How is my debt?

[mike880]

I turn 30 in two months and for some absurd reason I am comparing myself to the "typical" 30 year old's debt! I don't know why I'm doing it...

I have no student loans.
I lease my vehicle but that may change. The benefit of renting a brand new car every 3 years is no longer as valuable to me as owning a car debt-free, within five years. In essence, I may opt for an auto loan on my next vehicle.
I currently rent a condo but considering advancement to a home. With the historically low interest rates, my 761 credit score, I am highly confident a bank would lend to me, even in these rigid times.

My biggest main concern is my actual credit card debt. I have two credit cards (Amex and Bank of America) totaling $8000 line, between the two. Currently, my outstanding debt is slightly higher than normal levels, due to utilizing the cards to pay for some living expenses. I know, dumb, right? Currently, my outstanding debt is $2435, when normally it is less than $1000.

Despite being at $2435, am I progressing on a good level into my 30s? Have people reading this post carried similar, more, or less debt at their 30th birthday?

[humandraydel]

Debt levels really mean nothing. I'd be more concerned about net worth, your budget, and savings rate.

[jpg7n16]

You're just experiencing some psychological reflection because of your age. When you're turning 30, to you that is a more mature number than you've ever been in your life, and the psychological change of now being "30" is making you reflect on just how grown up you are. "Am I really as grown up as I should be? What is normal for a 30 year old? Have I been doing enough?"

Just alot of introspection. I'm only 25 though - so I can't say if that feeling will go away or not.

As far as the debt goes - $2500 in CC debt isn't terrible in the grand scheme of things, but you're probably able to pay it off (and should). HumanDraydel's listed things that are more appropriate for determining whether you're on a good pace so far. We don't have enough info to tell.

Nonetheless, let's say you're doing great - what should you then do? Cut down expenses, increase savings, stick to a budget, and invest wisely.

And what if you're not doing great - what should you do? Cut down expenses, increase savings, stick to a budget, and invest wisely.


Either way, your action steps are the same. Just recognize it's part of growing older to reflect on how you've done so far. Take what you learn, and make action steps to move towards the best you can be. Good luck!

[disneysteve]

The benefit of renting a brand new car every 3 years is no longer as valuable to me as owning a car debt-free, within five years.

I currently rent a condo but considering advancement to a home.

my outstanding debt is slightly higher than normal levels, due to utilizing the cards to pay for some living expenses.

Welcome. I think you are asking yourself the wrong question. You shouldn't be asking "how" is your debt. You should be asking "why" is your debt. You say your credit card debt is from paying living expenses. WHY are your living expenses higher than your income? WHY did you need to resort to credit cards to cover living expenses? That's a problem that needs to get fixed ASAP.

I'm glad that you have recognized the blunder of leasing. It is a total rip-off. That said, your goal should be to own a car free and clear within 3 years, not 5. If you need to borrow over 5 years, you are buying a car that is too expensive for your means. Get something a step down or a year or two older so that you are able to pay it off in no more than 3 years. Ultimately, your goal should be to pay cash for future cars. By owning debt-free, you will then be able to save up to pay cash for the next car in 7-10 years.

I couldn't help but notice you said you live in a condo but want to get a "home." You didn't say you want to get a "house." Surely, a condo IS a home. A house is just a bigger home with more responsibilities and more costs. Don't buy a house because of market conditions or your ability to get a loan. Buy a house because you are ready for one and have a need for something more than what you currently have.

As for your actual question about the amount of debt you have, we really can't answer that since we don't know what you earn, but I think any debt incurred from using credit to cover living expenses is too much. Cut the spending and get rid of the debt. Comparing yourself to others is totally meaningless. At age 30, I had about $100,000 in student loans and had recently purchased our home with a $113,000 mortgage, so over $200,000 in total debt at that point. Does that mean you are doing better than I was? Nope. Maybe you are. Maybe you aren't. The amount of debt doesn't answer that question.

[Scanner]

Currently, my outstanding debt is slightly higher than normal levels, due to utilizing the cards to pay for some living expenses. I

This is the only real red flag I see - and this could be serious or it could not.

Let's say your living expenses exceed your income by $50/month. . .not terribly bad in the scheme of things (depending on what scheme you reference). . .but if it's $500/month, then you've got a whopper of a problem developing and you shouldn't buy a house.

Even if you are breaking even on your living expenses, that means you aren't saving for retirement, which at age 30, is time to start thinking about.

Good luck.

[Seeker]

I turn 30 in two months and for some absurd reason I am comparing myself to the "typical" 30 year old's debt! I don't know why I'm doing it...

I have no student loans.
I lease my vehicle but that may change. The benefit of renting a brand new car every 3 years is no longer as valuable to me as owning a car debt-free, within five years. In essence, I may opt for an auto loan on my next vehicle.
I currently rent a condo but considering advancement to a home. With the historically low interest rates, my 761 credit score, I am highly confident a bank would lend to me, even in these rigid times.

My biggest main concern is my actual credit card debt. I have two credit cards (Amex and Bank of America) totaling $8000 line, between the two. Currently, my outstanding debt is slightly higher than normal levels, due to utilizing the cards to pay for some living expenses. I know, dumb, right? Currently, my outstanding debt is $2435, when normally it is less than $1000.

Despite being at $2435, am I progressing on a good level into my 30s? Have people reading this post carried similar, more, or less debt at their 30th birthday?

It depends on the whole financial picture. You write only about the negatives (debts). What are your positives (savings)?

You are write about "renting a condo" versus "advancing to a home." How do you plan to accomplish that goal? Plan it!

Instead of comparing yourself to other people at 30, you need to figure out where YOU want to be by the time you are 35. Don't compare; set your own goals and figure out how YOU can get there.

Don't let comparisons to other people get in the way; no two people are exactly the same. Life tends to throw curve balls at some people and not at others. Deal with life as it's dealt to you; pick yourself up and try again.

Comparisons are very rarely apple to apple; mostly they are apple to orange. No two things, or people, are exactly the same.

[maat55]

I'm not comfortable with any debt on assets that go down in value. Credit card debt is pure bleeding. On the surface your debt level appears small, don't waste a minute getting rid of it.

The most important thing you need to be doing is getting your budget set to where you are saving 20% of your income for retirement(10 to 15%) and consumption(5 to 10%) needs.

[jIM_Ohio]

I turn 30 in two months and for some absurd reason I am comparing myself to the "typical" 30 year old's debt! I don't know why I'm doing it...

I have no student loans.
I lease my vehicle but that may change. The benefit of renting a brand new car every 3 years is no longer as valuable to me as owning a car debt-free, within five years. In essence, I may opt for an auto loan on my next vehicle.
I currently rent a condo but considering advancement to a home. With the historically low interest rates, my 761 credit score, I am highly confident a bank would lend to me, even in these rigid times.

My biggest main concern is my actual credit card debt. I have two credit cards (Amex and Bank of America) totaling $8000 line, between the two. Currently, my outstanding debt is slightly higher than normal levels, due to utilizing the cards to pay for some living expenses. I know, dumb, right? Currently, my outstanding debt is $2435, when normally it is less than $1000.

Despite being at $2435, am I progressing on a good level into my 30s? Have people reading this post carried similar, more, or less debt at their 30th birthday?

Here is my advice...

1) Pay off the credit cards with some efficiency. If you can lease a car, you should be able to pay off card within 10-20 months as the balances are not that high to begin with

2) Do not finance next car for more than 2 years. If you cannot afford new, then get a used car which will last 6-8 years and then save cash for next car purchase.

3) Try not to finance assets which depreciate, especially if you have low savings. Cars lose value over time, so financing one should be short- this should keep loan payoff "close" to what car is worth.

4) Build up your bank account and savings rates. I agree with this post above

humandraydel Debt levels really mean nothing. I'd be more concerned about net worth, your budget, and savings rate.

[littleroc02us]

I have some wisdom for you. I am 39 years old and I leased a vehicle in my late 20's and used my credit cards for everything. Stupid. I thought I was succeeding financially, but I was only digging a hole. Leasing (Renting) a vehicle is foolish because why would you want to spend money on a vehicle that isn't yours, when you could invest that money and make 8% in Mutual funds. When the lease is over, save up enough cash to buy a used car and then pay off your cc's asap. Credit card debt is bad, because it doesn't teach you to save up for something and then have the reward of paying for it outright. It's a completetly different feeling to know that you worked hard for something wanted. Good luck. I am now debt free and am working on my retirement.