Household debt can take many forms. But, whether it’s student debt, credit cards or a mortgage, most people are guilty of spending more than they earn in some way, shape or form.
And according to Compare The Market, many people are too busy worrying about repaying their debts to realise why they have their heads underwater in the first place.
“What you may not realise is that your household debt could be determined by more than simply your income and expenditure,” Compare the Market said in a new report.
“Where you live, and how much it costs to live there, can also play some role in dictating your spending.”
Collecting data from the OECD, Compare the Market found an Aussie household with a combined net disposable income of $100,000, had an average debt of around $210,070.
That places Australia fifth on the list of most indebted households around the world.
Take a look at the table below for the top 35 most indebted households.
Most households spend significantly more than they earn
Of the 35 countries analysed, 19 had debt totalling more than net disposable income, Compare the Market said.
“What’s interesting to note is that these countries are all considered to have advanced economies,” it said.
“Historically, rising household debt in advanced economies has been relative to rising household income, but in recent years, property prices have outpaced incomes.”
Considering mortgages make up a high portion of household debt, it is unsurprising to see it climbing.
Where you live impacts your debt
Unsurprisingly, the countries at the top of the list are also the most expensive countries to visit and live in.
“Given that Denmark is ranked the country with the highest household debt, it comes as no surprise that Denmark’s capital, Copenhagen, was listed as the 25th most expensive city to live in, in 2020,” Compare the Market said.
“Switzerland’s capital, Zurich, ranks as the fourth-most expensive city to live in against 209 others, and it’s also fourth ranking for highest household debt.”
The report said cost of living takes into account factors such as rent/mortgage, other housing costs, transport, groceries and more.