George Kamel Says Your Debt Is a ‘Totally Useless Metric of Financial Success’

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Financial expert George Kamel recently released a video discussing the average American’s total debt. Spoiler alert: It’s a lot.

But the purpose of Kamel’s video isn’t just to show you how your debt stacks up against that of your fellow Americans. His main point is that comparing debt as a measure of financial success is totally useless. Instead, you should look at your net worth.

This article will cover some of the key debt statistics that Kamel discussed, plus some tips on calculating and building your personal net worth.

Also, read about some myths about debt that nobody should believe.

The State of American Debt

According to Kamel, the average American’s debt in 2024 is $105,215. Here’s how that breaks down:

• Average credit card debt: $6,501
• Average student loan debt: $38,787
• Average auto loan balance: $23,792
• Average mortgage balance: $244,498 

What does that look like in practice? According to one study, the average American spends $1,583 per month on loan repayments, a $300-per-month increase from 2020.

Those repayments can hold you back from your financial goals. Take student loan debt, for instance: A recent Ramsey survey found that 44% of borrowers delay investing in their retirement to pay off their student loans, while 33% put off buying homes.

‘Good’ vs. ‘Bad’ Debt

Is there such a thing as good or bad debt? Many Americans consider student loans and home loans to be “good,” or constructive, debt because these loans may eventually lead to a higher payout. A student loan can help you access higher-paying jobs in the future, while homes typically appreciate in value.

However, it’s important to understand that as long as you’re paying for your mortgage or student loan, that investment is detracting from your net worth. That’s why thinking in terms of good vs. bad debt can be dangerous. 

Instead of qualifying your debt, it can be more helpful to address the total sum. Whatever amount you owe — for whatever purpose — needs to eventually be paid in full to grow your net worth, so don’t borrow more than you can handle.

Debt vs. Net Worth

As Kamel put it, “How much debt you owe compared to other people is a totally worthless metric of financial success.” In other words, it doesn’t matter how much you owe compared to the average American — what matters is how much you owe compared to how much you have and how much you earn. 

If you owe less than $105,000, you might feel pretty good about yourself. But that number doesn’t account for your income or savings. An individual with $200,000 in debt and $400,000 worth of investments has a higher net worth than someone with $5,000 in debt and $3,000 in the bank. 

That’s why, if you want to measure your financial success with a number, you should calculate your net worth instead of just worrying about your debt. 

Calculating Your Net Worth

There’s a simple formula to calculate your net worth: assets minus liabilities equal net worth. Your assets include anything you own that has a positive financial value. Your liabilities are things you need to pay off, including loans, mortgages and the like. 

To find out your total net worth, add up the full cost of your liabilities and subtract that value from your total assets. Remember that certain items can be both assets and liabilities. Your car, for example, has financial value, but that depreciating value may be offset by an auto loan balance. On the flip side, you might have a mortgage, but the value of your house eventually should exceed the mortgage.

If your result is a positive number (i.e., you have more assets than liabilities), you’re on the right track. Most Americans have negative net worth due to high amounts of debt. Kamel said there are two key steps toward building wealth: turning that value positive, and then growing it.

Building Your Net Worth

Whether you’re focused on turning a negative net worth positive or growing that positive value, there are a few steps you can take. Building your net worth takes time and hard work. However, it’s worth it — this is the best way to set yourself up for long-term financial success. 

Here are a few steps to consider:

• Pay off any high-interest debt first
• Save up for an emergency fund to avoid a financial setback
• Consolidate your loans to get out of debt faster
• Avoid taking on new debt
• Cut your costs wherever possible
• Invest in a retirement account
• Diversify your income.

Remember, it’s not just about how much debt you currently have. What matters is that you’re taking positive steps to build your net worth in the long run. 

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