What Would You Give Up to Be Debt-Free?

Paying Off Debt, Personal Finance

Consumers looking to get out from under a mountain of credit card debt have likely encountered their share of aspirational stories.

They usually go like this: Penny-pinching Peter rid himself of enormous debt by cutting out small treats and giving up Netflix. But will abstaining from $12 avocado toast and missing out on the latest season of “Orange Is the New Black” really do the trick?

Or people read about budget cutters who sleep in their cars for a year, shower at the gym and consume only discarded ketchup packets. That might not work for the average consumer, either.

Defeating debt is a delicate balance: Those hoping to join the ranks of the debt-free need to figure out where they can cut — and how long they can live that way.

We crunched the numbers for some common and some extreme budget cuts, then tested how long they’d take to offset $15,000, a nice round number close to the average credit card debt in the U.S. as of early 2017.

Many consumers will be tempted to nibble around the edges of their budgets and hope that little changes add up to enough. But seeing how long it takes to amass $15,000 can reset that thinking. Is it better to live without cable TV for 25 years? Go without that workday latte treat for 16 years? Or go all-in and endure a bigger sacrifice for a far shorter time?

Giving up a car and using mass transit could dramatically boost debt payoff efforts. Think 1.5 years, not 15 or more. And that’s just taking into account average monthly ownership costs — loan payment, insurance, gas, etc. — not sale proceeds.

But not every consumer has a car to sell or a transit system to rely on. Giving up some personal space is another way to gain financial freedom more quickly. Someone with a spare room could get a full-time roommate or periodically welcome Airbnb guests. Saving half the median two-bedroom rent or taking in the median Airbnb earnings could amass that 15 grand in less than three years.

The truly dedicated might decide to go nuclear — move in with parents or live out of that car they didn’t sell. The savings — based on median U.S. rents for a one-bedroom place — adds up to a $15,000 goal in only a year and a half.


ActionMonthly amount*Annual amountYears to offset $15,000 debt
Give up Pandora$4.99$59.88250.5
Give up Spotify$9.99$119.88125.1
Give up Netflix$9.99$119.88125.1
Drop collision and comprehensive car insurance$43$51629.1
Get cheaper phone$45$54027.8
Cancel cable TV$50$60025
Cancel gym membership$58$69621.6
Give up coffees$76.65$919.8616.3
Slash entertainment spending$76.83$921.9616.3
Skip vacations$97.17$1,166.0412.9
Stop eating lunch in restaurants$105$1,26011.9
Stop buying new clothes$153.83$1,845.968.1
Halt 401(k)$254.89$3,058.684.9
Get second job$314.17$3,770.044
Rent room on Airbnb$440$5,2802.8
Share housing$470.50$5,6462.7
Move in with parents or live in car$810$9,7201.5
Sell car, use public transit$816.42$9,797.041.5
*See how we got the numbers in the Methodology section.

Cuts that really make a difference

Fueling debt pay-down doesn’t have to be a this-or-that choice, of course. Most consumers will create their own recipe of budget cuts and side gigs.

NerdWallet’s debt-free calculator lets consumers test cuts to their monthly budget and see how long various combinations would take to save up enough to offset their current debt.

Playing around with different scenarios can lend valuable insight: Some might be inspired to go big and defeat debt quickly, while others decide to eliminate little luxuries and accept a longer timeline. Perhaps the biggest motivator is simply seeing current debt expressed in years — not including further charges or ongoing interest.

With that motivation and a sense of what suits their individual circumstances, consumers can move on to setting up a solid plan to handle their debt.

Picking a path to payoff  

Those who can compile budget savings that would equal their debt goal in five years or less are good candidates for a self-directed approach. Here are two popular ones:

  • NerdWallet recommends the debt avalanche, which focuses all extra pay-down money on the debt with the highest interest rate while paying minimums on the rest. When the first debt is wiped out, target the next highest APR. Continually concentrating on the costliest debt will save the most on interest overall. 
  • Those who need some extra motivation might prefer the debt snowball. All extra payments go toward the debt with the smallest balance, knocking it off quickly before moving to the next biggest. Always working on the smallest debt ensures that morale-boosting victories come as frequently as possible.   

Either of those methods can get a boost from debt consolidation, which rolls several debts into one at a lower interest rate. The most common approaches use a balance transfer credit card or a personal loan.

Consumers who want both a lower interest rate and some outside structure to help steel their resolve should consider a debt management plan for credit card debt. Nonprofit credit counseling agencies offer free initial consultations that can explain whether it’s the right fit.

Most people want to pay what they owe, but there comes a time when trying to dig out is really just digging deeper — perhaps risking the family home or a chance at even a modest retirement. Consumers should explore bankruptcy if it would take more than five years to pay off debt even with extreme austerity measures. That’s the longest payment period required for a Chapter 13 restructuring, and those who qualify for Chapter 7 bankruptcy could be done and start rebuilding their finances even sooner.

Sean Pyles is a staff writer and Daniel Tonkovich is a data analyst at NerdWallet, a personal finance website. Email: spyles@nerdwallet.com or dtonkovich@nerdwallet.com


Calculator figures the time needed to save enough money to pay off a target amount but does not incorporate interest. Average monthly savings and sources:

Give up Pandora: Pandora Plus, $4.99. Source:  Pandora

Give up Spotify: Premium, $9.99. Source: Spotify

Cancel Netflix: Standard plan, $9.99. Source: Netflix

Drop collision and comprehensive car insurance coverage: Blended savings from dropping collision, comprehensive, $43. Source: NerdWallet

Get a cheaper phone: Unlimited plan, $80; Small plan, $35. Source: Verizon (largest carrier)

Cancel cable TV: Cheapest Comcast bundle with at least 10 channels vs. comparable internet-only deal, $89.99 vs. $39.99, Bay Area, first year of service only; monthly savings $50. Source: Comcast

Give up gym membership: Average membership, $58. Source: StatisticBrain.com

Give up coffees: Starbucks grande latte, $3.65 per weekday; monthly savings $76.65. Source: Fastfoodmenuprices.com

Slash entertainment spending: Annual average spending on fees/admissions, $569, entertainment equipment/services, $353; monthly savings $76.83. Source: Bureau of Labor Statistics

Skip vacations: Two trips a year at average expenditure for domestic trips of more than 1 day away from home; monthly savings $97.17. Source: Bureau of Labor Statistics

Stop eating lunch in restaurants: Average fast food meal, $5 per weekday; monthly savings $105. Source: Franchisehelp.com

Stop buying new clothes: Average spending $1,846 a year on clothing, shoes, associated services. Monthly savings $153.83. Source: Bureau of Labor Statistics

Stop 401(k) contributions: Average 6.8% deferral rate, median weekly earnings for full-time workers $865; monthly savings $254.89. Sources: VanguardBureau of Labor Statistics

Pick up a second job: 10 hours a week at $7.25 federal minimum wage, monthly pretax total $314.17. Source: Department of Labor

Rent out a room on Airbnb: Median earnings $440 a month. Source: Priceonomics.com

Live with a friend / get a roommate: Median 2-bedroom rent $941; monthly savings $470.50. Source: Census Bureau, 2015 American Community Survey

Live with parents or sleep in car: Median 1-bedroom rent, $810. Source: Census Bureau, 2015 American Community Survey

Sell car, use public transit: Average savings for car payment, gas, insurance, parking vs. average monthly transit pass (proceeds from car sale not included); monthly savings $816.42. Source: American Public Transportation Association