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Non-Mortgage Debt Dips 22% in Past 2 Years

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Consumers’ finances are improving, despite the upheaval and uncertainties caused by the coronavirus pandemic. Average credit scores are up four points since the beginning of the crisis, according to a March 2021 analysis from LendingTree, and financial discipline is seeing a boost. So it’s no surprise that non-mortgage debt has dipped.

According to the latest data in an annual study from Milwaukee-based Northwestern Mutual, adults 18 and older who carry debt have an average of $23,325 in non-mortgage debt, a 22% dip from $29,800 in 2019. (Non-mortgage debt averaged $26,621 in 2020.)

Large share of income going toward credit cards, auto loans

Though consumer non-mortgage debt is trending downward, a sizable chunk — 30% — of Americans’ income goes toward paying off non-mortgage debt.

And where is that money going? 24% of respondents cite mortgages as their main source of debt, followed by:

  • Credit cards (19%)
  • Auto loans (8%)
  • Student loans (7%)
  • Home equity loans and home equity lines of credit (4%)
  • Educational expenses for children or family members (3%)

Meanwhile, 32% of respondents say they have no debt.

Delays, delays, delays

Many Americans feel debt has hindered their ability to reach significant life events. Because of their debt, 29% of respondents say they delayed making significant purchases and the following milestones:

  • Saving for retirement (18%)
  • Buying a home (14%)
  • Having kids (8%)
  • Getting married (7%)

However, 51% of respondents cite none of the above have been delayed.

MORE: The March 2021 LendingTree analysis that found credit scores were up four points since the beginning of the pandemic also found credit card debt was down 10%. Auto loan debt, meanwhile, was up 5%.

Pandemic shaking up debt repayment timelines

The pandemic has stirred up people’s expectations about when they’ll pay off their debt. Among the Northwestern Mutual respondents, 34% say it’ll take longer to knock out their debt because of the COVID-19 crisis. However, 23% expect it’ll take them less time to finish their payments. (42% cite no impact.)

For those who have some debt, 66% report they have a plan to pay it off. Further, they have a timeline: Nearly half (45%) predict they’ll be carrying a debt burden for the next one to five years, followed by:

  • Six to 10 years (20%)
  • 11 to 20 years (14%)
  • Rest of their lives (9%)

Another 12% say they don’t know.

Using a personal loan to consolidate debt could be an option for those who feel they’ll be deep in debt for years to come. By rolling multiple credit card debt into a single loan, borrowers wouldn’t need to juggle multiple bills. Meanwhile, they could receive a lower interest rate.

Methodology: Northwestern Mutual commissioned The Harris Poll to conduct an online survey of 2,320 U.S. consumers ages 18 and older from March 16 to March 26, 2021. Data from the 2021 Planning & Progress study has been released in phases, with the latest focusing on debt.