A large proportion of the U.S. population is in debt. That’s the unfortunate conclusion reached in multiple studies, including one published by Debt.org, a trusted website that provides the general public with information related to personal finance. It revealed that American household debt hit a record $16.9 trillion in 2022, up from the roughly $2.75 trillion reported in 2019.
What Types of Debt Are Americans Struggling With the Most?
To understand what’s dragging so many Americans down financially, we need only take a deeper dive into the Debt.org study. It revealed that Americans owe nearly $990 billion in credit cards, some $12 trillion on mortgages, roughly $1.55 trillion on vehicle loans, and around $1.60 trillion in student loans. While we are on the topic, U.S. consumers with children appear to be worse off than consumers who do not have children. According to data from Experian, U.S. consumers with children have anywhere from 14% to 51% more total debt and lower credit scores than the national average. And most of their debt is related to auto loans and credit cards.
Studies Show Many Americans Are Using Debt Management Strategies To Get Out of Debt
Most Americans recognize that outstanding debt can negatively affect their credit. Because of that, many are willing to do whatever it takes to repay their creditors. For many, that means using DIY or professional debt management strategies. Before highlighting these strategies, we should probably discuss what debt management is in general. In short, debt management is an umbrella term for several financial strategies that help people better manage their debt and eventually get out of debt altogether.
Popular DIY Debt Management Strategies
Rather than turning to nonprofit or for-profit debt management organizations for help, some people will try to escape crushing debt by themselves. And for some, this approach works. The two most common and effective DIY debt management strategies include the debt snowball and the debt avalanche.
The debt snowball is a DIY debt management strategy that involves paying off one’s debts based on the amount owed, going from the smallest to the largest. Meanwhile, the debt avalanche entails paying the minimum amount due on outstanding debt accounts with smaller balances and using any remaining money to pay off the account with the highest balance and interest rate. To stay on track and to get the most out of either the debt snowball or debt avalanche method, most people use one or more of the following tools:
- Budget calculators
- Financial management apps, such as PocketGuard, Simplifi by Quicken, and Mint
- Repayment calculators
Most people consider the debt snowball and debt avalanche methods to be go-to DIY debt strategies for quickly paying off credit cards, mortgages, vehicle loans, and student loans. However, they can be just as effective in helping to pay off other kinds of debt.
Additional DIY Debt Management Strategies
Along with the debt snowball and debt avalanche methods, some people use home equity loans and refinancing to help them pay off outstanding debts. Also known as an equity loan, home equity line of credit (HELOC), or second mortgage, a home equity loan involves homeowners borrowing against the equity in their homes to repay creditors. Data from Bankrate shows that lenders approved 284,000 home equity loans for homeowners in the second quarter of 2024, up from the 251,975 approved in the first three months of 2023. Non-homeowners and those opposed to HELOCs often go with refinancing loans to pull themselves out of debt. That is especially true for those with mortgages, auto loans, and credit card debt. Refinancing involves replacing an existing loan or credit line with a high interest rate with a new loan with a lower interest rate.
Professional Debt Management Strategies
When DIY debt management strategies don’t work, many people turn to nonprofit or for-profit debt management organizations for help. That help typically comes in one or more of the following ways:
- Credit counseling – When someone seeks help from a debt management organization that offers credit counseling, a credit counselor will work with them to come up with a plan to repay their outstanding account balances and, if necessary, negotiate a debt management plan (DMP) with their creditors on their behalf. Such negotiations can lead to lower interest rates, reduced monthly payments, or waived fees, which can all help individuals get out of debt fast.
- Debt consolidation – This type of debt management strategy involves combining multiple debts into a single loan, preferably one that offers more favorable terms. Debt consolidation typically lowers an individual’s interest rates and gives them more time to pay off debt.
- Debt settlement – This kind of debt management involves negotiating a payment for less than the amount owed on a loan. Studies show that the average debt management organization helps individuals reduce the amount they owe on their outstanding debt by 10% to 50%.
The Downsides of Debt Management
When someone closes a credit account via a debt management plan, it can raise their credit utilization ratio. Having a credit utilization ratio that is too high can lead to a lower overall credit score.
Additionally, most nonprofit and for-profit debt management organizations charge a minimum set-up charge for their debt management programs. Some also charge monthly fees. Lastly, debtors only have a limited time to pay off outstanding debt that is part of a debt management payment plan, typically 3 to 5 years. Failing to repay debt or not repaying it within the allotted time can result in the termination of the debt management plan, which can, in turn, lead to collections, lawsuits, and judgments. Such events can further ruin one’s credit and ability to qualify for future loans.
Get Your Outstanding Debt Under Control Today
All in all, excessive debt can cause financial struggles and eventually ruin one’s credit. But it needn’t be that way. Several DIY and professional debt management strategies can make coping with and getting out of debt easy. If excessive debt is holding you back financially and threatening your credit, consider taking advantage of the DIY or professional debt management strategies detailed in this article.
A large proportion of the U.S. population is in debt. That’s the unfortunate conclusion reached in multiple studies, including one published by Debt.org, a trusted website that provides the general public with information related to personal finance. It revealed that American household debt hit a record $16.9 trillion in 2022, up from the roughly $2.75 trillion reported in 2019.
What Types of Debt Are Americans Struggling With the Most?
To understand what’s dragging so many Americans down financially, we need only take a deeper dive into the Debt.org study. It revealed that Americans owe nearly $990 billion in credit cards, some $12 trillion on mortgages, roughly $1.55 trillion on vehicle loans, and around $1.60 trillion in student loans. While we are on the topic, U.S. consumers with children appear to be worse off than consumers who do not have children. According to data from Experian, U.S. consumers with children have anywhere from 14% to 51% more total debt and lower credit scores than the national average. And most of their debt is related to auto loans and credit cards.
Studies Show Many Americans Are Using Debt Management Strategies To Get Out of Debt
Most Americans recognize that outstanding debt can negatively affect their credit. Because of that, many are willing to do whatever it takes to repay their creditors. For many, that means using DIY or professional debt management strategies. Before highlighting these strategies, we should probably discuss what debt management is in general. In short, debt management is an umbrella term for several financial strategies that help people better manage their debt and eventually get out of debt altogether.
Popular DIY Debt Management Strategies
Rather than turning to nonprofit or for-profit debt management organizations for help, some people will try to escape crushing debt by themselves. And for some, this approach works. The two most common and effective DIY debt management strategies include the debt snowball and the debt avalanche.
The debt snowball is a DIY debt management strategy that involves paying off one’s debts based on the amount owed, going from the smallest to the largest. Meanwhile, the debt avalanche entails paying the minimum amount due on outstanding debt accounts with smaller balances and using any remaining money to pay off the account with the highest balance and interest rate. To stay on track and to get the most out of either the debt snowball or debt avalanche method, most people use one or more of the following tools:
- Budget calculators
- Financial management apps, such as PocketGuard, Simplifi by Quicken, and Mint
- Repayment calculators
Most people consider the debt snowball and debt avalanche methods to be go-to DIY debt strategies for quickly paying off credit cards, mortgages, vehicle loans, and student loans. However, they can be just as effective in helping to pay off other kinds of debt.
Additional DIY Debt Management Strategies
Along with the debt snowball and debt avalanche methods, some people use home equity loans and refinancing to help them pay off outstanding debts. Also known as an equity loan, home equity line of credit (HELOC), or second mortgage, a home equity loan involves homeowners borrowing against the equity in their homes to repay creditors. Data from Bankrate shows that lenders approved 284,000 home equity loans for homeowners in the second quarter of 2024, up from the 251,975 approved in the first three months of 2023. Non-homeowners and those opposed to HELOCs often go with refinancing loans to pull themselves out of debt. That is especially true for those with mortgages, auto loans, and credit card debt. Refinancing involves replacing an existing loan or credit line with a high interest rate with a new loan with a lower interest rate.
Professional Debt Management Strategies
When DIY debt management strategies don’t work, many people turn to nonprofit or for-profit debt management organizations for help. That help typically comes in one or more of the following ways:
- Credit counseling – When someone seeks help from a debt management organization that offers credit counseling, a credit counselor will work with them to come up with a plan to repay their outstanding account balances and, if necessary, negotiate a debt management plan (DMP) with their creditors on their behalf. Such negotiations can lead to lower interest rates, reduced monthly payments, or waived fees, which can all help individuals get out of debt fast.
- Debt consolidation – This type of debt management strategy involves combining multiple debts into a single loan, preferably one that offers more favorable terms. Debt consolidation typically lowers an individual’s interest rates and gives them more time to pay off debt.
- Debt settlement – This kind of debt management involves negotiating a payment for less than the amount owed on a loan. Studies show that the average debt management organization helps individuals reduce the amount they owe on their outstanding debt by 10% to 50%.
The Downsides of Debt Management
When someone closes a credit account via a debt management plan, it can raise their credit utilization ratio. Having a credit utilization ratio that is too high can lead to a lower overall credit score.
Additionally, most nonprofit and for-profit debt management organizations charge a minimum set-up charge for their debt management programs. Some also charge monthly fees. Lastly, debtors only have a limited time to pay off outstanding debt that is part of a debt management payment plan, typically 3 to 5 years. Failing to repay debt or not repaying it within the allotted time can result in the termination of the debt management plan, which can, in turn, lead to collections, lawsuits, and judgments. Such events can further ruin one’s credit and ability to qualify for future loans.
Get Your Outstanding Debt Under Control Today
All in all, excessive debt can cause financial struggles and eventually ruin one’s credit. But it needn’t be that way. Several DIY and professional debt management strategies can make coping with and getting out of debt easy. If excessive debt is holding you back financially and threatening your credit, consider taking advantage of the DIY or professional debt management strategies detailed in this article.
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