New Study Finds the 20 Best and Worst Cities to Pay Off Debt

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A new study from Student Loan Hero identifies the 20 best and 20 worst cities for residents to get out of debt.

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“Living in one of the top 20 best cities gives you a disposable income of $18,000 left over, on average, after taxes and basic living expenses are paid. That’s a huge boon to residents of these cities who want to get out of debt faster."

The key to paying off debt faster might be living in a city with high wages and a relatively low cost of living, a new study finds.

This research from Student Loan Hero, a financial education site, compared average wages to local income taxes and costs of living. The study calculated the average disposable income residents can expect in 159 major U.S. cities and ranked them accordingly. The findings identified the top 20 cities where residents have more money left over to get out of debt.

“Living in one of the top 20 best cities gives you a disposable income of $18,000 left over, on average, after taxes and basic living expenses are paid,” said Elyssa Kirkham, lead researcher on the Student Loan Hero study. “That’s a huge boon to residents of these cities who want to get out of debt faster. It gives them a lot of room to play with their budget and find extra money to put toward debt.”

These best cities to live in to pay off debt share some characteristics:

-- Half of the top 20 cities are located in states that don’t levy a state income tax. Another Student Loan Hero study found that living in a state with no income tax saves residents an average of $1,977.
-- The top 20 cities have low costs of living relative to wages and national averages. Only one city has a cost of living higher than the national average (by just 0.8 percent).

Here are the 10 best cities to get out of debt faster and their average disposable incomes:

1. Durham, N.C.: $21,975
2. Kennewick, Wash.: $20,938
3. Houston, Texas: $20,422
4. Des Moines, Iowa: $20,094
5. Austin, Texas: $20,027
6. Kalamazoo, Mich.: $19,904
7. Memphis, Tenn.: $19,723
8. San Antonio, Texas: $19,718
9. Knoxville, Tenn.: $19,661
10. Huntsville, Ala.: $19,444

In addition to the best cities to pay off debt, the study also identified the 20 worst cities for paying off debt.

“These are expensive cities where average workers will struggle to make ends meet, let alone get ahead,” Kirkham said. “The study shows that in the two worst cities, San Francisco and San Jose, Calif., average workers are likely to get further into debt just covering basic living expenses.”

Here are the 10 cities where disposable incomes are the lowest:

1. San Jose, Calif.: -$12,027
2. San Francisco, Calif.: -$1,290
3. Honolulu, Hawaii: $372
4. New York, N.Y.: $1,807
5. Anaheim, Calif.: $7,994
6. Washington, D.C.: $9,115
7. San Diego, Calif.: $9,183
8. Oakland, Calif.: $9,246
9. Los Angeles, Calif.: $9,261
10. Bridgeport, Conn.: $10,652

To generate these rankings, we surveyed the following data for 159 U.S. cities:
Average annual wage, sourced from the May 2016 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates published by the Bureau of Labor Statistics
Federal, payroll, state, and local income tax estimates generated through the SmartAsset tax calculator, assuming a single filer with a household of one
Costs of basic living expenses, including food, shelter, healthcare, and transportation, per the Bureau of Labor Statistics’ Consumer Expenditure Survey and adjusted for local costs of living index from the Council for Community and Economic Research
We surveyed more than 159 cities but excluded cities for which any of the above data points were unavailable. We also cross-checked city locations and in some cases substituted data points from neighboring cities within 50 miles.

About Student Loan Hero

Student Loan Hero combines easy-to-use tools with financial education to help the millions of Americans living with student loan debt manage and pay off their loans. Student Loan Hero has helped more than 150,000 borrowers manage and eliminate over $3 billion in student loan debt since 2012 and assists over 3.5 million people in becoming more financially healthy every year.

Student Loan Hero offers both current and former students free loan calculators as well as unbiased, personalized advice and repayment plans through an easy-to-use online dashboard.

Founded in 2012 by CEO Andrew Josuweit, who himself had over $100,000 in student loans, Student Loan Hero operates on the belief that all loan help and recommendations should come with honesty and no hidden agenda.

For more information, visit

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