The NY Federal Reserve puts out a quarterly report on household debt with the help of one of the credit bureaus, Equifax.  This report shows the current conditions of our household debt in the US.  In this report you can see how borrowing for student loans has taken off in the last decade.  It’s also obvious that borrowing for homes topped out in the 3rd quarter of 2008, but it’s since bottomed around the halfway point of last year.  Total debt bottomed out then too, as mortgage debt makes up the bulk of our borrowing, by a long shot.

But what happens when we look at the state borrowing trends?  That report selects a few major states and it really paints a picture of just how different things are across the country.

total debt per capita by state

This is how much debt the borrowers have in these states (per capita).  Notice how quickly Nevada rose and fell over time.  California has loads of debt, which shouldn’t surprise anyone.  It doesn’t mean they are in trouble though.  Cost of living is high there.  You can get a better picture of how manageable a debt load is by looking at how much of the debt is 90 days late or more.  Meanwhile, every state has been reducing their debt load over the last few years, but something happened in late 2013, and the borrowing picked up again.

 

So who has a good handle on their debt situations?  Pennsylvania sure does.  Same goes for Michigan, and recently California too.  Part of this is due to the working through of foreclosures in each state. just look at NV and FL.  But by now this is starting to look more like normal behavior.

 

composition of debt per capita by state

This is probably the most interesting chart.  What do people in different states like to borrow money for?  Look at the Auto Loans for Texas and California.  CA is the home of material possession.  Especially cars.  If that’s true for much of the state, they’re either paying cash or using something like home equity to make their purchases.  Because compared to Texas they don’t have much auto lending debt.  Thanks to a low cost of living, Texas doesn’t have to spend much on housing.  That must leave more room for borrowing to buy their vehicles, because they sure seem to have a lot of auto debt.

It’s hard to get a picture of what state borrows the most with such a small sample.  Cost of living is clearly a factor.  Each state  does borrow very differently, and these borrowing habits can help explain what’s important to people in the state, and what isn’t.

 

 

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categories: economics, Housing, loans, personal finance