Yahoo Finance If You Live in Colorado, Why Do You Have More Debt Than People in California and Hawaii?
Who would have thought Coloradans would have higher average debts than Californians and Hawaiians?
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A consumer debt survey by Experian found that Colorado residents have the highest average debt rates in the country. These rates also rose faster year-over-year than other high-debt states like California, Washington and Hawaii.
Sure, housing is expensive in Colorado, with the average home selling for $553,692. But average homes cost more in California ($786,180) and Hawaii ($861,040), so that can’t explain the difference.
So what gives?
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High Student Loan Debt
Colten Claus, broker at 8z Real Estate in Colorado Springs, pointed to student loans.
“There are a lot of college and post-college age residents here, and with the cost of college this really adds to our overall debt burden,” Claus said.
Nor is he alone in that conclusion.
“Colorado’s relatively young and highly educated population adds to high student loan averages at about $36,822 per borrower,” Chase Hughes, founder of ProAI, explained. “These things combined with higher costs of living such as rents and transport systems make Coloradans heavily burdened financially.”
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High Auto Debt
Claus elaborated, outlining that unlike some more walkable and bikeable regions in the country, Coloradans have to drive, well… everywhere.
“Colorado has a high rate of car ownership because of its geography and it is a necessity in many areas. With the desire for more luxury cars and where interest rates are this all adds to a higher debt burden,” Claus explained.
After all, outdoor recreation remains one of the primary draws for transplants moving to Colorado. You can’t take the subway to a ski resort or hiking trails.
Expensive Recreation
Hiking may be free (after paying for gas and a car to get to one’s destination), but much of the state’s signature recreational destinations are costly.
Brett Johnson, a real estate agent and investor with Colorado-based New Era Home Buyers, has seen it firsthand.
“Colorado’s lifestyle, which often prioritizes recreation, can lead to increased expenditures. Many individuals heavily invest in gear and activities related to skiing, hiking, and other outdoor endeavors, resulting in the accumulation of credit card debt,” Johnson said.
That lifestyle-oriented culture can impact spending, too. “Coloradans’ love for good vibes and a ‘free-spirited’ lifestyle can sometimes lead to a reckless attitude towards debt,” said Nick Robinson, creator of used car marketplace Pick and Pull Sell Car.
“You all gotta remember, it’s easy to get caught up in the thrill of buying that new camper, taking a weekend trip to the mountains, or splurging on craft beer and concerts. But before you know it, you’re drowning in a sea of debt — and wondering how you got there.”
Healthcare Costs
The cost of medical care in Colorado isn’t cheap, either.
“Healthcare costs in Colorado are also very high,” explained Olivia Smith, financial manager at .VOTE. “Despite the expansion of health insurance access like Medicaid expansion, many residents still incur substantial hospital charges, particularly if they have underinsurance or high out-of-pocket payments.”
Slower Economic Growth than Spending Growth
Sure, companies and wages have expanded in Colorado — but not necessarily as fast as consumption and housing costs.
As Johnson pointed out: “A significant factor behind the high debt levels among Colorado residents is the state’s rising cost of living, which has escalated notably over the past 10 years due to a surge in population — particularly in cities like Denver and Boulder. This influx has significantly driven up housing prices, prompting locals to take on mortgage debts to secure homes in these fiercely competitive markets.”
Andrew Fortune, founder and real estate agent at GreatColoradoHomes.com, has seen it too.
“Teenagers used to be able to get jobs and move out of their parent’s homes. Now, it’s hard to find any starter job that can keep up with the skyrocketing rent prices, even in the cheap areas. As the wage gap and cost of living expand further apart, people will be forced to lean on debt to help them get through,” Fortune said.
In fact, Fortune sees that gap growing between economic growth and cost-of-living growth.
“Colorado’s debt crisis is directly tied to inflation increasing faster than business expansion throughout the state. It’s not a geographically friendly state for business, as it has no coastline, has harsh winters, has water scarcity issues, and is in the center of the U.S. It’s not positioned to handle the high costs of living that Hawaii, New York, and California have sustained” Fortune explained.
In short: Life is expensive in Colorado because so many people want to live there — not necessarily because local jobs pay so well.
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