Gaining the Upper Hand on Debt

Upper hand on debt image for landing page (1)Let’s play a game of word association. What comes to mind when you hear the word debt? Anxiety? Worry? Concern? If you blurted out any of these responses, you’re not alone. One thing most Americans have in common is that they carry some form of debt.

According to recent research, the overwhelming majority of Americans owe money. In fact, the Federal Reserve estimates that the average American household is saddled with approximately $137,000 in debt. And owing all that money, though somewhat natural and often unavoidable, makes many people feel uneasy. The good news is that taking control of your—or your family’s—debt is achievable. Here are some things you should know as you get started.

Not all debt is bad
Maybe you have heard that there is “good” debt and there is “bad” debt. What’s the difference? Think of debt in these simple terms:

  • Good debt is an asset that is expected to increase in value relevant to the funds that were borrowed to pay for it. Examples of good debt include a home or real estate.
  • Bad debt is an asset that loses value after its purchase. Often, it involves discretionary spending that brings short-term happiness but long-term payments. Examples of bad debt include a new flat-screen TV or a vacation paid for on a credit card.

Knowing the nature of your debt, and whether it can be classified as good (i.e., essential) or bad (i.e., often nonessential), is a good first step toward getting a handle on it.

Figure out what you owe
Your debt is what it is. Beating yourself up about how you accumulated it does you no good. Instead, focus your energy on what you can do today to get it under control. Resolve to determine how much you owe, to whom you owe it, and by when you need to pay it off.

There are several easy ways to chart your debt obligations. You can do it with a few clicks of your mouse in one of many popular online software programs or via an app on your smartphone. You can even do it the good old-fashioned way—using a pencil and notepad. Whichever way you decide to chart it, this critical first step will get you organized and set you in the right frame of mind for your debt-management journey.

Put together a game plan for paying it down
There are several tried-and-true strategies for tackling debt, but the foundation for all of them remains the same: have a plan! A systematic plan will help you stay accountable, disciplined, and confident throughout the debt-reduction process.

If you’re not sure where to begin, help is available. Take advantage of some free online planning tools or government-approved credit counseling agencies. Or arrange for a consultation with a financial advisor or your retirement plan advisor.

Tip: Some tactics you may want to work into your plan include:

  • Paying more than the minimum monthly payment on your credit cards
  • Reducing your spending on nonessential items
  • Paying off accounts with the lowest balances first
  • Arranging for automatic payments to be made from your bank account

Track your progress
Okay. You’ve calculated what you owe, and you have a plan. Now, as you begin to put your plan into action, it is critical to track your progress. Making headway toward financial freedom—even in small increments—can give you the boost you need to keep forging ahead.

As each balance gets paid off and your debt begins to subside, maintain your momentum. Consider diverting payments to another source of debt or increasing your 401(k) or IRA contribution with your newly freed-up money.

Being debt free promotes confidence in your future
One last thing. There’s no question that debt can affect how we feel about our ability to make our dreams for the future a reality. For example, the Employee Benefit Research Institute’s 2018 Retirement Confidence Survey found that a worker’s confidence in being financially prepared for retirement had a direct correlation to his or her level of debt. But don’t be discouraged. With a solid plan, and some help, getting the upper hand on your debt is a target well within your reach.

If you have questions about how to pay down your debt, reach out to me. You can reach me at or you can click the image below to view my calendar and set an appointment.  

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family finances, finances, financial management, Personal Finance, Financial Well-Being, debt, saving money, money, credit score, credit cards, credit report, anxiety

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