Taking On Your Debt

Taking On Your Debt

Core Facts

 [ What is this? ]


The average American is swimming in debt, from student loans to credit cards, mortgages, and so on. U.S. consumers racked up $21.9 billion in credit card debt during the third quarter of 2016, and we are now on track to finish 2016 with an $80 billion net increase in credit card debt. 

Credit Cards

Since credit cards typically come with the highest interest rates, those are the usually the first target when getting oneself out of debt. The current national average interest rate for credit cards is over 15%. 

In fact, some advisors will even say that before you start saving for retirement or putting a down payment on a house, you should significantly reduce, if not eliminate your credit card debt. So pull out those scissors, cut up your cards, and get paying. Consolidate into one single low interest card if possible, or focus on them one at a time, starting with the highest interest rate one first. 

Student Loans

Americans owe nearly $1.3 trillion in student loan debt, spread out among about 44 million borrowers. In fact, the average Class of 2016 graduate has $37,172 in student loan debt, up 6% from last year. 

Federal student loans typically have interest rates in the 4% to 6% range, depending on the exact type of loan. Private student loans on the other hand, can come with rates in the double digits. 

Saving for retirement and paying off student loan debt doesn't have to be mutually exclusive. Many people with lower-interest loans can avoid throwing extra money at student debt at the expense of saving for retirement.


The goal shouldn't necessarily be to pay off your mortgage as soon as possible. If you're paying under 4% on your home loan, any extra cash you have should go toward retirement (assuming you don't face high-interest credit card debt).

The truth is that you can be making more money by investing that money for the long-term rather than by putting it toward prepaying your mortgage. Most people have under-saved for retirement (one third of Americans report having no retirement savings at all), and that's what they should be focusing on. 



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC



^ Top


Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

^ Top


Jake Mendlinger
Account Manager
516.829.8374 X 232

^ Top