Tennessee Ernie Ford crooned about it in the 1950's song Sixteen Tons.
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Kanye West tweeted that he racked up $53 million of it.
Whether you “owe your soul to the company store” or you’re in the hole after following your dream of launching a fashion line - Americans are swimming in debt.
A CardHub study says the average household with credit card debt now owes more than $7800 - the highest amount since the Great Recession.
“As far as the credit markets are concerned, 2016 might be shaping up to be the next 2008,” says Jill Gonzalez, an analyst at CardHub’s sister website WalletHub. “Consumer confidence is good for the economy, but bad when it comes to consumers overspending far beyond their means.”
Gonzalez says the “snowball method” is one way to become debt free at the lowest cost possible. “Attribute the majority of your monthly payment to your balance with the highest interest rate. That's where you’re losing the most money. Put all of your cash there and make the minimum payment on everything else. When your most expensive debt is paid off, repeat the process with your remaining balances.”
Victor Antonio, host of the Spike TV show “Life or Debt," advises consumers to use cash instead of credit cards and avoid being tempted to buy items just because they’re on sale.
Antonio recommends an “economic shutdown” for anyone tackling debt.
“That’s when a family only spends on things they need, and not on things they want such as entertainment, eating out and vacations. An average family making $50,000 a year can save $1,500 a month.”
Credit card debt isn’t the only substantial debt we’re carrying.
The Federal Reserve Bank of New York says mortgage balances remain the largest component of household debt at more than $8 trillion.
John Sweeney, Executive Vice President of Retirement and Investing Strategies at Fidelity, says consumers should view mortgages and credit cards differently.
“You’re paying for the home with a 30-year mortgage, but you’re going to live in it for 30 years. Usage of the home in the time you’re paying for it is aligned. Bad debt is when you put dinner on your credit card and you end up paying 18% over the next two years for that dinner you consumed in one night.”
The Federal Reserve says the second largest portion of household debt is student loans - at $1.2 trillion.
Greg McBride, Chief Financial Analyst at Bankrate.com says consumers have some options with the average student loan debt at $30,000.
“Student loan debt can typically be repaid over a period of 20 years or more, at a favorable interest rate, with forbearance options in the event of financial difficulty.”
McBride says families should work together to avoid as much student loan debt as possible.
“Parents can help by saving money during the 18-year lead time before college expenses kick in. Students can help by going to a less expensive school and majoring in something that actually translates to the job market.”
This is the first in a series of articles that will appear weekly during April; National Financial Literacy month.