The thing about debt is you just have to get through it. No one timeline or plan is perfect, except the one that gets you debt-free. There are so many different ways to work through debt, but new research suggests there's one factor that predicts how fast you'll get to zero.
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This week, a paper from the National Bureau of Economic Research raised some promising possibilities for anyone facing debt, especially with credit cards. Researchers looked at data from hundreds of users of the online personal finance service ReadyForZero, as well as the plans each user agreed to follow at the beginning of the process. As it turned out, just making a plan turned out to be the best indicator of whether those users paid down their debt at all.
The results weren't perfect. Debt is a struggle, and short-term financial needs can get in the way. "On average, each person only reduced their debt by 25 to 30 cents of every dollar they planned to pay down," writes MarketWatch's Maria LaMagna. However, making the explicit commitment to pay down the debt in the first place turned out to be the most accurate predictor of ultimately getting debt-free.
It's a big boost to the idea of intentionality and creating some kind of contract or routine to help manage your finances. If you're hoping ReadyForZero can help, alas, the service was shut down in 2016. There are still plenty of other options out there, though, including the free plan generator Undebt.it. You don't have to fix all your debt right away, nice as it would be, but you can definitely set yourself on the road to success right now.