Financial expert shares advice on balancing and managing debt – Indianapolis News | Weather in Indiana | Traffic in Indiana

INDIANAPOLIS (WISH) – New data released by the Federal Reserve Bank of New York shows that the U.S. household debt balances are rising and the same happens with late payments.

Adam Young, area manager at Credit union alwaysstopped by Daybreak on Monday to offer some advice on managing debt.

“I think the first thing to do when it comes to your debt is to understand exactly where you are – so you know where you’re going. And it’s really just on the expense side of your balance sheet. So really understanding where all your income and expenses go – when you think about income, expenses and net worth, debt is in expenses,” Young said.

He suggests tracking all your income and expenses and then figuring out which expenses you can cut to increase your cash flow.

There are two types of debt – fixed rate and variable rate. Your fixed-rate debt is your mortgage or auto loans.

“You have a fixed rate option – which you think about including in your mortgage or car payment – ​​and you also have variable rate debt. Typically, this is more like variable rate, meaning the interest rate can change and this will affect your credit card debt more – sometimes on a home equity line of credit. But this can change a little and offer a little flexibility when it comes to how much money you spend in a given month,” explained Young.

Young suggests that people approach debt reduction in several ways, one of which is known as the “Snowball Method.” With the Snowball Method, you commit as much income as possible to your lowest debt and make only minimum payments on the rest.

“Stack up all the different items you owe money on and take the one you owe the least on – and take all the extra cash flow you have and apply it to that debt. Maintaining only the minimum payments required for all other debts. After the debt is eliminated, you come back and say, ‘Okay, I’ll look for the next one who has more money than I owe.’ And you keep a snowball approach to that debt and ultimately it gets the last item and you’re debt free at that point,” Young said.

Watch the interview for more advice on reducing your debt.

News 8 Daybreak anchor Hanna Mordoh and Everwise Financial’s Adam Young. (Photo DESIRE)

Source