Guest commentary: Debt is reaching new highs throughout the U.S.
By John Grace
Do you remember the good old days when a road trip meant questionable snacks, blaring mixtapes, and kids bouncing around the back seat like ping pong balls?
Then, one day, the seatbelt law hit, and the family rebellion began. You had to threaten, “Put that seatbelt on, or we’re not going anywhere!” — and you meant it.
Now, thanks to airbags, safety campaigns, and seatbelt-wearing compliance, our cars are mini fortresses. And though traffic fatalities spiked 18% from 2019 to 2022, by 2024, they finally reversed course. Progress.
But what about our financial safety systems?
That’s where I come in — consider me your financial GPS, the one who says, “Recalculating!” before you drive off a cliff of consumer debt. So buckle up, because the national debt road is full of potholes, and your wallet may already be feeling the jolt.
DEEP IN DEBT
Let’s start with some numbers that might make your airbag deploy.
U.S. consumer debt just hit $18 trillion in Q1 2025, according to the New York Fed. That’s trillion with a T, as in “too much.” That includes mortgages, auto loans, credit cards, and student debt. The average household now carries about $105,056 in debt, with around $6,500 of that on credit cards alone, according to the Motley Fool. If your financial backseat feels a little crowded, that’s why.
But it’s not just your household running up the tab — companies are at it too. Meet the “Zombie companies”: businesses so deep in debt that they need life support to operate. They don’t earn enough to pay interest, let alone principal.
Think of them as the financial version of that sketchy diner that somehow hasn’t closed yet despite never having customers. As of 2020, nearly 1 in 5 public companies were Zombies, according to economist Harry Dent. That’s not market vitality — that’s market survival mode.
And who helped keep them breathing? Uncle Sam, of course. Between 2020 and 2022 alone, the U.S. injected $11 trillion in COVID-related stimulus — a quick fix that ballooned total U.S. debt to $94 trillion, 3.5x our GDP. That’s not a Band-Aid; that’s duct tape over a cracked windshield.
Dent warns the next downturn will be “memorable for the wrong reasons,” especially when rising interest rates and falling demand slam the brakes on everything. And BlackRock agrees — citing that with the government issuing over half a trillion dollars in debt weekly, even private markets might start saying, “Sorry, we’re full.”
HOW CAN YOU PROTECT YOURSELF
So, where does this leave you?
For one, you need to stop being a passenger. High debt isn’t just an economic theory — it’s affecting marriages (58% of couples report debt stress), health (48% feel debt is hurting their well-being), and freedom (more of your income goes to minimum payments than making memories).
It’s time to put your financial seatbelt on before the crash. That might mean rethinking investments, reducing exposure to high-risk real estate, and rebalancing portfolios that are overexposed to stocks. Dent believes neutrality — cash-heavy, real-estate-light — might be the safest lane until the fog clears.
Because when the market hits black ice, you don’t want to be driving a financial clown car with no brakes. The “spend, baby, spend” era may have felt good, but the bill has arrived. Remember what Grandma said, “You can’t save what you spend.”
So here’s your friendly reminder: in life and finances, those who buckle up early ride out the storm better.
Don’t drown. Turn around.
• John Grace is a financial planner and president of Investor’s Advantage in Thousand Oaks.