Debt affects millions of Americans. According to the Federal Reserve Bank of New York, total household debt increased by $92 billion, or 0.7%, in the third quarter of 2019. This was the 21st consecutive quarterly increase.

For many individuals, debt can feel overwhelming and paralyzing. It can be challenging to know where to start. If you can relate, reaching out to a financial planner might represent a step in the right direction. He or she can provide you with a big-picture perspective on your overall financial situation and help sketch a realistic roadmap to overcoming debt.

Routes to Eliminating Debt

Everyone’s financial situation is different – the way others might handle their debt might not be right for you. Working with a financial planner will clarify the routes to debt management that make sense for your current circumstances and future goals. Five common ways include:

• Prioritizing Types of Debt. Two types of debt exist: secured and unsecured. Secured debt is attached to an asset (or collateral), such as a house or a car. On the other hand, something like a business or personal loan is considered unsecured debt. Secured debt is often associated with lower interest rates than unsecured debt. Depending on your individual life circumstances, a financial planner may suggest repaying one type of debt before the other.
• Organizing Debt. A financial planner may recommend organizing your debt and steadily eliminating it through using tools such as debt consolidation, refinancing, debt restructuring, and other management vehicles.
• Optimizing Income. A financial planner can assist in setting up a personalized and effective budget to best allocate income to debt repayment, while considering your lifestyle, current expenses, and savings goals.
• Balancing Other Goals. Many individuals who carry debt also have other important accumulation goals, such as saving for retirement or paying for college. A financial planner can help you balance paying off debt and working toward these other goals.
• Setting Milestones. Meeting with a financial planner gives you a wide-angle view of your finances. Together, you can set milestones to track your progress, while also remaining accountable and motivated.

An imposing wall of debt can derail plans and cause plenty of sleepless nights. But working with a financial planner can break debt down into manageable pieces, help you budget effectively, and prevent debt from accumulating again. A financial planner can help you feel empowered and informed to make smart financial decisions for your future.

Meet with a financial planner to discuss your debt today.  

Bill Kelso, CPA, CFP®, is a financial planner* at Pinnacle Financial Advisors, which assists individuals, families, and businesses with financial planning and wealth management in Sedona and the Verde Valley. He is a Registered Representative offering Securities through UNITED PLANNERS FINANCIAL SERVICES, Member: FINRA, SIPC. *Advisory Services offered through SEROS FINANCIAL, LLC. Pinnacle Financial Advisors, Seros Financial, and United Planners are independent companies.