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How’s this for obvious:

It’s a bummer being poor.

How’s this for startling:

Many people don’t even know they’re poor.

But what else would you call it when debt overtakes your assets and/or slow investment growth can’t keep up?

And yes, that includes the possibility of outliving your retirement savings.

According to a Federal Reserve report issued this month, USA households are carrying a total deficit of $12.3trillion. The hard fact is one in seven Americans are living in the red.

living in the red

The main culprits are credit cards and student loan debt.

If Americans with negative net worth are split into groups of equal size, here are the results:

  • One third are in the red by $12,000 with credit cards being the main culprit,
  • The next third are down between 12,500 to $47,500 beyond their assets’ ability to cover, and
  • The final third owe $47,500 or more.

Unsurprisingly, student loan debt is the primary reason in the last two groups.

student loan debt

It often makes sense to borrow in young adulthood — education is important, and becoming a homeowner is usually a better deal than renting — but in an era of stagnant wages, repayment projections can easily go awry.

No wonder more and more people are looking to get involved with e-commerce to either enhance their income or take the plunge to seek financial independence.

Austere living is never fun, but the best way to deal with debt is to make a plan and then take action.

There’s no time like the present. Debt is costing you money every day. Possibly more than you realize.

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