Understanding Personal Debt

Consumer or personal debt in the United States continues to be a pain point for many citizens. With an economy driven by debt, companies and financial institutions make it incredibly easy to obtain financing. While that’s great for those whom are well versed in budgeting and savings, most of us find ourselves getting trapped with massive debt accumulation

There are several types of personal debt and each carry different terms that include interest rates, payback length, loan terms and so on. It all can seem overwhelming, which leads to a serious lack of understanding and uneducated use of debt.

In this article, we’ll highlight a few of the common types of personal debt and how they can impact your financial health. We also have multiple resources to help you get out of any debt you currently find yourself struggling with. 

Credit Card Debt

First and arguably the easiest way to get into debt is by owning a credit card. Whether it’s a store credit card or a generic card, they all work in a similar fashion and offer one main benefit, an open line of credit. All you have to do is swipe the card and instantly purchase nearly anything you want regardless of if you can afford it.

One of the main benefits to having a credit card is it can help keep your cash flows open. More specifically, if you are looking to make a large purchase, you can finance it over the course of a few months rather than having to pay the full amount at once. Some card companies offer special 12-month financing over certain dollar amounts or have zero percent interest as an introductory offer.

However, one of the drawbacks ends up being that life gets in the way and you carry a balance. While a month or two with unpaid credit card debt isn’t the end of the world, many carry a balance for years, only paying the minimum payment. If you carry a balance, interest rates on cards can be north of 25% depending on your terms. To avoid paying high interest rates, you need to pay your balance off in full each month. This will save you stress and keep debt at bay.

If you currently find yourself with credit card debt, we can help you get out of it!

Auto Loan Debt

The next type of popular consumer debt is the auto loan. Auto loans are easy to obtain in most cases, but there are a few more hurdles you have to jump through to get an auto loan than to get a credit card. Financing a car is the typical road many travel, since vehicles are a necessity for most.

Financing a vehicle has become much cheaper as interest rates have decreased. Conservatively you can get a loan around the 5% area with respectable credit. Since borrowing is less expensive, if you want to get that new vehicle you may finance it over a few years, keeping your cash flow open.

Similar to credit cards, many people neglect to pay down their loan quickly, thus paying the full amount of interest. Also, when you go to shop for a vehicle, look to obtain financing at your local bank or credit union as they typically have more competitive rates than the dealership. If you find that your rate is a bit high, after you’ve paid on the loan for a few months you can look to refinance to a lower rate.

Mortgage Debt

Last up is the home mortgage, enabling people to realize their dream of home ownership. Many loans are typically a 15- or 30-year term, with either a fixed or variable interest rate. These loans are secured by your house and typically run 90% of your homes value or lower. To avoid private mortgage insurance you’ll want to make a down payment of 20%.

For many, obtaining the status of home ownership would be impossible without the home mortgage. This allows you to stretch the cost over many years, giving you the ability to afford a home. Typically you can prepay the note, meaning you can put more towards principal each month if you wish to pay down the note.

Unlike the other two debts, a mortgage is something you get once and will only look to refinance if rates go lower. Other than that, a traditional mortgage is a fairly straightforward product.


Unfortunately, debt is one of the trademarks of modern American society. The topics addressed in this article are some of the most common personal debts you’re likely to encounter during your lifetime. Using debt as a leveraging tool can have a positive impact on your financial well-being. However, for many the debt gets out of hand and becomes a financial burden. When using debt, use it cautiously and ensure you can repay the loan quickly, saving you money on interest expense.



  1. Debra Sue Berna Reply

    I’m looking for a small vacation loan for an disabled individual with ok credit needs.

    • Lizzy Reply

      Hi Roderick, it sounds like you have more than one loan and might be paying a lot of interest. If that’s the case, you might be able to consolidate them into one and reduce your payments! Check it out if it would help you: https://bit.ly/2OgnZgP Take care!

  2. Tina Harvey Reply

    I only owe like 250 on my credit card my problem is I owe my parents 1200 and a friend 1200 and a small loan 1050 and I would like to take my daughter on a vacation. And pay these people back so I don’t have to worry about it anymore. I am disable and have filed for disability but I am waiting on a hearing.

  3. Joseph. Droddy Reply

    Have small loans up to total of 5000, would like to pay all of without . filling bankruptacy

  4. Joseph Droddy Reply

    Small loans need to bundle
    All to save interest and have one note

    • Lizzy Reply

      Hi Joseph, many people run into the same issue! Visit this link to see if you can get your loans bundled into one to save on interest. Best of luck!! https://bit.ly/2OgnZgP

  5. Lee a Thomas Reply

    It’s not easy to get a loan…….and people really need to look out for the scams…..!!you don’t have to PAY to get a loan…,… I my self have put in for Meany … Meany. Loans and be approved then that tell ya your credit score this too low I need to send 9995 through a Walmart card for insurance because your credit card hurt your credit score is too low I do have a low credit score 588 and 605 but I’m still unable to give up a true loan I have a lot of scammer calls no I said I won a grant or something at the end of that you still have to send the money to get the grant so you know that ain’t no good either well that’s what I’ve been going through the last month on this internet Loan servicing trying to save my house and I don’t seem like I’m going to get that help with me cross-country mortgage more than stepped up and helped me I’m still there and I’m still struggling I’m still trying to get things going don’t give up true and legit please try to contact me at my emai tlee21420.at gmail.com. It

  6. William Johnson Reply

    I have a $300 loan from a finance company and I have a car loan stuff up to $4, 500 I could use some help

  7. Personal debts are very depressing. But you can start making your purchases and your transactions a bit rewarding with American Express. It will surely add some benefits.

  8. I have about 450 in credit card debt, 900 in back child support, I owe a couple people, plus my regular Bill’s, and not that great of credit. Can you help?

  9. I have about $5000 dollars in debt to family and friends and medical bills and dentist bills!!! So just wondering how and where can I go to get a loan without having a bank account?? I mean can I get a loan from someone and they send me a check and then I can open up a bank account!?!?

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