Yes, the average person does have debt, and it's a common part of modern finance, often including mortgages, car loans, student loans, credit cards, and Buy Now Pay Later (BNPL), with mortgage debt being the largest component for many households, while consumer debt (personal loans, credit cards) varies significantly by age and income.
The average Australian household carried $313,633 in total debt in June 2025, with the majority coming from home loans. Mortgages remain the dominant source of debt, while personal loans, car loans, and credit cards continue to add pressure on household budgets.
The average American owed $103,358 in consumer debt in the second quarter of 2023, the latest data available, according to credit bureau Experian.
$30k is a perfectly manageable debt for most people with most jobs and living situations.
Buy now, pay later surges
Some 40% of lone parents and 35% of women aged between 25 and 34 use these deferred credit products, which remain unregulated. Overall, nearly half of adults have outstanding unsecured debt, where the money borrowed is not backed up by assets.
Yes, $10,000 is a lot of debt if it causes your debt-to-income ratio (DTI) to go above 43%. Your DTI is the ratio of all your monthly debt payments divided by your gross monthly income, and any percentage above 43% means you have too much debt to manage.
Being debt-free is a financial milestone we often hear about people striving for. Without debt, you can focus on building more savings, investing those extra funds and just simply having more peace of mind about your finances. Paying off all your debt, however, doesn't always make sense.
If you're carrying a significant balance, like $20,000 in credit card debt, a rate like that could have even more of a detrimental impact on your finances. The longer the balance goes unpaid, the more the interest charges compound, turning what could have been a manageable debt into a hefty financial burden.
The 2-2-2 credit rule is a guideline lenders use to assess a borrower's creditworthiness, requiring two active revolving credit accounts, open for at least two years, with a history of on-time payments for those two consecutive years, often with a minimum limit of $2,000 per account, to show financial stability for larger loans like mortgages. It demonstrates you can handle multiple credit lines responsibly, not just have a good score, building lender confidence.
Federal Reserve data shows that about 23% of Americans have no debt. Striving to live without debt is admirable, but having debt isn't automatically bad. For example, a mortgage is a significant debt, but you're building equity in an asset that's likely to appreciate over time.
DTI over 43% is typically considered too high by most lenders and may signal you're carrying more debt than you can comfortably manage. Types of debt also matter. High-interest consumer debts (like credit cards) are riskier than low-interest ones (like mortgages or student loans).
Paying off debt
Yes, Australia is facing significant financial challenges, with many households struggling with the cost-of-living crisis, high interest rates, slowing economic growth, and rising government debt, leading to declining living standards despite the economy not being in official recession. Key issues include soaring housing and essential costs, stagnant real wages, weakening productivity, and increasing state and federal debt levels, creating a "gentle decline" where many feel financially squeezed.
A $500,000 mortgage's average monthly payment (principal & interest) typically ranges from around $2,000 to over $3,000, heavily depending on the interest rate and loan term (usually 30 years). For example, at a 7% rate, payments are roughly $2,661, while a higher 8% rate pushes it to about $2,935, excluding taxes and insurance (PITI).
Older Aussies unsurprisingly hold more in savings, with Baby Boomers having $68,185 and Gen X having $40,266, on average. Young Aussies had less than the overall average, with Gen Y saying they had $37,085 in savings and Gen Z having $16,320, on average.
While the exact range for a bad credit score in Australia can depend on the credit scoring model, usually a score between the range of 300-550 is considered a bad credit score.
By paying more than your required monthly mortgage payment, you can put that extra money directly toward the principal amount on your loan. Your interest payment is based on your principal balance, so by applying your extra payment to your principal, you could pay less in interest over time.
Here are some ways you can pay off your mortgage faster:
A good goal is to be debt-free by retirement age, either 65 or earlier if you want. If you have other goals, such as taking a sabbatical or starting a business, you should make sure that your debt isn't going to hold you back.
Use this 11-word phrase to stop debt collectors: “Please cease and desist all calls and contact with me immediately.” You can use this phrase over the phone, in an email or letter, or both.
It's tempting to focus on saving money or paying off debt but it's better to try to handle both. This way you get the benefit of saving money from tackling debt while also having an emergency fund for the unexpected.
Debt can make us feel embarrassed, but it's nothing to be ashamed of. Confronting your debt issues head-on is often the first step in getting them under control.
Living on $1,000 a month is extremely challenging but possible in very low-cost areas, requiring strict budgeting, cutting all non-essentials, relying on free entertainment, cooking all meals, and potentially having no rent or a roommate; it's generally not feasible in most US cities, where housing alone often exceeds this amount, but it might work in extremely rural areas or with subsidized housing. Success hinges on minimizing housing, transportation, and food costs, and potentially supplementing income.
The Five Cs of Credit are character, capacity, capital, collateral, and conditions.