Want to be debt-free? Break these 5 habits
Everyone wants to be debt-free, but you could be making this goal impossible to reach if you continue to do these things.
USA TODAY
A record number of consumers entered debt consolidation in the first half of 2026, with an average balance of about $40,000, according to one of the nation’s largest debt-management nonprofits.
Nearly 15,000 new clients entered debt-management plans with Money Management International in the first six months of 2026. That is the largest year-to-date figure in a dataset that dates back to 2017.
The nonprofit delivered financial counseling sessions to more than 40,000 households in those months. The tally of counseling sessions has increased for five consecutive years and is up 143% since 2021.
By several economic measures, the nation is falling deeper into debt.
Household debt nationwide totals $18.8 trillion, the highest number on record, according to the Federal Reserve Bank of New York.
Debt-collection lawsuits have spiked in recent years, according to The Pew Charitable Trusts.
Personal bankruptcies are rising.
Meanwhile, the personal saving rate stands at just 2.7%, federal data shows. That’s the lowest rate since the 2022 inflation crisis.
Consumer prices are rising fast
Americans are struggling with several consecutive years of rising prices. Consumer prices are up by roughly 27% since the start of 2021, according to the Consumer Price Index.
“In a word, I would attribute a lot of this to inflation,” said Ted Rossman, principal consumer finance analyst at MMI. “Really this whole post-pandemic surge in prices for just about everything is the biggest thing that’s stressing household budgets.”
Miriam Perez, 59, of Syracuse, New York, remembers a big bag of salmon costing $23.99 since “forever” at her local Costco.
“Now, it’s somewhere between $40.99 and $42.99,” she said. “And I’m talking about in a span of a year or a year and a half.”
‘I felt like I was drowing financially’
Perez entered debt consolidation with MMI in late 2022. Her real estate business had stalled during the COVID-19 pandemic, leaving her with more than $100,000 in debt on several credit cards. At the pandemic’s peak, she was losing $10,000 to $15,000 a month. Her savings were exhausted.
“I felt like I was drowning financially,” she said. “So, do I go bankrupt, or do I go into debt management, which is not great either.”
Debt consolidation typically bundles multiple consumer debts into a single debt with one monthly payment. Debt counselors negotiate lower interest rates on credit cards and other loans, so the client can pay down the balance more quickly.
The downsides? The single monthly payment can be steep: Perez was paying more than $2,000 a month. And you don’t get to use the credit cards anymore.
But debt consolidation can do what many a cheesy late-night television ad has promised: get you out of debt quick.
Perez repaid all six figures of her debt in about 3 ½ years, making the final payment this year.
She was able to get her real estate business back on track. Every time she flipped a house, she would make a large extra payment on the balance she still owed. Last month, she bought a new car.
When Perez entered debt consolidation, she said, “It just felt like I exhaled for the first time in a while.”
Runaway debt is hitting young Americans hard
Runaway debt is hitting young Americans especially hard. Gen Z adults, ages 18 to 29, are the fastest-growing segment of MMI clients, with a 35% increase over the past year.
Millennials, ages 30 to 45, make up the largest share of MMI clients, 56%. They have an average of $43,533 in unsecured debt.
Gen X, ages 46 to 61, make up a smaller share of MMI clients but have the most debt, $53,350 on average.
When consumers fall behind on debt, the culprit is often credit cards. The average credit card has an interest rate of about 21%, as of May, making it one of the costliest forms of credit.
American consumers are falling behind on their credit cards at levels not seen since the Great Recession era.
Roughly 13% of the nation’s card balance was at least 90 days delinquent in the first quarter of 2026, according to a report from the New York Fed. That figure hasn’t ranged so high since 2011, when the nation was recovering from the 2008 financial crisis.
Can you use personal loans to get out of debt?
To consolidate credit card debt on their own, many Americans turn to personal loans. A personal loan is typically an installment loan with a fixed interest rate and monthly payments that might stretch for one year or several. Competitive rates might start around 7%.
And Americans are loading up on them. The share of consumers with personal loans rose from 31% in 2017 to 38% in 2025, according to a February report from Experian.
But too often, MMI reports, the personal loan approach doesn’t work. Nearly half of new MMI clients hold personal loans, with an average balance of nearly $19,000.
“A lot of the do-it-yourselfers are ending up needing additional help,” Rossman said. “They end up running the credit cards back up, and they’re just moving money around.”
Another tool: the zero-interest credit card
Rossman and other personal finance experts recommend another powerful tool for paying off credit card debt: the zero-APR credit card.
A zero-APR card allows a consumer to make purchases and pay no interest for a promotional period of 12, 18, or even 24 months. When the promotion ends, interest kicks in – but only on the debt that remains on the card.
Zero-interest cards can be a great tool, Rossman said, for a borrower with relatively good credit and no more than $5,000 or $6,000 in debt.
Cardholders with weaker credit or higher balances, Rossman said, should consider a credit counseling service.
The nonprofit National Foundation for Credit Counseling serves as a clearinghouse of trusted credit counseling agencies.