Three Strategies To Tackle Debt

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Many Americans share the same money worries; car loans, tuition and school fees, mortgages, and credit cards are universal concerns, especially for those on the bottom half of the socioeconomic ladder. The ubiquitous anxiety associated with mounting debt inspires some to believe that if you get rid of the debt, you get rid of the stress. Unfortunately, for many people, it is not that simple.

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While the “pay debt first” approach to personal finance is popular, it results in the equivalent of yo-yo dieting whereby debt gets hammered down and individuals are left exhausted by the effort, but when a large purchase or emergency comes up, new debt gets taken out and the cycle starts all over. In fact, it is not the debt that is the problem, it is a mere symptom. It is actually the spending.  It is a difficult nut to crack.

The Strategies To Conquer Debt

We work with individuals and families trying to tackle debt, and our work is most fulfilling when we help them become great savers. Ultimately, we want them to consume consciously but save unconsciously.  What follows are some the strategies we employ to help gain balance in financial decisions and conquer debt.

  1. Don’t Budget, Be Mindful

Budgets are the diets of personal finance. Although they work in theory, they are very difficult to stick to in practice. That said, it is important to have a rough understanding of where your money goes.  Cash flow can be broken out among four categories: insurance, savings, debt, and lifestyle.  If you want to make serious headway on your debt, you should dedicate at least 30% or more of your pre-tax income to both saving and servicing your debt. If you are unable to do this, you may be able to grow your income (through raises or a side hustle) with this target in mind.  If growing income is a challenge, then you may have to consider serious changes to lifestyle to bring your cash flow into balance (especially if debt is growing month to month).

  1. Create a Structure

Once we have determined that debt is an issue, we add a structure to naturally move you to an improved position. This is done by inserting what we call a FLO™ Reservoir account between the paycheck and checking account. By inserting this account, we naturally capture savings opportunities that would have previously been lost (e.g. income increases or maxing out 401(k) contributions).  A FLO account makes sure savings is prioritized before any spending can occur.  As long as checks go directly into checking accounts, savings will continue to be an uphill battle.

  1. Good, Bad, and the Ugly

With structure in place, now we can analyze the debt for opportunities to restructure. This is when we categorize the debt by interest rate and payment structure. The best debt would be at a low interest rate with a long repayment timeline such as a 30-year mortgage. The worst debt would be high interest rate with a short repayment schedule like credit cards.  This allows us to evaluate the best options to paydown or refinance portions of the debt portfolio and make adjustments to the FLO Reservoir account we created.


By shifting how to think about spending, saving and debt, we’ve watched so many people reduce personal finance stress. Employing strategies that can help you evaluate whether debt is a problem and whether a lifestyle adjustment should be considered are important first steps. No matter what strategy is a fit, the eventual goal is for individuals to become unconscious savers and conscious consumers. Let's get rid of the yo-yo of debt, gain some balance, and leave behind the stress ... for good.

About the Authors

Marc GenslerMarc Gensler, CFA, is a personal financial strategist for Strategies for Wealth. It is his mission to show his clients that their financial concerns can be solved through thoughtful and efficient design that gives them permission to take actions they previously thought impossible.

Vidal PeoplesVidal Peoples is a veteran financial advisor for Strategies for Wealth who works closely with individuals to guide them towards improving their financial lives and building financial confidence. He specializes in working with medical, legal, and other professionals to build their wealth and protect their assets.

Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Therefore, the information should be relied upon only when coordinated with individual professional advice.

Vidal Peoples is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Strategies for Wealth is not an affiliate or subsidiary of PAS or Guardian. CA insurance license #0K86573. 2021-123717 Exp 07/23

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