We’ve all been there before, stuck in heaps of debt wondering, is this normal? Is this what life is? Well, maybe I shouldn’t speak for everyone, but I’ve certainly felt like this before.

Throughout this article I plan to address the commonly asked question of “is it normal to be in debt” and then take a deeper look into the types of debt that exist, good and bad.

Is it Normal to Constantly be in Debt?

So let’s start with the question at hand, is it normal to be in debt?

Well, according to a study done by Experian, which is a credit reporting agency, the average American has a debt balance of $96,371. Now this study was completed in 2021, so these numbers could be slightly different now, but I think you get the point.

Okay, but what does normal even mean?

Webster’s dictionary defines normal as conforming to a type, standard, or regular pattern characterized by that which is considered usual, typical, or routine”

Since the average American as of 2021 is nearly $100,000 in debt, I think we can safely state that yes it is pretty typical to be in debt, and therefor normal.

Now I’m not saying being in debt is a good thing, or that it’s okay, I’m just looking at that data and calling it as it is – which is normal.

But this brings us to our next point, is it okay to be in debt? Or is all debt bad?

Good Debt vs Bad Debt

Now this is where we need to take a closer look at the types of debt that are out there – we have good debt and we have bad debt. You may have heard of these terms before, but let’s break them down a bit further for those who haven’t.

What is Good Debt

Good debt is defined as debt that is taken on for a specific purpose that will increase your net worth in the long run.

Good Debt Examples

  • Student Loans: Taking out student loans to attend college or university can be considered good debt because it’s an investment in your future and will likely lead to increased earnings over your lifetime.
  • Mortgage: Taking out a mortgage to buy a house is also considered good debt because, over time, the value of your home is likely to increase and you will build equity.

Now, just because it’s called “good debt” doesn’t mean it’s not still debt and it doesn’t mean there aren’t risks involved.

But as a general rule of thumb, sources of “good debt” tend you have lower interest rates, and they also are usually tied to future financial goals like owning equity in a home or increasing your earning potential through education so it is usually considered to be less risky than bad debt and it is more manageable in the long run.

What is Bad Debt

Bad debt is defined as debt that does not have a specific purpose or offer any long-term benefit.

Bad Debt Examples

Credit Card Debt: Carrying a balance on your credit cards from month-to-month is considered bad debt because you’re not using the money to make a purchase that will appreciate in value, and you’re likely paying interest on that balance.

Personal Loans: Taking out a personal loan for things like vacations or shopping sprees is considered bad debt because, again, you’re not using the money to make a purchase that will appreciate in value.

In regards to bad debt, you definitely have to be careful not to get out of hand with it. I used to be completely against it, but as I’ve gotten older, I have soften my stance on it and don’t agree as much with guys like Dave Ramsey who think you should avoid all debt, especially bad debt, like that plague.

Sometimes spending with credit is just flat out easier.

And I do agree with him that because spending with credit is easier, it makes us spend MORE – which can be very dangerous. We don’t feel the pain of spending when we do it with credit.

You know that gut wrenching feeling you get when you spend your own actual cash or money from a debit account, yeah we just don’t get that same feeling when using credit to make purchases – and this can be very dangerous in regards to developing habits of overspending.

So just be careful about this is all I’m trying to say!

5 Tips to Help You Avoid Bad Debt

Now that we know a bit more about good debt and bad debt, let’s talk about how to avoid bad debt.

Here are a few tips:

1. Make a Budget: This one is key. You need to know what you can afford to spend each month, and then stick to it.

Related Financial Geek Article: 8 Really Smart Budgeting Tips You Should Know About

2. Don’t Be Afraid to Say No: If you can’t afford it or don’t think you should spend money on something, then don’t. Just because everyone else is doing it, doesn’t mean you have to.

3. Save Up for Big Purchases: Instead of putting a big purchase on a credit card and paying interest on it, save up and pay cash for it.

4. Use Cash or Debit for Everyday Expenses: This will help you stay mindful of your spending and make you more aware of where your money is going.

5. Live Below Your Means: This one is also key. Just because you can afford something, doesn’t mean you should buy it.

Another Related Financial Geek Article: 18 (Uncomplicated) Smart Money Moves For Your 20s


To sum things up, I think it is safe to say that it’s very normal to be in debt – not that that makes it right, but with the average American in 2021 being $96,371 in debt, so it’s just the reality.

So for the next time you are having a mid/quarter/half life crisis about your financial situation, take a deep breath and realize that you’re not alone.

But this also shouldn’t stop you from taking action and starting to work towards being debt free. It’s not going to happen overnight, but if you are consistent and have a plan, it’s more than achievable.

Thanks for reading folks!

Geek, out.

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