Debt Advice and Help

Trying to get out of debt may seem like an impossible task at times. Thankfully, you’re not alone and there are several ways to pay off your balances and get debt advice help.

According to an Experian study, the average current household debt balance is $96,371. This balance includes home loan ($220,380), credit card ($5,221) and student loan debt ($39,487).

These pointers can help reduce your debts and save more money each month.

Understanding Your Debt

Being in debt is going to be different for each person. Although, understanding your types of debt makes developing a debt payoff plan easier.

What is Debt?

There are several different types of debt:

  • Auto loan
  • Credit card
  • Home mortgage
  • Medical loans
  • Personal loan
  • Student loans

Loans secured with collateral, such as a home mortgage or car loan, tend to have lower interest rates. However, the lender can repossess the asset backing the loan if you default.

Unsecured loans like credit cards and personal loans usually have the highest interest rates. Therefore, it’s usually best to pay off these loans first to minimize your lifetime interest costs.

You can also classify your debt as being good or bad:

  • Good debt: Debt necessary to improve your quality of life like a home or student loans. It can also be optional debt that you can easily afford along with your other financial priorities.
  • Bad debt: Debt that is unnecessary or you can’t afford. These monthly payments may also cause you to struggle to pay your basic monthly living expenses.

How to Avoid Excessive Debt

Going into debt isn’t always a bad thing. For example, you may need to get a home loan to acquire affordable housing. You may also need to get a car loan to have reliable transportation to get to work or your children to school.

Even with “good debt,” it’s essential to avoid borrowing more than necessary, even if you can afford the higher monthly payment.

For example, you might get a car worth $20,000 instead of $30,000. While you may sacrifice features (i.e., leather interior, infotainment, etc.) that are convenient, you’re still getting a reliable vehicle, but at a cheaper cost.

You might also go to a more affordable college to avoid graduating with a pile of student loan debt. While your alma mater may not have the same name recognition, you earn a similar degree and can have competitive employment prospects.

Excessive debt differs for each person as we all have varying incomes and expenses. These charts from the Experian Consumer Study can help compare your current debt balances to the national average.

Debt TypeAverage Balance
Home Equity Line of Credit (HELOC)$39,556
Student Loan$39,487
Auto Loan or Lease$20,987
Credit Card$5,221
Personal Loan$17,064

You might also be curious how your debt balance compares to others near your age.

GenerationAverage Debt Balance
Generation Z (18-24 years old)$20,803
Millennials (25-40 years)$100,906
Generation X (41-56 years)$146,164
Baby Boomers (57-75 years)$95,607
Silent Generation (76 years or older)$39,859

Source: Experian

While knowing how your current debt amounts compare to the national averages by loan type and generation, a healthy debt level depends on your income and expenses.

Being in debt isn’t as detrimental if you have a high income or low monthly expenses. However, if you’re struggling to afford your current monthly debt payments, it’s a sign that you have too much debt at the moment.

Understand that even “good debt” can go bad

Good debt usually helps improve your financial situation and standard of living. For example, many consider home mortgages and student loans “good debt” as the long-term benefits typically outweigh the costs.

Still, there are times when good debt can turn into bad debt.


Few people can buy a primary residence with cash. Thankfully, mortgages have the lowest interest rates and a long repayment period. You also enjoy the ability to build home equity as you reduce your loan balance and if your property value increases.

A home loan can turn against you in two situations:

  • Tap home equity: Borrowing from your home equity through a cash-out refinance or home equity line of credit (HELOC) can be a cheap way to consolidate high-interest debt. However, your home can be repossessed if you stop making payments.
  • Fluctuating property values: Home values can decrease and be lower than your remaining loan balance. An “underwater mortgage” means you cannot cash out your equity or sell your home for a profit.

Experian reports that the average mortgage balance in the 3rd quarter of 2021 was $220,380.

Student Loans

A college degree is an essential requirement for many professions. However, not every degree has the same earning potential.

STEM-focused degrees (science, technology, engineering, and mathematics) can be promising fields of study. So can hands-on vocational degrees like HVAC, welding, or plumbing.

Unfortunately, there are too many degree programs where more students than open jobs. To make matters worse, the available positions have a low salary range that makes it difficult to afford your monthly living expenses and student loan payments.

Loan forgiveness programs exist for most federal loans but can require between 10 and 25 years of payments before forgiving your remaining balance.

Experian reports that the average student loan balance in the 3rd quarter of 2021 was $39,487.

Do You Have a Debt Problem?

Asking yourself these questions can help you determine if you struggle with managing debt. Answering “yes” can indicate you need help paying off debt.

  • Over time, is an increasing percentage of your income going toward paying debts? If so, is it because you have added new loans, or is your income lower than before?
  • Do you pay your bills late because you don’t have enough money? Track your spending, and look for ways to reduce optional expenses. Also, consider getting a side hustle to earn extra cash in your free time.
  • Have you stopped paying some of your debts? You may explore debt relief to receive partial forgiveness after the creditor agrees to a smaller final payment. A debt counselor can help compare your debt payoff strategies.
  • Are you paying the minimum on your credit cards because you can’t afford more? Explore debt consolidation or a debt management program to potentially secure a lower interest rate and monthly payment. These services may require freezing your credit cards to focus on paying off your existing balance.
  • Are you using cash advances on your card(s) to pay for essentials like groceries, utilities, etc.? Unfortunately, cash advances have high-interest rates, making it difficult to stop living paycheck to paycheck.
  • Do you utilize payday loans? These loans can help cover short-term expenses but the interest rates are incredibly high. Several states ban or highly regulate payday loans.
  • Have you maxed out your credit limit(s)? A maxed-out credit card or line of credit means you can’t borrow any more funds when you genuinely need more cash. Another downside is a high credit utilization ratio that penalizes your credit score.
  • Are you constantly looking for 0% balance transfers? Interest-free balance transfers effectively minimize your interest charges and have extra money to reduce your remaining balance. However, they may not help you get out of debt if you only make the minimum monthly payment.
  • Are you regularly being denied new credit? While there are several reasons why you may not qualify for new credit, too high of a debt-to-income ratio (DTI) or a streak of missed payments can jeopardize your approval odds.
  • Do you have little or no savings? Start by building an emergency fund to cover 3-6 months of living expenses. After reaching this point, consider making extra debt payments to reduce your monthly expenses. Then, as you pay off debt, you have more free cash to save for future expenses.
  • Have you borrowed money from friends or relatives? Be sure to honor the repayment terms to avoid ruining your relationship. This negative consequence can be worse than a damaged credit score by missing payments on a traditional loan.
  • Have debt collectors begun to call you or send overdue notices? Consider working with a debt counselor to review your repayment options to avoid legal action.
  • Are you constantly worried about money? Start by analyzing your income and expenses. Next, look for easy ways to reduce your spending. You may also need to take additional steps to improve your finances.
  • Are you and your spouse fighting over money? Try working together and coming up with a plan you can both agree on. Each person may need to compromise. Despite the initial struggles, you can hold each other accountable or have a family friend help. Fixing your problems can be cheaper and have fewer long-term consequences than a divorce.
  • Do you lie to others about your finances? Of course, you don’t have to tell your friends and family every tidbit about your finances, but trying to live a lifestyle that you can’t afford to impress others isn’t sustainable.

6 debt help strategies to deal with your debt

If you’re struggling to afford your monthly loan payments, these strategies can help organize your payments and reduce your total debt costs.

Debt Snowball

The debt snowball strategy has you make extra debt payments to your smallest balance first. If two accounts have a similar balance, choose the one with the higher interest rate.

You shift that monthly payment to your next smallest balance as you pay off a debt. As a result, your extra payment increases with each payoff.

You will continue making the minimum monthly payment on your other debts.   

Debt Avalanche

The debt avalanche is a popular alternative to the debt snowball. Instead of paying off your smallest balance first, you attack the highest interest rate regardless of the balance size.

This strategy can result in more interest savings. However, you might prefer the debt snowball method if you prefer the adrenaline rush from paying off smaller accounts more frequently.

Debt Consolidation

Debt consolidation combines your existing balances into one monthly payment. You will also receive a new interest rate which can be potentially lower than your current credit card and personal loan APRs.

This strategy also provides a structured repayment plan that removes the confusion of credit cards that only require a minimum payment which can be far lower than your outstanding balance.

Depending on the program, the lender may send the funds directly to your creditors to save you the hassle of transferring your balances yourself.

This strategy also won’t require you to close your revolving credit accounts so you can continue using your credit cards for purchases. However, be sure to pay your future monthly statement balance in full to avoid fees and interest.

Debt Settlement

Consider debt settlement when you cannot afford your monthly payments and refinancing your repayment terms isn’t worth it.

With this strategy, a debt relief company provides hands-on support to avoid legal action and negotiate debt forgiveness.

First, you will stop making monthly payments for your qualifying unsecured debts like credit cards and personal loans. Next, you make a monthly payment to the relief company which places the funds into a savings account.

When the company believes you have a sufficient cash balance, they reach out to a creditor to request a debt settlement offer. A successful negotiation reduces your total debt due as the lender erases some of the balance.

While this strategy reduces the total amount you owe, late fees and interest accrue. Your credit score also incurs damage as you won’t be making payments for several months or years.

Debt Management

A debt management plan also provides hands-on support similar to debt relief but has minimal negative impact on your credit score as you continue making monthly debt payments.

In addition, the plan provider will negotiate a lower interest rate but doesn’t seek to settle your debt for a lower amount.

One potential downside to this strategy is freezing your credit accounts and closing paid-off credit cards and lines of credit.

A nonprofit credit counseling agency can be your best option to avoid excessive fees and scams.


Filing for bankruptcy can be an option of last resort if you have no way to pay off your debt without losing everything. A bankruptcy lawyer can review your circumstances and help you decide if it’s better to claim Chapter 7 or Chapter 13 bankruptcy.

While bankruptcy stays on your credit report for up to 10 years, you have legal protections which can help avoid home foreclosure. This option can also allow you to discharge debts with fewer fees and penalties than debt relief.

Smart Ways to Avoid Debt Problems

There are several different practices you can adopt to avoid debt problems.


Making a budget can help you avoid overspending and use your money more effectively. You can start by making a basic spending plan to spend less than you earn.

If you prefer an in-depth budget, use a platform like YNAB which guides you through multiple monthly budget categories. This program aims to help you stop living paycheck to paycheck.

Use Cash

Pay with paper money or use a debit card to avoid carrying a balance whenever possible. Using cash means you can only pay for a purchase when sufficient funds are in your bank account.

Managing your accounts can also help you fully know your current checking account balance to avoid overdraft fees.

Create Savings Goals for Expensive Purchases

Avoiding credit and loans can prevent you from going further into debt.

Applying for credit may also encourage you to purchase items or experiences that you don’t need at the moment.

Instead of borrowing money for big purchases, make savings goals through your bank account or budgeting app. This feature can calculate how much you need to save each month.

Avoid Fees Whenever Possible

You should also avoid unnecessary fees on your existing debts and future loan products.

Some of the fees include:

  • Monthly late fees
  • Early repayment fees
  • Origination fees
  • High-interest APR

It’s wise to also compare rates from multiple lenders and know these expenses before agreeing to a loan offer:

  • Total finance charges: Your loan APR, lifetime interest costs, and origination fees. This is the total amount of fees and interest in addition to the loan principal.
  • Monthly payment requirements: Be sure you can afford the monthly payment. In addition, know what the grace period and late fee guidelines are.
  • Total number of payments: Know how long you will be in debt. A shorter repayment period can potentially have a lower interest rate but a higher monthly payment, reducing your total finance charges.