The Hidden Burden of Consumer Debt: Insights from Grant Cardone

When it comes to consumer debt, real estate mogul and motivational speaker Grant Cardone has a stark warning: it doesn’t just slow you down financially—it can actually trap you. In a recent post on social media platform X, Cardone laid out a powerful message: “Consumer debt makes slaves!” Here’s why he believes that debt management is crucial for financial wellness.

The Consequences of Debt

Cardone identified five significant downsides to being in debt:

• Inability to Invest: When you’re weighed down by debt, you often lack the capital to invest in opportunities that can build wealth.
• Struggling to Keep Up: Monthly payments can consume your budget, making it hard to maintain financial stability.
• Paying More for Everything: High interest rates mean you’re usually paying more than necessary for almost everything.
• Difficulty Building Net Worth: With funds tied up in debt repayments, accumulating assets becomes a challenge.
• Constant Stress: Financial worry takes a toll on mental well-being, always keeping you on edge.

The Rising Tide of Consumer Debt

Cardone’s post comes amid growing concern over the state of consumer debt in the U.S. Recent data from LendingTree shows that Americans are navigating an unprecedented personal loan debt of $251 billion as of late 2024, a jump of $6 billion from the previous year. Even more alarming is that the number of borrowers has increased from 23.5 million to 24.5 million in just one year.

Key Statistics to Note

• Personal Loan Landscape: While personal loans make up only 1.4% of all consumer debt, they account for 5% of non-mortgage debt.
• Average Loan Balance: The average personal loan balance is about $11,607. Many borrowers use these loans primarily to consolidate existing debt or cover everyday expenses.

The Real Cost of Borrowing

For those already strapped for cash, personal loans can feel like a lifesaver. However, the cost of borrowing can be staggering. Rates for individuals with excellent credit hover around 17.71%, while those with poor credit can face rates exceeding 200%. This makes the financial burden even heavier.

The Delinquency Dilemma

The risks associated with increased borrowing are evident in delinquency rates. As of Q4 2024, 3.57% of personal loan accounts were significantly overdue. Although that’s an improvement from the year before, it’s still notably higher compared to mortgage delinquency rates of 1.29%.

Final Thoughts: Prioritizing Financial Freedom

Cardone’s warning serves as a wake-up call for anyone grappling with consumer debt. The bottom line? Managing your debt is not just about keeping your finances in check; it’s about safeguarding your mental well-being and creating a life free from financial restraints.

If you find yourself amidst rising debt, consider seeking advice on budgeting and financial planning. Stay informed, budget wisely, and take control of your financial future—your peace of mind is worth it.

Priya Desai

Writes about personal finance, side hustles, gadgets, and tech innovation.

Bio: Priya specializes in making complex financial and tech topics easy to digest, with experience in fintech and consumer reviews.