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What are the top three causes of debt?

Debt is a slippery slope that is often hard, if not impossible to avoid. A new poll reveals that 25 percent of Americans see no hope of paying off their debt before they die. Another 40 percent of Americans simply don't know when they will be able to pay off their debt. That leaves the remaining 35 percent of the population with a payment plan and a known payoff date and the rare few with no debt at all.

These are startling numbers that lead to the question, why are debt levels so high? Of course, anyone in debt can tell you the answer, but here is a summary.

Dissecting American debt

People are often told that owning a home is cheaper than renting. The common reasons given are that landlords or property managers can charge more for rent than they pay in mortgage and that renters never see a return on their investment. While this is true, home ownership often has steep expenses, especially when major repairs are necessary.

Three of the most common causes of debt in America include:

  • Mortgage debt: The most common cause of debt in the U.S. is from home mortgages. Because a house is typically the most expensive thing a person will ever purchase, this is not surprising. In 2016, the national average mortgage debt was close to $200,000. A debt that large can be hard to overcome, even in the best circumstances.
  • Credit card debt: The second most common type of debt in the U.S. is from credit cards. A large and growing percentage of Americans live paycheck to paycheck, and when something unexpected comes up, such as medical bills or major repairs, credit cards are many people's only safety net.
  • Car debt: While car longevity is increasing steadily, cars remain a top monthly expense in most people's lives. Even without the monthly expense just to use the car, repairs and maintenance add up quickly.

For the majority of us, debt is a part of life. But that is not a reflection on the person, more of that person's life circumstances. Help is available to people who feel their debt could become unmanageable, or people who feel that their debt is an anchor they will never escape. There is often shame surrounding debt, but when people finally open up, they are often surprised to learn that they are not alone, and there are ways out.

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