Many Americans don't have a plan to pay off their debts

  • If you're in debt, you can benefit from choosing a payment strategy, weighing refinancing and assessing your budget.
  • "One of the most important things is having a plan," says Brian Karimzad, vice president of research at LendingTree.
Couple doing paperwork
Elena Leonova | Getty Images

Don't let mounting debt be your new normal.

In June, cumulative U.S. household debt reached $12.84 trillion, a $114 billion increase from the first quarter.

Four 4 in 5 Americans are in the red, according to data from a LendingTree report provided exclusively to CNBC.com. The loan marketplace surveyed more than 1,000 consumers in July.

Scarier still: More than a quarter of those with debt don't have a plan to pay it off.

"When you're in the midst of a crisis, it's not the first thing you think of — to make a plan," said Brian Karimzad, vice president of research at LendingTree.

That may be why the company found that Americans are least prepared to cover medical debt — more than 35 percent don't have a blueprint to pay back what is often a sudden, unexpected expense. It doesn't help that medical bills tend to be "confusing and nebulous," said Karimzad.

Americans are most likely to have a plan in place to cover housing debt (81 percent do).

Lack of planning can lead to plenty of financial struggles, from late payments and credit problems to extra months (even years) in debt. Nearly 1 in 5 millennials has had to ask for money from a friend or relative, LendingTree found, versus 16 percent of Gen Xers and 9 percent of baby boomers.

"One of the most important things is having a plan," Karimzad said.

First, pick a method: snowball or avalanche. The snowball method calls for focusing on paying down the smallest balance first; the avalanche method, the highest-rate balance first. (With either, you'll aim to pay more than the minimum on that priority debt, and make the monthly minimums on the rest.)

The snowball approach can provide a nice psychological win, while the avalanche method saves you more in interest, said Karimzad.

But it really comes down to whatever keeps you paying down those debts, said Bruce McClary, a spokesman for the National Foundation for Credit Counseling.

"My philosophy is if you pick a plan that doesn't motivate you, you're not going to get to the finish line, and the plan is already a failure," he said.

McClary also recommends looking into refinancing debt — but warns that this strategy isn't always a good idea.

If you're thinking of consolidating credit card debt with a zero-percent balance transfer offer, for example, "scrutinize these deals carefully," McClary said. Balance transfer fees of about 3 percent typically apply — and most offers expire in a matter of months. (The most generous ones currently clock in at 21 months.)

Although the "trick" is to pay off the debt before the deal expires, that doesn't always happen.

"What happens if you can't pay it off before clock runs out?" McClary asked. "What is that interest rate adjustment going to look like? ... You may have to think harder about whether this balance transfer makes sense in the long run."

Karimzad also suggests taking a good hard look at your expenses. See if there are recurring items you could score a better deal on and discretionary ones you could trim or eliminate.

"There is a little something that can be forgone in any budget," he said.

The aim: Live below your means. That's the secret to becoming (and staying) debt-free, said Harvey Bezozi, a certified public accountant and the founder of YourFinancialWizard.com.

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