A new analysis by The Century Foundation and Protect Borrowers reveals that while the typical U.S. household's real take-home pay increased by $109 from late 2022 to early 2026, monthly debt payments surged by $57. This means that for one-earner households, 52% of income gains are consumed by debt payments, and for two-earner households, the entire income gain is offset by debt.
The study highlights that inflation-adjusted debt payments have risen nearly 15% over three years, outpacing household income growth of less than 2%. Angela Hanks from The Century Foundation noted that the findings may underrepresent the financial strain on households, as they do not include mortgage payments or certain types of loans.
The Federal Reserve's data corroborates this, showing an increase in families spending over 40% of their income on debt payments, reaching levels not seen since 2013. Experts warn that even 'good debt' can become burdensome if repayment terms are extended too long.
To mitigate debt accumulation, financial analysts recommend budgeting, making specific purchase lists, and comparing prices before borrowing