Tennessee Folks Among Most Financially Distressed in the U.S.

It's no secret that folks all around the U.S. are in financial distress, but according to WalletHub, people in states like Tennessee seem to have it the worst.

I've spent most of my life in Indiana, but I also spent a year in both Kentucky and Tennessee, respectively. Having lived in each of those states, I came to have a good understanding of the housing market, taxes, and average utility bill in those areas. From my personal experience, the most expensive of the three was undoubtedly Kentucky. I definitely paid more in taxes and utility bills in Kentucky than the other two states. That said, the housing market was slightly better in the Bluegrass State than both Indiana and Tennessee.

As Americans battle inflation, soaring interest rates, and fluctuating unemployment, paying bills is easier for some than others. WalletHub recently conducted a study to shed light on the financial troubles experienced by people across the U.S., detailing where those difficulties are most pronounced. WalletHub compared all 50 states across several key metrics, including average credit scores, changes in the number of bankruptcy filings in the last year, and the share of people with accounts in distress. (The website defined financial distress as having a credit account that is in forbearance or has its payments deferred.)

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The results of the study were actually quite surprising. According to WalletHub, people in Michigan are in the most financial distress. Within the first quarter of 2024, folks in Michigan had the most accounts per person in forbearance or with its payments deferred. Michiganians also had the second-highest increase in people with distressed accounts, at over 70%. States that were not far behind Michigan were Texas, claiming the No. 2 spot on the list, and Nevada, claiming the No. 3 spot.

Checking in at No. 4 on WalletHub's list of states in financial distress was Tennessee, which I would not have assumed. I loved living in Tennesse, especially because of the fact Tennesse has no state income tax. That said, the Volunteer State seems to now have a large number of accounts in financial distress. Tennesse didn't score extremely low or high in any of the other key metrics.

Texas, which also doesn't have a state income tax, was another one I was surprised to see on the list. Wallethub reported Texas has the eighth-largest economy in the world, with a bigger Gross Domestic Product (GDP) than most countries. However, what sealed Texans' fate on this list was the fact that Texas residents had the third-lowest average credit score in the country in the first quarter of 2024. Additionally, Texas has the fourth-highest number of accounts in forbearance or with deferred payments. WalletHub reports the following states are the most financially distressed.

1. Michigan
2. Texas
3. Nevada
4. Tennessee
5. Rhode Island
6. Georgia
7. Louisiana
8. North Carolina
9. Mississippi
10. New York