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Utahns are facing mounting debt. If that’s you, here’s what experts say you should do.

On the plus side, Utahns have the lowest delinquency rates in the U.S. for car loans, mortgages, credit card and student loan debt.

(Chris Samuels | The Salt Lake Tribune) A sign advertising mortgage rates in Salt Lake City on Friday, Oct. 13, 2023. Mortgages make up the largest portion of Utah's average household debt.

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This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

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Stopping credit card usage except for big things. Consolidating debt. Working two jobs.

Utahns have different ways of managing their debt as Beehive State residents steadily owe more money to banks and other creditors.

The average Utah household has nearly $80,000 in debt.

Some — including two Utahns who talked to The Salt Lake Tribune about their debt — have more or much more, largely because of mortgages.

Growing debt is a combination of higher costs and human behavior, said Jessie Fan, a professor at the University of Utah.

Fan, who teaches in the Department of Family and Consumer Studies and researches housing saving and borrowing and financial management, said managing increasing debt is all about tradeoffs.

“You have to cut back somewhere,” she said.

Keeping a budget also is key, said Stephanie Sherrell, the Salt Lake region president for Zions Bank.

Fan and Sherrell also offered other advice for managing debt, such as knowing interest rates and communicating with creditors.

Utah’s average household debt is high and growing

Utah has one of the highest average household debts in the country — and that number has been growing.

Average personal debt in Utah grew 119% between the end of 2003 and the end of 2022, according to data from the Federal Reserve.

It also grew 54.8% over a decade — between 2012 and 2022 — and increased 12.5% since 2019 and 10.2% since 2021.

Inflation has contributed to that, Fan said, and it takes people a bit to adjust their spending habits after prices go up.

When things get more expensive, people usually have the same spending patterns before they change, she said, and some people never adjust.

“It’s easy to spend more money when you have more money. It’s hard to cut back,” she said. “People get used to a certain lifestyle.”

Paychecks also just don’t go as far as they used to, said 36-year-old Danny Froerer.

He and his wife have discussed the costs of higher education, homes and more with their parents, but it seems like a lot of the older generation doesn’t quite get it.

“We paid more for our van than my parents paid for their first house,” Froerer said.

Their family is doing well, he said, and not scrapping and scrimping every month. But a fun vacation means saving for two years for Disneyland, not a lavish trip, he said.

Mortgages are more than 75% of debt

The most overall growth has been in average student loan debt, which increased 441% from 2003 to 2022 despite a 3% decrease between the end of 2021 and 2022.

But student loans are a small portion of personal debt — less than 6% for an average household.

The story continues below the graph.

Mortgages make up the largest chunk at 77.1%.

Froerer’s debt is higher than average and the largest part of it is a mortgage. He and his wife bought their home near Logan about two years ago and have about $450,000 left to pay on their mortgage.

Though they didn’t used to have debt, that changed after they finished school.

Froerer took out his first student loan when he went to get his master’s degree. That was also around the time they started a family.

Expensive moves to Colorado and then back to Utah led to more credit card debt than they anticipated, he said, and they finally just got a consolidation loan because they were paying so much in interest.

That’s helped get things under control because it’s one payment with a set interest rate, he said. They also have stopped using their credit cards unless it’s for big purchases, Froerer said.

Froerer’s wife also is going back to school to get an advanced degree and go back to work, he said. If she doesn’t do that, he said, they won’t be able to save for their four kids’ futures.

A mortgage also is the largest part of Abby Laskey’s debt. They bought a home with their partner last year around Millcreek and still owe about $375,000 on the mortgage.

Laskey, 23, said they and their partner “don’t spend very much money in general.”

The couple has one car — a “total beater” that Laskey got a long time ago.

“We both treat credit cards basically as debit cards,” they said, explaining both of them work to pay off the balance every month to avoid interest.

(Rick Egan | The Salt Lake Tribune) Abby Laskey holds Onyx, at their home in Millcreek, on Wednesday, Oct. 11, 2023. They drive a "total beater" car to help manage debt and are paying down a $375,000 home mortgage.

Laskey’s parents are wealthy, which they said is the only reason buying a home was possible. They also realize they’re lucky to have an asset behind their debt.

Education around finances is lacking

Mortgage debt is followed by car loans, student loans, and credit card debt.

Though Utahns’ consumer debt is growing, they have low delinquency rates — the lowest of any state for car loans and mortgages, the second lowest for credit cart debt and the third lowest for student loans.

Overall, debt levels aren’t too bad, Fan said. They aren’t at a historical high — that was around the Great Recession in 2008 — so debt generally is still manageable even though it’s going up, she said.

Some debt, like a mortgage, is long-term and a necessity, Fan said.

But there are other places people can cut back or look to renegotiate their debt, she said.

Right now isn’t a great time to refinance a traditional home or car loan, she said, but there are other options like a home equity loan or a personal loan to consolidate credit card debt.

Lowering an interest rate from 18% or higher to 8% or 10% can save a lot, Fan said.

She added many people don’t know about compound interest. That’s when you pay interest on the principal and any accrued interest.

That interest adds up, making it hard to pay off credit card debt “once you get into it and are always trying to catch up,” Sherrell said.

Understanding how debt works is important, Fan said.

But there isn’t a lot of education around debt and finances, Sherrell said. Banks and credit unions try to help, she said, but parents should start at home early teaching their kids about financial responsibility.

She said a lot of people — including her — get out on their own and don’t know where to start.

Sherrell recommended setting a budget and using cash for discretionary spending — especially on luxury items.

Don’t ignore debt, reach out to creditors

Once people are in debt, the worst thing they can do is ignore it, Sherrell said. It’s natural to get scared, she said, but it’s important to act quickly.

People should talk to their creditors, she said. Banks don’t want people to be in a situation where they’re choosing between eating and paying bills, she added.

“Financial institutions want to be repaid but also want to be fair,” she said.

Fan agreed people should contact creditors. They may be able to renegotiate the terms to get a lower rate or payment, she said.

There are two approaches for tackling debt, Sherrell said: Attacking the smallest first or the highest interest rate first. She prefers the latter but said some people need the motivation from paying off a smaller amount to keep them going.

Fan added people who already have a lot of debt should “really work on changing (their) spending habits to not create new debt.”

She’s seen people go on expensive vacations while in debt and recommends doing lower-budget activities like a hike or a weekend trip to southern Utah.

Sherrell agreed that people need to adjust their lifestyles by avoiding impulse purchases, saving for big items and delaying gratification if they don’t really need an expensive item.

There’s good debt and bad debt, Sherrell said.

She pointed to mortgages and student loans as good debt and financing luxury items as bad debt.

“You need a reliable car,” she said. “You don’t need a $100,000 car that’s going to be nice for a couple of months.”

(Chris Samuels | The Salt Lake Tribune) Cars for sale are found on a lot in Murray, Friday, Oct. 13, 2023.

Debt isn’t completely avoidable, she added, but people can minimize the negative impact and should stick to their budget and reevaluate their spending as needed.

Tracking spending can help, whether it’s writing it down on paper or tracking it on a phone app, she said.

“That $5 at Beans and Brew every morning adds up,” she said, and people need to pay attention to their spending.

Saving also is important, Sherrell said. Financial experts recommend at least $1,000 and then three to six months of expenses in savings, she said.

Need help with debt?

Utah’s Division of Consumer Protection has information about credit reports and repair, debt collection and more at dcp.utah.gov/education.

The United States Department of Justice has information on credit counseling agencies that work with Utahns at justice.gov/ust/credit-counseling-by-state/Utah.

Editor’s note • This story is available to Salt Lake Tribune subscribers only. Thank you for supporting local journalism.

Megan Banta is The Salt Lake Tribune’s data enterprise reporter, a philanthropically supported position. The Tribune retains control over all editorial decisions.