Understanding Utah’s Debt Problem (And What You Can Do About It)

Understanding Utah’s Debt Problem (And What You Can Do About It)
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Utah is known for many remarkable things: stunning national parks, winter sports, the Sundance Film Festival, brilliant companies, and remarkable entrepreneurs. However, unfavorably, Utah is known as the “most indebted” state. 

There are plenty of people that are far behind their retirement savings goals, by most standards, that are classified as “high-income earners”. Make no mistake, there are plenty of people in Utah that have a significant personal or household income that are battling debt and imprudent spending.

The state finds itself at a critical juncture, as findings from the Cultural Currents Institute shed light on a concerning reality. Utahns grapple with an average debt burden of $79,240 per capita. Their debt-to-average salary ratio towers at 1.38, surpassing all other states. 

With that said, the Utah debt problem is not all dark clouds the further we analyze the data. 

Understanding The Nature of Utah’s Debt

To fully grasp why Utah has a high debt-to-salary ratio, it’s best to learn about its population, financial behavior, and other economic factors. 

Firstly, Utah has a distinct demographic profile that boasts the youngest median age in the nation at 31.3 years old. The youthful populace suggests that most Utahns are still navigating the initial phases of their financial journeys. Young families are often at the stage of accumulating big-ticket items like automobiles, appliances, and homes, usually on loan. Below are some specifics about these loans:

  • Mortgages ($61,120) comprise the predominant share, accounting for 77.1% of the overall debt.
  • Auto loans ($6,040), student loans ($4,220), and credit card debt ($3,340) in Utah hover around average and below-average levels, respectively, in comparison to national standards.

Combined with their outstanding student loans, it explains why this demographic of Utahns does not have the time or resources to pay down their debts. 

But interestingly, Utah has remarkably low mortgage delinquency rates. Despite the increasing debt load, Utahns have responsible repayment behavior. The state claims the most minimal default rates nationwide for car loans and mortgages. As for credit card debt and student loans, Utah ranks second-lowest and third-lowest, respectively.

The Impact of Personal Debt on Utahns

However, there are still alarming numbers when it comes to personal debt. Utah is 38% above average in total bankruptcy filings relative to its population. According to the Federal Reserve, the average personal debt in Utah surged by 119% from 2003 to 2022. There’s also a 10.2% spike recorded from 2021 to 2022. These high figures stress the importance of effective financial planning and debt management.

One of the most prevalent demographics in Utah that need such guidance is young parents. Other financial matters take a backseat as priorities shift toward raising a family. This leads to having no extra funds for important things like insurance and retirement planning.

Fortunately, the government is helping the public through certain programs in the public education system. Utah’s financial literacy graduation requirement trains students to make smarter financial decisions, empowering schools to offer top-tier financial education. Those who took the course had improved financial knowledge compared to peers without this completion.

What You Can Do About It

happy elder couple

Just like other advocacies, the most impactful approach often begins with individual actions. Considering the cost of living and educating yourself about money-related matters are just a few steps. By focusing on the right strategies and habits, you can take part in mitigating the statewide issue of mounting debt. 

Here are some proactive and actionable tips that can yield tangible results.

Live below your means

Spending less than you earn allows for more savings and reduces the reliance on borrowing to meet daily expenses. Instead of upgrading or indulging in luxury purchases, opt for more cost-effective alternatives to generate surplus funds. Cutting down on dining out or subscribing to budget-friendly entertainment platforms can also free up money you can put toward debt repayment or savings.

Prioritize debt repayment

Make it a habit to allot money for outstanding balances. You can create a structured repayment plan, allocate a larger portion of income toward debt servicing, or even seek side income sources to expedite debt clearance. It’s also best to avoid accumulating new debts. As you channel funds to pay off debts instead of accruing new charges, you gain control over your finances.

Negotiate lower interest rates

Debt consolidation can greatly ease debt burden. Merging multiple high-interest debts into a solitary, lower-interest loan can minimize overall interest costs. This strategy can save money in the long run while streamlining payments.

Seek professional guidance

Seeking professional guidance is a great way to untangle complex ideas such as debt management. Whether you’re in South Jordan, Cottonwood Heights, Logan, or Draper, for help from the best financial advisor in your area to give you a headstart. Their expertise offers tailored strategies and insights to manage debt effectively and create financial plans. They can also instill discipline and accountability with finances, helping you work toward long-term stability.

Taking Charge for a Debt-Free Future

Although Utah’s debt challenge is state level, dealing with it starts with individual empowerment. You become closer to your financial goals through various strategies like living below your means and prioritizing debt repayment. But to further boost and support your journey, consider consulting a financial advisor. These professionals provide tailored advice and tactics for a holistic, effective approach.

By collaborating with experts from Tencap, you can better equip yourself with the necessary tools and knowledge. Tencap Wealth Coaching also offers other services to help you secure a more prosperous financial future.

Tencap is very proud of the financial coaching that we offer each client. On the other side of a Tencap financial advisor are a few indisputable things:

 1) Accountability. Having someone that you bounce your ideas and thoughts off of, and really verbalize your plan, is invaluable. There is power and wisdom in really looking at your ideas before moving ahead, especially as it relates to big financial decisions.

2) Broader perspective. Recently we had a client that came with a plan to pay off some debt. As their advisor sorted through some of the more basic options, the advisor let the client know that their plan was not ignorant, but it wasn’t optimal. The two had a discussion and the advisor introduced some other ideas that ended up being far better for the client. Our client was coachable and immediately agreed the advisor’s plan would be a much better fit. 

3) Concentrated focus. What do I mean by that? I mean that our clients are committed to building and securing their wealth, being retirement ready and financially independent. We take their goals, join them in their action plan and meet with them several times a year about it all. We each get what we set up! Because our clients have a goal and can be found “in action” as it relates to their financial goals, each meeting our clients move forward in their financial goals. This cannot be overstated! You get what you set up! Of course our clients are making significant progress in their financial resilience – they are committing the time, they are coachable, they are in-action and they are working with a group that has shown they are capable of leading in this space!

Photo of Nick Carrigan
Nick Carrigan
Wealth Advisor | + posts

Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.

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