Unexpectedly Intriguing!
July 13, 2006

How much debt do Americans have and can they handle it?

To answer these questions, we here at Political Calculations went to the Federal Reserve's 2004 Survey of Consumer Finances (SCF), which provides a breakdown of the median amount of debt (of any kind) held by the surveyed families. The Fed interviewed some 4,552 families, which through the miracle of statistical sampling, represent approximately 112.1 million families in the United States!

The survey report breaks down its data by a number of different methods (age, income, work status, etc.), but the method we found most interesting was by net worth. The following table shows the breakdown of the percentile brackets by which the report presented its data, along with the corresponding median income and net worth for each bracket range:

2004 SCF Net Worth Percentile Data
Net Worth Percentile BracketMedian IncomeMedian Net WorthNet Worth at Top of Bracket
0 - 25\$20,500\$1,700\$13,300
25 - 50\$37,000\$43,600\$93,100
50 - 75\$52,400\$170,700\$328,500
75 - 90\$77,000\$506,800\$831,600
90 - 100\$143,800\$1,430,100N/A

So that's the basic profile of who's been surveyed. Now, let's see the median debt that each grouping has along with their median debt burden, which is defined as the percentage of debt payments divided by income (also called the debt-to-income ratio.) This latter figure gives us a good indication of how well the families surveyed are able to manage their debt:

Median Debt and Median Debt Burden by Net Worth Percentiles
Net Worth Percentile BracketMedian Debt HeldMedian Debt Burden
0 - 25\$11,40013.0%
25 - 50\$44,20021.2%
50 - 75\$90,10021.4%
75 - 90\$110,70017.9%
90 - 100\$190,80012.6%

We can measure how well families manage debt by seeing where they fall on the debt burden scale. Lending institutions are reluctant to extend credit for individuals whose debt-to-income ratio is greater than 36% - often charging people with a debt ratio above 36% higher rates of interest to discourage them from exceeding this debt burden level. Since the median debt held in each grouping is well below this level, it indicates that overall, Americans are in pretty good shape when it comes to managing their debt.

Labels:

is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

Visitors since December 6, 2004:

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.