And I'd have no problem being debt free by my 50's, if I wanted to put all my extra money toward debts.

Ramsey's belief is that all debt is bad. I tend to be that way myself. ... There are no guarantees.

I don't like being in debt on cars so we don't borrow for those. Even if they dangle a 0% interest offer, I still have to worry about the car being upside down in case of an accident. .
Presumably, if you're completely one-dimensional - judging the quality of your life based on how much money you have in the bank, then maybe "all" debt being bad, just maybe could be marginally true. But, driving a beat up car, not taking vacations, not doing activities that require spending extra money, all so you can retire a few years earlier - sacrificing the quality of living in your prime for a future reward? Remember, there are no guarantees; you're not guaranteed to live to 80. Or even 50. The only thing worse than blowing all of your money foolishly would be to save every penny of your money for retirement, and die before you retire.


Oh, and upside down on a car loan if the relatively new car is totaled? That's what gap insurance is for; and it's not very expensive; I think it's about $30 per year for the first year, and it goes down as the car ages. Get it through your insurance agency - NEVER from the dealer who overcharges for it. If you have zero equity in a $25k vehicle and it's totaled 6 months later, you're going to have no vehicle, and owe your lender roughly $7000. With gap insurance, it's covered. If you put down a sizable down payment though, then there's nothing for gap insurance to cover, then it probably wouldn't be worth it, unless perhaps you put a LOT of miles on the vehicle each year (depreciating the vehicle faster than normal.)
 
Nov 8, 2012
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I think the scariest part of the delivery process was the epidural procedure my wife elected to have. Now that's nerve racking, everything else was cake (for me not for her LOL).


As for me I'm 34 and currently have a Hilton hhonors credit card which I fully pay down monthly & rack up points and also mortgage and car payments. Mortgage 30yr 3% and car 5yr @ 1.75%. Paying off the car soon but I see no reason to rush and pay down the mortgage. In my situation since I plan on selling the house a few years down the road it makes better sense to spend the money on upgrades expectant buyers will have for this area. My next house I expect to either pay cash or have a large down payment. So I figure in next 15 years max I'll be fully debt free.

Ugh, my wife keeps advocating for house upgrades. It makes me sick.

No hun, I don't want to spend $8k to remodel the kitchen for granite counter tops. We live in a shit neighborhood where few others are going to do that. Therefore, buyers looking in this neighborhood aren't going to be willing to pay anywhere near the $8k we will spend for a simple remodel. It just doesn't make sense. I would rather wait until our next home in a much better neighborhood before putting in nice upgrades.

She just doesn't see the connection with lower class buyers not willing to pay as much if it were in higher class buyers of a nicer neighborhood. If you cheap out on the house, the last thing people are going to say is "Ohhhh lets put in 10 more K here, they have nicer countertops!"
 

DrPizza

Administrator Elite Member Goat Whisperer
Mar 5, 2001
49,606
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www.slatebrookfarm.com
There is no way that the value of most homes on the market match any sense of reality. There is a reason the 3x household income rule exists.

I love the 3x household income rule. My household income is 3x the purchase price of my house. That leaves us rather comfortable. We could be doing slightly better, but it's not worth the fight with my wife. We could have $10k in the bank, and I could put $3k on one of my credit cards for some remodeling expenses; and instead of paying it all off, for whatever psychological reason, she'd rather pay $1.5k each month for 2 months, so the amount in the checking account doesn't dip down for a month.

Which brings up yet another flaw in the "all debt is bad" argument. I have far more protection of my assets by paying with a credit card vs. debit card, check, or cash. Not to mention 1-5% back, though as mentioned, my wife's style of bill paying negates a little bit of that 1-5% cash back. (1% of $3k = 30 back; interest on the $1500 she carries over for a month is less than that.)
 
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Pulsar

Diamond Member
Mar 3, 2003
5,225
306
126
Solution. Don't get offspring.

Not true.

I have 3 of them.

My 'timeline': married immediately after college. Both worked a couple years. Then had kids and she hasn't worked since.

I'll be debt free around age 52. I will not be paying for my children to go through college. Entirely too many people are falling into that trap. If the kids has the brains and the work ethic they will get scholarships. Either way, community college can be attended while working and they can make their own way.

I think half the reason this country is in the situation it's in is because so many kids have things handed to them. They don't know what it is to work for things and they really never learn.

I will help my kids get ahead by teaching them everything I know. Not by handing them my money and working myself until I die.

I do not have a six figure salary.
 

nickbits

Diamond Member
Mar 10, 2008
4,122
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Only in America people call debt "good".

Mortgage is the worst kind of debt one can possibly have. Have you even looked at your mortgage statement and how much interest you have paid to your bank?

There is no "worst" debt than your mortgage.

Most people pay anywhere from 10-20k a year in interest!

And NOT putting every cent towards your mortgage and minimizing your interest "to enjoy your life, which of course requires money, can't enjoy life without that".......is not exactly smart either.

Student loans much worse than mortgage debt since they normally cannot be discharged in bankruptcy.
 

Vdubchaos

Lifer
Nov 11, 2009
10,411
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Regardless of what people call it, debt ratio in most other parts of the developed world are even worse.

I know. Many countries are doing a great job replicating what America has done.

:)

Get "stuff" now, pay x5 for it over period of time.......be a bank slave.

It's a modern day slavery (one can say).
 
Nov 8, 2012
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I love the 3x household income rule. My household income is 3x the purchase price of my house. That leaves us rather comfortable. We could be doing slightly better, but it's not worth the fight with my wife. We could have $10k in the bank, and I could put $3k on one of my credit cards for some remodeling expenses; and instead of paying it all off, for whatever psychological reason, she'd rather pay $1.5k each month for 2 months, so the amount in the checking account doesn't dip down for a month.

Which brings up yet another flaw in the "all debt is bad" argument. I have far more protection of my assets by paying with a credit card vs. debit card, check, or cash. Not to mention 1-5% back, though as mentioned, my wife's style of bill paying negates a little bit of that 1-5% cash back. (1% of $3k = 30 back; interest on the $1500 she carries over for a month is less than that.)

My wife is similar. I'm an accountant, so I see everything like chart of accounts. Either way the ending balance will be the same, regardless of if it was cash or credit. I could ultimately care less what my checking account balance is at a certain time of the month.


...One of the many reasons I took over bill-paying altogether. She doesn't do any of the work, yet sometime complains she isn't involved. She can charge to her card and I'll do the payment of it.
 

nickbits

Diamond Member
Mar 10, 2008
4,122
1
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I should be debt free in about 10 years (45ish). Right now I have a 0% car loan that will be paid off in 2 years and 10 years left on my mortgage. I suppose if I move before then it will reset the amortization but I have no plans to move ATM. I never had student debt since I worked while in school and tuition isn't as expensive in Canada. Credit cards I pay off every month so I don't count those. Debt because of children is a non issue since I don't have any and will never have any. I could pay off everything now but I don't see the point.
 

xeemzor

Platinum Member
Mar 27, 2005
2,599
1
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My wife is similar. I'm an accountant, so I see everything like chart of accounts. Either way the ending balance will be the same, regardless of if it was cash or credit. I could ultimately care less what my checking account balance is at a certain time of the month.


...One of the many reasons I took over bill-paying altogether. She doesn't do any of the work, yet sometime complains she isn't involved. She can charge to her card and I'll do the payment of it.

This brings back terrible memories of trying to explain to a 1st year associate how a company could have negative cash.
 

purbeast0

No Lifer
Sep 13, 2001
52,834
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Never heard of that rule, but I guess it checks out.

$300k house on $100k income.

Maybe a little steep... 2.5:1 sounds like better advice.

i think you have it backwards. he said his household income is 3x the price of his house.

ie, $100k house on $300k income.

never heard of this rule either, but not a chance in hell it is even remotely plausible where i live (and many parts of the country)

EDIT:

unless he meant mortgage is 1/3 the monthly income.
 
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artvscommerce

Golden Member
Jul 27, 2010
1,143
17
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There is no "worst" debt than your mortgage.


I suggest you dig a little deeper on this topic. Mortgage interest rates are under 4% right now. You would have to be inexplicably bad at investing if you are unable to earn a return greater than 4% on your money. If I was buying a house right now and had the funds to buy it in cash, I wouldn't even consider it. If I were to take out a mortgage at ~4% and invest all of that cash that would have went to the house, at the end of the mortgage, the earnings on those investments would be an order of magnitude higher than the interest paid to the bank on the mortgage.

It's pretty simple math; if your investments have a history of earning substantially more than 4% each year, you are throwing money away by paying for that house in cash or paying extra on the mortgage.
 

edro

Lifer
Apr 5, 2002
24,328
68
91
i think you have it backwards. he said his household income is 3x the price of his house.

ie, $100k house on $300k income.

never heard of this rule either, but not a chance in hell it is even remotely plausible where i live (and many parts of the country)

EDIT:

unless he meant mortgage is 1/3 the monthly income.
Oh, haha. Yeah, that sounds super conservative then.

$100k income, $33k house. Not realistic at all.
 

Blanky

Platinum Member
Oct 18, 2014
2,457
12
46
Ugh, my wife keeps advocating for house upgrades. It makes me sick.

No hun, I don't want to spend $8k to remodel the kitchen for granite counter tops. We live in a shit neighborhood where few others are going to do that. Therefore, buyers looking in this neighborhood aren't going to be willing to pay anywhere near the $8k we will spend for a simple remodel. It just doesn't make sense. I would rather wait until our next home in a much better neighborhood before putting in nice upgrades.

She just doesn't see the connection with lower class buyers not willing to pay as much if it were in higher class buyers of a nicer neighborhood. If you cheap out on the house, the last thing people are going to say is "Ohhhh lets put in 10 more K here, they have nicer countertops!"
Sorry, this is what wives do. When was the last time a man told his wife "Oh, these floors just have to be replaced." Doesn't happen. I'm in the middle of redoing my floors now. I fought the battle for years and lost, but the war never ends.

The problem is compounded by the addiction many have to watching HGTV. This is why you end up with people who live in a fairly cheap house thinking that it needs granite counter tops. I know a couple who recently spent $6k to replace the counter tops. They look nice. However, the rest of the kitchen is still hilariously old and ugly and they still put the microwave on the counter because there is nowhere else to put it. IMO that $6k was completely wasted and thrown in the toilet, and they aren't rich.
 

xeemzor

Platinum Member
Mar 27, 2005
2,599
1
71
i think you have it backwards. he said his household income is 3x the price of his house.

ie, $100k house on $300k income.

never heard of this rule either, but not a chance in hell it is even remotely plausible where i live (and many parts of the country)

EDIT:

unless he meant mortgage is 1/3 the monthly income.

The rule means you shouldn't buy more a house more than 3x your household income level. This is done to avoid becoming house poor. As with anything, take the rule with a grain of salt and really do your own budget due diligence.

In general, when you pay much more than that for a house either the area has a huge premium(Silicon Valley) or the value is unsustainable(Most of America).
 

lsd

Golden Member
Sep 26, 2000
1,183
69
91
Ugh, my wife keeps advocating for house upgrades. It makes me sick.

No hun, I don't want to spend $8k to remodel the kitchen for granite counter tops. We live in a shit neighborhood where few others are going to do that. Therefore, buyers looking in this neighborhood aren't going to be willing to pay anywhere near the $8k we will spend for a simple remodel. It just doesn't make sense. I would rather wait until our next home in a much better neighborhood before putting in nice upgrades.

She just doesn't see the connection with lower class buyers not willing to pay as much if it were in higher class buyers of a nicer neighborhood. If you cheap out on the house, the last thing people are going to say is "Ohhhh lets put in 10 more K here, they have nicer countertops!"

My wife could care less about upgrades, 'tis why I love her ;) .
Definitely having reasonable expectations matter. My previous home was in a "middle" middle class neighborhood and I resisted installing granite counter tops because I knew I would sell down the road. All I did was install laminate flooring, some paint touch ups and de-clutter. Sold the house in 1 day.
 

purbeast0

No Lifer
Sep 13, 2001
52,834
5,713
126
The rule means you shouldn't buy more a house more than 3x your household income level. This is done to avoid becoming house poor. As with anything, take the rule with a grain of salt and really do your own budget due diligence.

In general, when you pay much more than that for a house either the area has a huge premium(Silicon Valley) or the value is unsustainable(Most of America).

oh i gotcha, he said it backwards then in his example if that is what he means.

yeah i'm well below that line (house is like 2x our income, closer to 2.5 now that my wife is not working while our newborn grows a bit).

and i only put 5% down on my house, so apparently i can't afford it, even though i pay an extra $250 into the principle every month :( :( :( :(