The average American's personal debt exclusive of mortgages is $21,800, which is $8,000 less than what people reported in 2019. But underneath that topline number is a second story, about two very different experiences with debt. More than a third (35%) of Americans say they're carrying close to or at their highest level of debt ever. At the same time, more than four in ten (43%) U.S. adults who have personal debt say they're currently carrying close to or at their lowest level of debt ever. These are the latest findings from Northwestern Mutual's 2023 Planning & Progress Study. 

"At a time of high inflation and economic uncertainty, it's encouraging to see personal debt levels have held relatively steady year-over-year, and even ticked down a little," said Christian Mitchell, chief customer officer at Northwestern Mutual. "That said, it can be a slippery slope between manageable debt and runaway debt so it's an important time to remain extra vigilant about planning and spending."

The primary source of personal debt in America can be found right in people's wallets. According to the study, credit cards account for more than double any other single source of personal debt.

People who carry personal debt say 30% of their monthly income goes toward paying it off, and most also expect to remain in debt for years.

Discovering a Debt Divide

The research finds that more than four in 10 (43%) U.S. adults who have personal debt say they're currently carrying close to or at their lowest level of debt ever. At the same time, more than a third (35%) say they're carrying close to or at their highest level of debt ever.

"This is a reminder that debt trends aren't uniform, and everyone's personal circumstances are different," said Mitchell. "More people feel like they're moving in the right direction than those who do not, but there's still a sizable universe of people carrying more debt than ever. No matter where you are on that spectrum, it's important to be proactive and intentional about how debt is managed, and where it fits within a broader long-term financial plan."

With respect to priorities, the research found that most people's instincts are to get out of debt before building savings. Sixty-one percent say they prioritize paying down debt versus 39% who put saving first.

Student Loans Weigh Heavily on Gen Z and Millennials

The study results indicate that student debt still weighs heavily on younger generations. Overall, 5% of survey participants cited personal education loans as their top source of debt. For Gen Z, it's more than triple that (17%) and for Millennials it's double (10%).

"There are productive ways to incorporate debt into a financial strategy, and student loans are a good example of that as they often result in long-term upsides," said Mitchell. "But still, it's critical to have a holistic strategy and a debt repayment plan that accounts for a diverse set of financial goals."

In forthcoming data sets, the 2023 Planning & Progress Study will explore wide-ranging issues facing Americans spanning professional advice, inter-generational conversations, financial wellness and more.