Home > Managing Debt > 7 Ways Americans are Getting Out of Debt

Comments 0 Comments

You may be determined to get out of credit card debt, but how do you actually do it? If you’re like most people, cutting out that cup of joe you grab at your local coffee shop in the morning isn’t going to cut it. You’re going to have to use a combination of several strategies to help you reach your goal.

Motivation doesn’t seem to be the issue. According to a recent Credit.com survey, Americans and Credit Card Debt, 72% of people with credit card debt say it is “extremely important” or “somewhat important” to have a plan to pay off their credit card debt in 2014.

And in fact, 85% of those surveyed who say they have credit card debt also report they have been successful paying down this kind of debt in the past.

What techniques have people used to pay down debt in the past? We asked survey respondents to select all the strategies they employed to help pay down their balances and here’s what they told us they did:

  • Took in a roommate — 3%
  • Cut back on buying coffee from a cafe — 13%
  • Got a second job — 14%
  • Consolidated credit card debt — 20%
  • Cut regular expenses (cable, phone, insurance) — 31%
  • Stopped eating out as much — 37%

The No. 1 strategy listed by most respondents who said they paid down credit card debt in the past?

“Started budgeting” was chosen by 60% of respondents.

As dreaded as the task of creating a budget may be, consumers seem to be aware that if they want to pay off debt, they had better start paying attention to where their money is going.

There can be a big payoff to creating a budget: Just tracking spending has been shown to have positive benefits, extending even beyond the money saved. Some research suggests that people who write down everything they spend may see improvement in other areas of their lives, such as eating less junk food and becoming more productive.

Unfortunately, though, most consumers don’t budget. Only 32% of households prepare a detailed household budget, according to a Gallup poll conducted in April 2013.

Consolidation, Counseling and Bankruptcy

As for other solutions those in debt are considering, the survey also asked respondents which of the following they have seriously considered, and received the following responses (from those with credit card debt):

  • Credit card debt consolidation (15%)
  • Credit counseling (8%)
  • Bankruptcy (8%)

While debt consolidation was the most popular option, getting a consolidation loan can be tricky, especially for those whose credit scores have been hurt by the debt they carry. In those cases, credit counseling may be a more realistic option. It usually has the effect of a consolidation loan — lower interest rates and a lower monthly payment — but it doesn’t require good credit to qualify.

Whatever method consumers use to get out of debt, it’s going to take some willpower, creativity and hard work. And time. While 41% of those surveyed said it was extremely likely they would pay off all their credit card debt in 2014, it often takes people much longer than that, especially if their balances are large.

But other consumers have succeeded in paying off massive amounts of debt, demonstrating that with the right strategies and in the right situation, anything is possible.

As you pay down your debt, it’s a good idea to track your progress on how it’s affecting your credit.  For one, it can be encouraging to see the positive effect that paying down your debts can have on your credit scores; but it’s also good to just ensure that your payments are being reported accurately. You can keep an eye on your progress by checking your credit reports — at least once a year from each of the three major credit reporting agencies — which you can do for free through AnnualCreditReport.com — and monitoring your credit scores, which you can do using a free tool like Credit.com’s Credit Report Card.

More on Managing Debt:

Image: Purestock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team