The Rachel Cruze Show - How Do You Compare Financially to the Average American? (2026 Edition)

Starting point is 00:00:05 If you know me, you know, I'm not a fan of toxic comparison culture. But when it comes to building wealth, it actually can help you see actually where you stand when you look at your numbers compared to others. So today, we're going to look at how the average American manages their money. And stick around later because I will show you how to reach your financial goals regardless of where you're starting from. So be to sure like, subscribe, and share this episode with a friend. All right, first, let's talk about salary.

Starting point is 00:00:32 The average annual salary in the U.S. is around $68,000. So you can kind of size up where you are, where your household is in regards to that. Remember, that takes the income of people just starting off. That's hourly workers, all the things, all the way to people that have been working for 40 plus years. So that is the average. Now, your income is really important because it is the tool that's going to help you build wealth. And the problem is debt comes into the picture and takes your income, right? It can leave in thousands of dollars. at a time every single month going to car payments on student loans and personal loans and all the things and that those thousands of dollars is not being kept with you to invest and give and save and spend so keeping your income is so so important now of course again debt is a picture for a lot of people so the total debt for americans is over 18 trillion dollars and this includes everything from credit cards to mortgages all of it so let's break it down to specific debt which which each one is. So let's start with credit cards. The average credit card debt balance per borrower is almost $7,000. Now, the total credit card debt in America is $1.2 trillion, which is the highest

Starting point is 00:01:47 that it's ever been, meaning some people are carrying balances that are larger than $7,000 smaller, but on average, that is it. And I'm telling you, people sign up for credit cards with great intention to mostly to like play the game of like, oh yeah, points and cash back and all of it. And then what ends up happening is life happens. And if you don't have a plan, your credit card's there to catch it. And if you got to get, you know, things fixed on the car or the roof or the kids go to the doctor, it's like, well, if we don't have money saved, I guess the credit card is our plan. So they end up using the credit card and end up putting more money on it than they realize. Or, you know, they lose a job and they don't have an emergency fund.

Starting point is 00:02:25 The credit card is their backup. And again, the interest rate you guys on the is insane. Like, it's crazy. And so you end up spending so much money, not just on interest, but also the fees to have the credit card and all of it. So I love a debit card. You pay for what you need in the moment, and then it's done. And part of that is having an emergency fund in place and different things. But the credit card game, it's not worth it because you'll see on average people are carrying around around $7,000 on a balance. Okay, next are car loans. The average car loan balance per person is over $24,000. Now, the average new car payment is almost $750 a month. Oh, it's a lot. Our cars, man, it's tough. It really is because it does take a while to save up a

Starting point is 00:03:10 couple of thousand dollars in order to buy a crappy car, at least, in cash. But that is what we recommend, because people get stuck in the cycle of payments and they drive their car. They pay it off in five years or whatever. And then they're like, oh, well, the car's paid. off, it's been five years, let's just get a new car and they get back into the cycle of payment. So if you cannot pay your car off in 18 to 24 months or your car loan is more than half of your annual income, you got to get rid of the car. You have too much car at that point. Now, if you can pay it off less than two years, then that's fine, pay it off. But this idea that we're going to just keep a high car loan and payments associated with our lives, it is eating away.

Starting point is 00:03:54 your income. Don't do it. Don't do it. All right, before we get into the rest of the stats, I do want to tell you about one of our amazing sponsors, Delete Me. So those holiday promos can be great, but with every newsletter sign up and coupon code, you are giving away your data. And that personal info can easily end up with data brokers who sell it to spammers and scammers. And that is why I recommend Delete Me. The Delete Me privacy team digs through hundreds of those data broker sites to remove your data to keep it gone, which means fewer spammy texts and robocalls. So right now you can get 20% off at join delete me.com slash rachel with code rachel at checkout. So do it today. That's

Starting point is 00:04:35 joinselete me.com slash rachel code rachel. Now another great company that I want to tell you about is fair wins credit union. So the new year should be about progress, not payments. And that is why one of the reasons I love fair wins because they help you reach your money goals without debt. And with the Fairwind Smart Bundle, you get a no-fee checking account, a high-yield savings account to grow your money, and the exclusive Ramsey, debt as normal, be weird debit card. So every time you swipe, it's a reminder that you're doing money differently, and that is something to be proud of. So go to fairwins.org slash Ramsey today to start your smart bundle and grab your exclusive Ramsey be weird debit card. That's fairwins.org slash Ramsey. All right, we can't talk about debt stats without mentioning those student loans. Oh yeah,

Starting point is 00:05:27 the average borrower has a little over $35,000 in loans. Oh, man, this has been so hard because student loans, I mean, the interest rate is there. People haven't paid, and so what ends up happening is they can balloon almost over time. And it's so much more than even the original loan from where you started. And I feel like it is one of these things that people feel like, well, It's the only way to go to school. And this is the school I want to go to, so I want to take on the debt. And that becomes their life. And that is so normal.

Starting point is 00:05:57 So doing the opposite and actually saying, hey, I may not go to the school that I want, like my dream school. I may go to a community college for a year or two. I may make choices that aren't fun and not exciting, but financially are so wise in the long term. So that when you graduate, you don't have loans and you can start your first job. And you got, yeah, your paycheck. It's not going back out to loans that are going to be there. Some people, you know, it's for 10 years.

Starting point is 00:06:23 They have them. So get out of student loan debt, ASAP. If you have it, let that be part of your debt snowball where you pay off the smallest debt first. But it is so normal in America as we see average being $35,000. All right. So let's go to mortgages next, which make up about 70% of all debt in the U.S., which makes sense. Houses are expensive.

Starting point is 00:06:46 So the average mortgage is over, right over. $252,000. And the median monthly payment is around $2,200. And what's hard is it's not just that, but people now are borrowing against their home. And so he locks have been a very popular thing in the recent years. I feel like they're always been around, but definitely became more popular, you know, around COVID time. So the average he lock, which is a home equity line of credit, the balance is around $45,000. So, You got your mortgages, you got your helix, and they're all there together. So listen, if your heloc is more than half of your annual income, then you can lump it into Baby Step 6 when you're paying off your mortgage.

Starting point is 00:07:32 Now, if it's less, then go ahead and put it in Baby Step 2, which is just paying off consumer debt. But this is a tough one. And again, mortgages, it's the one type of debt we will not yell at you for. I don't like helix, though. Don't borrow on your house. I mean, you're making progress to pay it off. And so if you want to do renovations or do something great, then cash flow it, which means it might be cheaper. It might take longer to save and all of it. But again, financially in the long run, you're not borrowing money, which is so wise. All right, let's talk about savings. On average, people have about $62,400 in their everyday bank accounts, which includes checking, saving, and money market accounts. And 60% of Americans report to having money invested in retirement plans like a 401K.

Starting point is 00:08:17 or an IRA with the average account balance for those who are investing is around $334,000. But over half of millennials say that the amount of debt that they have is greater than their retirement savings. Yeah, which makes sense because of where millennials are at when it comes to their mortgages and maybe still paying off student loans and all of it. So, yeah, the key here is to prioritize where your money is going. So paying off debt first and foremost and then investing 15% of your income into retirement. Oh, you guys, there are a lot of numbers at you, but I think it's good to kind of get a comparison of like, okay, where am I compared to the average person out there? And maybe you realize, gosh, I got to get on this. I got to pay off debt. I don't have a lot of

Starting point is 00:09:01 savings, all of it. Or maybe you're encouraged to say, okay, we're actually doing a good job. Sometimes when you're being wise financially, you may not feel all that progress, but hopefully with some of these numbers, it was encouraging to you. But the good news is no matter where you are, you can start making progress with your money today. Now, the first thing to do is to tackle your money goals in the right order, which is the baby steps like I talked about. So you want to get a starter emergency fund of $1,000, pay off all your consumer debt, bump that starter emergency fund up to three to six months of expenses.

Starting point is 00:09:31 Those are the first three steps. And then beyond that is saving for retirement, kids college, paying the house off early. And the final step, Baby Step 7, is to build wealth and become extremely generous. Now, once you've got your plan in place, you do need a budget to make it happen. And so that is a really important part of this process. So be budgeting. That is going to be key tactically day in and day out with your money. And lastly, you want to focus on your money goals and your progress. So while we were comparing a little bit in this video, put the blinders on and look at what's best for you and your family. Now, when it comes to money, one of the best things

Starting point is 00:10:09 that you can focus on is what you can control, which is the choices that you make day in and day out. So remember, you guys, you have a lot of control over your money so you can make some really great decisions. They may not be easy ones, but they can help you in the long run. Now, if you're ready to stop stressing out about money and finally take control, I want to invite you to our Take Back Your Money Live stream. This is on January 8th with Dave Ramsey and Jade Warshaw, and they're going to help you find financial freedom by getting out of debt and building wealth with confidence. And it's a great chance to get focused and motivated to change your money for the better this year. So go ahead and save your seat today. I'll put a link down in the description, so make sure to sign up.

Starting point is 00:10:46 And I'm also going to include a link to my video on how to become financially literate in eight minutes. You can click there, or if you'll see on podcasts, there's a link below. All right, you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - How Do You Compare Financially to the Average American? (2026 Edition)

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