NEW YORK (MainStreet) — While everyone knows Americans aren’t shy when it comes debt, the common way of thinking is it’s not a smart idea to fall into the red.

However, with college tuition increasing rapidly, and the housing industry experiencing a resurgence, people may be looking at debt differently, at least according to new research by the Pew Charitable Trust.

According to Pew’s new study, 80% of Americans hold at least some form of debt — with nearly 70% saying debt is a necessity in their lives, even though they would prefer not to have it. A similar percentage also believe loans and credit cards have expanded their opportunities.

“The typical American family’s debt levels are high, and that can cause financial problems—but that is not the full story,” said Diana Elliott, research manager for Pew’s financial security and mobility project. “Our findings show that debt can also be an important component of overall financial health, provided it is sustainable and is used to support investments in families’ futures.”

Craig Zimmerman, a lawyer in Irvine, Calif. specializing in debt, said people’s perception of debt has changed just from the early 1990s.

“Most people didn’t have as much debt as I see today,” Zimmerman said. “You also see much more kinds of debt incurred from people.”

He said while two decades ago most people got in trouble with mortgages and some credit card debt, today it is not only common to see people with those two debts and also with substantial

student loan

 debt, payday loans, 401(k) loans and more.

“Accumulating debt is very acceptable today and encouraged at times,” Zimmerman said.

The new numbers show the most common debt among Americans is mortgages, and although younger Americans are the most likely to have debt — 89% of Gen X-ers and 86% of Millennials carry some debt — older generations are increasingly carrying debt into retirement. The survey show 80% of Baby Boomers hold some form of debt.

“Debt is a necessary component of a person’s financial affairs because it allows them to leverage their assets,” said Shawn Adamo, a financial planner for Financial Focus Group in New Jersey. “Obviously a mortgage is the best example.”

Adamo said even credit card debt — while normally a plague — can present benefits.

“In the event that it is merely a timing issue, the utilization of credit is great,” he said. “In some cases without the availability of credit the long-term opportunities might never materialize.”

The danger in credit card debt, and other types of debt, lies with faulty logic, Adamo added -- the mindset "where someone convinces themselves of things almost all other see differently.”

“Then credit is a curse, often plunging the already desperate even deeper into bad situations,” he said.

For those thinking of falling into debt, there are two important things to remember — budgeting and understanding how long to takes to pay debt off, Zimmerman said.

“Most clients don’t understand that, particularly the last point,” said Zimmerman, adding since many people don’t have any sort of savings, retirement plans or assets, adding debt brings the possibility of bankruptcy.

Nevertheless, there can be a place for debt and the numbers, in fact, show it is wealthier Americans who have more debt — and also healthier balance sheets overall. The study concludes this may be at least partly because they have greater access to sustainable forms of credit like as “prime” home mortgage loans that can help build wealth.

Adamo said while the wealthier may have higher debt overall, they also have less debt as a percentage of assets and most importantly the debt is not perpetual.


“These wealthier individuals have learned the value of leveraging credit,” Adamo said. “They realize the debt eventually has to be repaid and the wealthy generally have a plan to eventually reduce the debt in terms of dollars or as a percentage of their net worth.”