Money

The 5 best—and 5 worst—states for paying off debt

Detroit, Michigan.
Peeter Viisimaa | Getty Images
Detroit, Michigan.

Thanks to exorbitant and often unavoidable expenses like housing, credit card bills and student loans, Americans are in the red. In certain states, however, residents are better — and worse — at managing their individual share of that debt, according to a report from financial website Credible.

Researchers gathered data from more than 540,000 borrowers from all 50 U.S. states and Washington, D.C., "to calculate average monthly credit card, student loan and housing payments as a percentage of monthly income." On average, the report explains, Americans pay about $207 on their credit card debt, $370 on their student loans and $906 on their rent or mortgage each month.

Based on their data, researchers created a debt-to-income ratio and an overall score of 0-100 for each state: "0 being where debt payments are the highest percentage of monthly income, and 100 being where monthly payments are the lowest percentage of monthly income."

Here are the top five states where residents are best at paying their personal monthly debt:

Michigan

Average credit card payment: $198
Average student loan payment: $354
Average housing payment: $725
Average annual income: $60,642
Monthly debt-to-income ratio: 25.27 percent
Overall score: 100

Arkansas

Average credit card payment: $174
Average student loan payment: $319
Average housing payment: $666
Average annual income: $54,284
Monthly debt-to-income ratio: 25.62 percent
Overall score: 96.77

Delaware

Average credit card payment: $213
Average student loan payment: $364
Average housing payment: $853
Average annual income: $64,174
Monthly debt-to-income ratio: 26.74 percent
Overall score: 86.49

Kentucky

Average credit card payment: $184
Average student loan payment: $323
Average housing payment: $696
Average annual income: $53,821
Monthly debt-to-income ratio: 26.82 percent
Overall score: 85.74

Missouri

Average credit card payment: $203
Average student loan payment: $340
Average housing payment: $738
Average annual income: $56,234
Monthly debt-to-income ratio: 27.34 percent
Overall score: 81.02

Here are the five states where residents are worst at paying their personal monthly debt.

Montana

Average credit card payment: $188
Average student loan payment: $354
Average housing payment: $863
Average annual income: $52,587
Monthly debt-to-income ratio: 32.06 percent
Overall score: 37.61

Oregon

Average credit card payment: $195
Average student loan payment: $393
Average housing payment: $973
Average annual income: $58,147
Monthly debt-to-income ratio: 32.21 percent
Overall score: 36.19

Colorado

Average credit card payment: $215
Average student loan payment: $378
Average housing payment: $1,076
Average annual income: $62,161
Monthly debt-to-income ratio: 32.22 percent
Overall score: 36.15

Washington

Average credit card payment: $221
Average student loan payment: $385
Average housing payment: $1,096
Average annual income: $63,028
Monthly debt-to-income ratio: 32.4 percent
Overall score: 34.45

Hawaii

Average credit card payment: $238
Average student loan payment: $385
Average housing payment: $1,091
Average annual income: $56,889
Monthly debt-to-income ratio: 36.15 percent
Overall score: 0

Hawaii ranks worst on this list in terms of managing debt. That's partly because residents must contend with some of the highest housing costs and overall costs of living in the country.

"Residents of Hawaii pay the second highest amount on monthly credit card bills and fourth highest amount on housing costs," says Credible, "and their average income isn't high enough to offset those costs."

In a state like Michigan, on the other hand, "low average monthly housing payments relative to average income (combined with lower than average credit card and student loan payments) push the state up the rankings."

While the ranking highlights how well residents in each state are able to manage debt, keep in mind that the numbers are averages and "your debt is a personal matter," says Credible. "No matter how your state ranks, find a debt payoff plan that fits your budget and lifestyle, as well as minimizes what you'll owe in interest as you pay off each loan."

If you're looking to stash away more money or pay off a debt, keep in mind that it may not happen overnight. Start by re-evaluating how you spend or putting away small amounts of money with each paycheck. If you set a realistic goal and are proactive about reaching it, you're more likely to succeed.

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