There are several types of debt and borrowing. The major differences are when you borrow to build something of value, like an amortizing mortgage that allows you to build equity over time buying or building a home, versus borrowing on a credit card to service bills you are unable or unwilling to pay down with cash.

We often hear of the data speaking to credit card debt. That is just one form of debt and sometimes this datapoint is not that useful as many people pay down their credit cards every month, even whilst charging lots to them. Overdue credit card debt is a better indicator. Then there is the kind of debt that does not amortize in any way. Much of that is not great but then there are some who take on debt and only pay the interest on that debt for very specific (and smart) reasons.

Americans currently hold approximately $13.19 trillion in outstanding residential mortgage debt. Across all property types (including commercial and multi-family real estate), total outstanding mortgage debt in the U.S. exceeds $21 trillion. At least $100 billion of US credit card debt is currently in serious delinquency (90 or more days past due), part of an overall record-high $1.25 trillion in outstanding credit card balances held by Americans. But this number also reflects prices that are up 23-25% due to inflation.

A 30-year fixed-rate amortizing mortgage allows you to borrow and build equity over time by paying down the debt incrementally but an interest-only mortgage does not do so in the same way. However, if you are borrowing simply to pay the interest and the real estate increases in value, you are building equity but at a lower monthly cost as you are not paying down principal. Many do not plan to live in a home for 30 years either as most stay for about 11-13 years.