Household bills cost Americans an average of $29,459 per year or roughly 42% of the average take-home income, a recent report said.
Overall, U.S. households spent $3.87 trillion on household bills in 2022, according to doxo’s most recent U.S Bill Pay Market Size & Category Breakout Report. Housing accounted for the most significant spending, but utility bills, auto loans and auto insurance were also considerable costs.
High inflation and rising costs have meant Americans spend more on everything from food to fuel. In January, the Consumer Price Index (CPI), a measure of inflation, rose 6.4% year-over-year – still above the Federal Reserve’s 2% target.
“With record-breaking inflation rates, continued concerns of a recession, and nearly two-thirds of working Americans living paycheck to paycheck, economic transparency has never been more critical,” Liz Powell, senior director of insights at doxo, said in a statement.
If you are struggling with high inflation, you could consider taking out a personal loan to pay down debt at a lower interest rate, reducing your monthly payments. You can visit Credible to find your personalized interest rate without affecting your credit score.
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Most household money is being spent on mortgages
Mortgage payments averaged $1,321 a month and cost Americans an average of $6,341, nearly 40% of what the standard household spent on bills, the report said.
States with the costliest mortgage payments were California, New Jersey, Hawaii, Massachusetts and New York – where the average household spent over $2,000 a month, according to doxo.
The same five states also topped the list for rent costs. West Virginia was the most affordable state for both mortgage ($879 on average per month) and rent ($785 on average per month) costs.
Over the past year, rising mortgage rates and home prices have contributed to skyrocketing borrowing costs. The average 30-year-fixed mortgage rate has fluctuated between 6% and 7% so far in 2023, up from an average of just below 4% a year ago, according to a Redfin report. As a result, the typical homebuyer’s monthly payment has risen more than $500 year-over-year, the report said.
If you are ready to shop for a mortgage loan or are looking to refinance an existing one, you could get a better rate by looking at several lenders. Visit Credible to help you compare interest rates from multiple mortgage lenders and choose the one with the best rate for you.
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Many Americans live paycheck-to-paycheck
Sixty percent of Americans said they lived paycheck-to-paycheck in January, including 45% of high-income earners, according to a recent LendingClub and PYMNTS survey. That’s down from 64% a year ago and may indicate a pullback on spending has improved some consumers’ financial situations.
However, even as some consumers cut back on spending, more Americans said they had to rely on credit cards to make ends meet. The average consumer held outstanding credit card balances equivalent to 35% of their available savings, the survey said. For Americans living paycheck-to-paycheck, credit card debt jumped to 62% of their savings.
“While consumers are making behavioral changes as they adapt to inflationary pressures on their pocketbooks, it may not be enough to balance their finances,” LendingClub’s Financial Health Officer Anuj Nayar said in a statement. “Consumers across the income spectrum carry massive credit card balances, and with interest rates for debt growing, outstanding debt balances could equal all paycheck-to-paycheck consumers’ savings balances in the next five years.
“For consumers looking to decrease their overall debt burden, now is a good time to consider consolidating and/or refinancing that debt into an installment loan,” Nayar continued.
If you own private student loans, you could consider refinancing to a lower interest rate to lower your monthly payments. You can visit Credible to get your personalized interest rate without affecting your credit score.
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