From Stress to Strategy: How Americans Are Tackling Debt in 2025

For some Americans, debt is more than a number — it’s a source of real emotional strain. But even in the face of financial stress, some homeowners are discovering effective strategies to take control of their finances. 

A recent AmeriSave survey found that more than half of America’s homeowners experience anxiety from simply following current financial news. This reflects how today’s economy and rising costs have made managing debt feel heavier than ever. Nearly one-third spend $1,000-plus per month on credit card payments alone, adding significant weight to their financial obligations. 

These findings from our survey of 1,250 homeowners across every U.S. state highlight how the average American debt burden — spread across mortgages, car loans, student loans, medical expenses, and credit card balances — is stretching household budgets thin. 

But there’s reason for hope. While some homeowners feel stuck, others successfully shift from stress to strategy. They’re employing smarter, often overlooked approaches to reduce their debt, including one powerful tool that remains largely untapped: home equity. 

In this report, we’ll explore how Americans are tackling debt in 2025 — what’s working, what’s not, and why some homeowners successfully manage their debt while others might struggle. If you’re seeking solutions or just want to see how others in a similar situation handle debt, this data-driven guide can help. 

Key takeaways

• More than 1 in 4 (25.4%) homeowners feel stressed about debt but are managing it, while 9.7% feel completely overwhelmed. 

• Nearly one-third of respondents (30.8%) cited credit card debt as their biggest source of financial stress, with 31% spending more than $1,000 each month on credit payments. 

• Just over half (52.9%) of those surveyed prioritize paying off debt with the highest interest rates, suggesting high financial literacy around debt reduction. 

• Only 4.2% of respondents have used home equity to consolidate debt, though nearly 1 in 4 (23.7%) agreed that home equity can be a valuable tool for this purpose. 

The debt landscape in the U.S.

Many homeowners are successfully paying down their balances, sticking to a plan that works. But for others, mounting obligations — especially when unexpected expenses like medical bills add to the load — make it hard to stay ahead. In fact, 13.8% of homeowners manage medical debt on top of their other financial responsibilities. 

The reality is this: Debt doesn’t just impact our bank accounts; it shapes emotions, stress levels, and financial confidence. 

Take credit card debt, for example. While more than 40% of homeowners carry relatively low balances (less than $1,000), our survey found that 1 in 10 owes more than $15,000 — an amount that can feel overwhelming.  

But, while the average credit card debt in the U.S. is on the rise, homeowners are finding ways to take control and break the cycle of high-interest payments. Our survey found that many homeowners unknowingly have a potential solution within their reach — one that could put them on a path to vastly improved debt management. 

Home equity, the value built up in a home, remains a powerful tool for consolidating high-interest debt and regaining financial control. Yet, only 4.2% of homeowners reported using a home equity line of credit (HELOC) to improve their financial situation. This gap between available solutions and actual use becomes even more interesting when we look at how today’s economy is changing the way Americans deal with debt. 

How economic pressures impact our debt

Managing debt is about making payments and adapting to opportunity. High interest rates and rising inflation and housing costs have reshaped how Americans approach debt, making it more difficult to stick with traditional repayment methods. In fact, more than half of homeowners (50.4%) report feeling anxious or concerned about their finances when following economic news.  

While economic pressure is real, it’s also driving a shift toward more strategic financial decision-making. Our survey revealed an encouraging trend: Nearly one-third (30.2%) of homeowners are taking control by aggressively paying down their debt to counter rising interest rates. Even more promising, some are discovering smarter financial strategies, such as strict budgeting, exploring low-interest personal loans, or leveraging their home equity — which can transform debt management and create much-needed financial flexibility. 

The economic context is important to understand: 

• More than half (56.9%) of homeowners said rising costs and inflation have influenced their debt habits more than any other factor. 

• With everyday expenses stretching budgets thin, many feel trapped, forcing nearly 7.8% to rely more on credit to keep up with rising costs. 

• One in 10 respondents (9.4%) have essentially given up, admitting they aren’t taking any steps to reduce their debt because they feel overwhelmed or unsure where to start. 

Today’s economy is pushing homeowners toward financial strategies they might never have considered otherwise. Many are finding the solutions to their debt challenges may already be within reach — starting with the valuable resources they already possess. 

The emotional toll of our debt

Debt isn’t just a financial obligation. It’s something many people feel deeply, influencing mental and emotional well-being. According to our survey, about one-fourth (25.4%) of homeowners feel stressed about debt, with 9.7% saying they’re completely overwhelmed by what they owe. 

This impact is particularly pronounced among millennials and Gen Xers, who are twice as likely as other generations (11.9% vs. 5.7%) to perceive their debt as unmanageable and worry about making payments. Yet, despite these struggles, many have successfully navigated their way to financial relief through strategic planning and smarter debt management. 

How debt stress shows up

For some, debt stress is an occasional concern. Others feel its weight more frequently. Our survey found that more than 1 in 5 respondents (21.5%) feel overwhelmed by financial obligations a few times a month, and 13.1% experience this feeling at least once a week.  

Younger generations reported the highest frequencies of anxiety.  

Credit card debt stress stands out as a top concern among the various types of debt, with 30.8% of respondents citing it as their most stressful financial obligation.  

Mortgages, often a person’s largest monthly expense, were identified by 53.1% of respondents as a key source of financial strain — likely due to higher payments and the long-term commitment of homeownership. 

Outlooks differ based on where we live

Where we live influences more than just our lifestyle. Housing markets, cost of living, and regional financial norms shape how homeowners manage debt and view their financial future. 

In some areas, high home values provide greater equity-building potential, offering homeowners more flexibility in managing debt. Elsewhere, lower costs of living can make it easier to handle everyday expenses.  

It’s not surprising that our survey revealed financial stress varies across regions:  

• Homeowners in left-leaning “blue” states were 1.7 times more likely to say they’re “stressed but managing” their debt. 

• Those in more right-leaning conservative states — “red” states — were twice as likely to feel overwhelmed by debt a few times a month.  

Timing also plays a role in how people experience financial pressure: 

• People in blue states are twice as likely to feel overwhelmed by debt during the holidays. 

• People in red states are 1.7 times more likely to feel overwhelmed during emergencies. 

These variances might stem from differences in cost of living, job market stability, or cultural attitudes toward debt and financial planning.  

Geography may also play a role. Many blue states are concentrated in coastal and urban regions, where housing costs and living expenses tend to be higher, while red states often include more rural and suburban areas with lower housing and living costs. 

The whys behind them aside, these regional differences highlight the importance of tailored debt management solutions. If you live in a pricier neighborhood, your home has likely gained more value over time, giving you more equity to work with. This could make tapping into that equity a smart way to handle your other debts. On the other hand, if you’re in a more affordable area where home values don’t increase as rapidly, your equity might be more limited, and you might find better results with other approaches — like focusing on high-interest debts first or reaching out to creditors about better terms. 

Turning debt stress into financial confidence

Debt can feel overwhelming, but it doesn’t have to be a permanent source of stress. And addressing it can do wonders for your well-being.  

Financial psychologists emphasize that reducing debt can lead to better psychological functioning and decision-making. In contrast, a study published in AIMS Public Health found that people with debt are three times more likely to struggle with worry-induced depression, anxiety, and stress. 

Financial counselors often see a transformation in clients who take proactive steps toward debt management. The payoffs include reduced stress, better sleep, and stronger relationships. With the right approach, what once felt unmanageable can become a steppingstone toward long-term financial health. 

Debt may be a part of life, but it doesn’t have to define your mental health. Some homeowners we surveyed aren’t backing down from the debt challenge — 45.5% of respondents aim to be completely debt-free, with another 38.9% focusing on eliminating high-interest debt. 

With strategic solutions, thoughtful planning, and the right tools, homeowners are learning how to deal with debt stress and achieve financial confidence. 

How homeowners are tackling debt

Homeowners are using a variety of strategies as they attempt to reduce their debt:  

• More than half (52.9%) prioritize paying off balances with the highest interest rates, following the well-known “avalanche” or “debt stacking” method.  

• About 30% prefer focusing on eliminating debt by paying off the smallest balances first, following the “snowball” method to build momentum. 

• Nearly 17% focus on reducing the debt with the highest monthly payment to free up cash flow more quickly. 

Each of these strategies can be effective, but many homeowners still face obstacles, like rising interest rates or unexpected expenses that disrupt progress. 

Bridging the knowledge gap

There’s another factor at play: an information gap. Our survey found that homeowners’ lack of understanding about the best debt management strategies ranked as a top-three concern. This uncertainty can make it harder to take action, even when effective solutions are available. 

For example, younger generations are increasingly turning to social media influencers for financial guidance. Our survey found that Gen Z and millennials are four times more likely than other generations (16.4% vs. 3.7%) to seek debt management advice from influencers. While these platforms can offer genuinely useful tips, they sometimes lack comprehensive, personalized guidance. 

Take home equity, for example. Fewer than 4.2% of homeowners have used it to consolidate debt into lower payments with lower interest rates. Others might explore low-interest personal loans, structured payoff plans, or credit counseling. But without a deeper understanding of the pros and cons, the risk of choosing a less effective or more costly approach is high. 

Missed opportunities: 1 in 3 homeowners don’t understand their equity

Home equity can be one of the most valuable financial tools available to homeowners, yet many are unsure how to use it effectively.  

Our survey revealed two key findings that support this point: 

• One-third (33.4%) of respondents say they do not fully understand how to use their home’s equity. 

• Slightly fewer respondents (29.7%) say nothing would motivate them to use their home’s equity for debt consolidation. 

This hesitation suggests that misconceptions, fear of borrowing, or a lack of financial guidance may be holding homeowners back from an opportunity to simplify their finances and reduce high-interest debt (and thus their overall stress). 

Using home equity the right way

This isn’t to say home equity is a magic fix. Like any financial tool, you must use it strategically. For example, one survey respondent said that using a HELOC helped them to pay off higher-interest credit card debt, lowering their monthly payments and improving their financial stability. 

“My HELOC has helped me save money in the long run and will pay for itself over time,” they said. 

Not everyone experienced the same success, however. One cautionary tale from our survey highlights what can happen when home equity isn’t paired with a solid, long-term financial plan.  

“We paid off all our credit cards with a HELOC, then put money back on the credit cards and now have both the credit cards and the HELOC to pay off,” this respondent wrote. 

For homeowners considering how to deal with debt stress, tapping into home equity can be a smart move — but only with discipline and a clear plan. Simply consolidating debt into a HELOC or a home equity loan (HELOAN) isn’t enough. It’s most effective alongside changes in spending habits, budgeting, and a commitment to long-term financial health. 

Taking control of your debt

Debt can feel like an uphill battle. But as our survey shows, homeowners are motivated to take charge of their financial futures. Alongside challenges like credit card debt stress, mortgage payments, and financial uncertainty, there are real opportunities for progress. 

As such, home equity remains an underutilized tool for simplifying debt repayment and creating financial flexibility. But success isn’t just having options: It’s choosing the right strategy and using it wisely. Whether it’s targeting your high-interest debt first, consolidating multiple balances, or improving financial habits, the most effective approach aligns with your long-term goals.  

For homeowners, exploring home equity tools like a HELOC or home equity loan could be a game-changer, but only when paired with smart financial planning. 

If you’re curious about how home equity could fit into your debt reduction strategy, an AmeriSave Mortgage Expert can help. A quick, no-obligation conversation can provide clarity and insight into your options — bringing you one step closer to financial confidence and peace of mind. Get started online today. 

Methodology

We surveyed homeowners from Feb. 10 to Feb. 17, 2025, collecting an equal number of responses in all 50 states and the District of Columbia, totaling 1,250 responses. To be considered for the survey, respondents must have identified themselves as mortgage borrowers with at least one other type of debt. 

Red and blue state designations were determined by 2024 presidential election results reported by AP News.  

FAQs

What is the average credit card debt in the U.S.?

As of the third quarter of 2024, the average credit card balance in America was $6,380. In the U.S., the total credit card debt at the end of 2024 was $1.211 trillion. (Source) 

What should I do if I’m overwhelmed by debt?

If you’re overwhelmed by debt, assess your financial situation to determine how to deal with debt stress. List your debts, interest rates, and payments. Focus on high-interest balances first and explore consolidation options, such as home equity solutions, to simplify payments. Build a realistic budget that prioritizes essentials and trims unnecessary expenses. If this feels overwhelming, don’t hesitate to seek guidance from financial experts, credit counselors, or debt management programs. The most important thing is to keep moving forward. Taking small, incremental steps can help you regain control and reduce financial stress over time.