When you realize that debt is making it impossible to get ahead, start the Become Debt-Free Path.
You’ll quickly establish your priorities and see what you can use to eliminate debt by creating your action plan. When you start working the plan, you might even find how to get out of debt sooner!
Guiding Principle for the Become Debt-Free Path
Use your resources effectively to eliminate debt.
How the Path Works
Learn it.
- Discover the key metric that helps you get out of debt faster.
- Learn what makes different debt-reduction strategies work.
- Explore the guides and articles for inspiration and helpful perspectives.
Plan it.
- Assess your financial strength.
- Plan how to optimize your finances for reducing debt.
- Set your first target and define the steps you’ll take.
Do it!
- Apply your strategy and start paying off debt.
- Model your finances to identify ways to fine tune the process.
- Stick with it, watch your debt vanish and your wealth grow!
TIP: Getting out of debt is foundational, so it's important to take this path early, especially if you can't make ends meet because of inflation or credit card debt.
Topics Covered
The Become Debt-Free Path addresses the two biggest concerns people have about getting out of debt:
- How to get out of debt faster
- How to stay motivated throughout the process
The interactive approach helps consumers find the most effective route to eliminate debt given their situation. The action plans are supported with articles that provide insights and explain techniques to help you reach the goal.
The most common topics are explored:
- How much debt is too much debt?
- Which debts should I pay down first?
- How long should it take to reduce my debt?
- Should I close my credit card account?
- Should I invest or pay off debt?
Frequently Asked Questions
What is a balance transfer credit card?
Balance transfer cards can help you save money by moving debt from one account to another that charges a much lower interest rate – if you can work within certain conditions.
Why do I need an emergency fund?
It’s important to set up an emergency fund to help absorb unexpected costs – it’s like a safety net for your finances. Without it, you might end up working off high-interest credit card debt and derail your other financial goals.
How do you calculate the debt-to-income ratio?
The basic formula for DTI is: Total Monthly Debt Payments / Gross Monthly Income
What is the average debt per household?
Total consumer debt in the United States was $17.943 trillion as of Q3 2024, according to the Federal Reserve Bank of New York[1].
In Q3 2023, when Experian[2] reported total consumer debt in the U.S. as $17.1 trillion, they estimated the Average Consumer Debt Balance by Debt Type in total at $104,215. Using the same calculation, Frugal Gnome estimates the average debt per household in Q3 2024 at greater than $109,000.
Sources:
- HOUSEHOLD DEBT AND CREDIT REPORT (Q3 2024)
Federal Reserve Bank of New York
11-13-24 | Accessed: 12-04-24 - Experian Study: Average U.S. Consumer Debt and Statistics
Chris Horymski, Experian
02-14-24 | Accessed: 12-04-24
