Grant Cardone Says ‘Consumer Debt Makes Slaves’: Understanding the Financial Chains

Real estate mogul Grant Cardone has made his stance on consumer debt crystal clear. In a recent post on X, he warned that debt doesn’t just slow people down financially—it traps them. Cardone’s bold assertion, “Consumer debt makes slaves!” resonates with many as it highlights the pervasive issue of consumer debt in America today.

The Consequences of Consumer Debt

Cardone breaks down the implications of consumer debt into five main consequences:

Can’t Invest: When individuals are burdened by debt, they often lack the financial freedom to invest in opportunities that could yield long-term wealth. This lack of investment can stifle personal and financial growth.

Can’t Keep Up: The constant pressure of monthly payments can make it difficult for individuals to keep up with their financial obligations. This can lead to a cycle of borrowing to pay off existing debts, creating a vicious cycle.

Pay Extra for Everything: High-interest rates associated with consumer debt mean that borrowers often pay significantly more for goods and services. This extra cost can drain resources that could otherwise be used for savings or investments.

Can’t Build Net Worth: Accumulating debt can prevent individuals from building their net worth. Instead of accumulating assets, they find themselves in a position where they are constantly paying off liabilities.

Never Live Stress-Free: The psychological burden of debt can lead to chronic stress, affecting mental health and overall well-being. The constant worry about finances can overshadow other aspects of life.

The Growing Concern of Consumer Debt

Cardone’s post reflects a growing concern in the U.S. as consumer debt continues to climb. According to recent statistics, Americans owed a record $251 billion in personal loan debt as of the fourth quarter of 2024—a $6 billion increase from the previous year. This surge in debt is not just a number; it represents real people struggling to manage their finances.

The Statistics Behind the Debt

TransUnion data reveals that the number of Americans with personal loans has reached 24.5 million, up from 23.5 million a year earlier. While personal loan debt constitutes only 1.4% of all consumer debt, it accounts for 5% of non-mortgage debt. In comparison, credit card debt is significantly higher, sitting at $1.211 trillion, or 6.7% of total outstanding debt.

The average personal loan balance per borrower stands at $11,607, with nearly half of borrowers taking out loans to consolidate or refinance existing debt. Alarmingly, 10% of borrowers use these loans to cover everyday bills, indicating a troubling trend of living beyond one’s means.

The Cost of Borrowing

As Cardone points out, “You pay extra for everything” when you’re stuck in debt. High-interest rates exacerbate the situation. Borrowers with excellent credit scores (over 720) can expect personal loan APRs around 17.71%. However, for those with poor credit (below 560), rates can skyrocket to over 200%. This disparity highlights the financial inequities that exist within the borrowing landscape.

Despite the high costs, personal loan usage is expected to grow as individuals turn to them to manage rising credit card debt. Many borrowers are not necessarily in crisis; they might be remodeling a home or covering significant expenses. However, as Cardone emphasizes, for those already stretched thin, additional borrowing can lead to severe stress and financial strain.

The Cautionary Tale of Delinquency Rates

Delinquency rates also tell a cautionary tale. As of Q4 2024, 3.57% of personal loan accounts were 60 or more days past due. While this is an improvement from the previous year, it remains higher than rates for mortgages (1.29%) or credit cards (2.56%). This statistic underscores the ongoing challenges faced by borrowers and the potential for financial instability.

Conclusion: Breaking Free from the Chains of Debt

Grant Cardone’s assertion that “consumer debt makes slaves” serves as a powerful reminder of the financial chains that many individuals find themselves in. The consequences of consumer debt are far-reaching, affecting not only financial stability but also mental health and overall quality of life.

To break free from these chains, individuals must prioritize financial literacy, budgeting, and responsible borrowing. By understanding the true cost of debt and making informed financial decisions, it is possible to reclaim financial freedom and pave the way for a more secure future. The journey may be challenging, but the rewards of living debt-free are well worth the effort.