What is the average debt for a 40-year-old in 2026?

The average debt for a 40-year-old can vary significantly based on individual circumstances, but as of late 2025, the average non-mortgage debt for individuals in their late 30s to early 40s (ages 35-44) typically includes student loans averaging over $40,000, credit card balances around $7,000-$9,000, and auto loans often exceeding $20,000. Mortgage debt, if applicable, would be in addition to these figures.

Is it realistic to be debt-free by 40 if I have student loans?

Yes, it is realistic to be debt-free by 40 even with student loans, but it requires a focused and aggressive strategy. This typically involves creating a strict budget, increasing income through side hustles or career advancement, and potentially refinancing private student loans to a lower interest rate. Many individuals successfully achieve this by prioritizing student loan repayment.

How much should I save for retirement after becoming debt-free?

After becoming debt-free, you should aim to save aggressively for retirement, ideally contributing 15% to 20% or more of your income. Maxing out tax-advantaged accounts like your 401(k) (up to $23,000 in 2026) and Roth IRA (up to $7,000 in 2026) should be a priority, followed by investing in a taxable brokerage account.

What are the biggest challenges to becoming debt-free by 40?

The biggest challenges to becoming debt-free by 40 often include unexpected expenses, maintaining motivation over several years, lifestyle creep as income increases, and the psychological difficulty of making sacrifices. High-interest rates on existing debt and managing multiple debt types can also pose significant hurdles.

Should I pay off my mortgage before 40 if I want to be debt-free?

The "Debt-Free by 40" movement typically focuses on eliminating non-mortgage debt (student loans, credit cards, car loans). While paying off a mortgage by 40 is an excellent goal, it's often a separate and more ambitious undertaking. Many financial experts recommend prioritizing high-interest consumer debt first, then investing, and only then aggressively paying down a low-interest mortgage.

How can I increase my income to pay off debt faster?

You can increase your income to pay off debt faster by negotiating a raise at your current job, taking on a side hustle (e.g., freelancing, gig work, selling items online), working overtime, or exploring opportunities for career advancement. Even small, consistent increases in income can significantly accelerate your debt repayment timeline.

What's the difference between the debt snowball and debt avalanche methods?

The debt snowball method prioritizes paying off debts with the smallest balances first to build psychological momentum, while the debt avalanche method prioritizes paying off debts with the highest interest rates first to save the most money on interest over time. Both involve making minimum payments on all other debts while aggressively attacking the prioritized one.

Debt-Free by 40: A Mid-Career Financial Reset | One Percent…