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Your Financial Life

How to Manage Your Debt

By Todd Draak | Johnson Financial Group

4 minute read time

Each generation faces unique debt management challenges. Younger consumers, especially, are carrying more debt than past generations, according to a recent Experian study. In recent years, both Gen Z and Millennials have taken on more debt, with average household debt steadily increasing since 2020. Demand for most types of loans increased more than usual in 2022 with the largest percentage increases for personal loans and credit card balances. But it’s not just Gen Z and Millennials who are managing debt. Last year, each generation witnessed an increase in overall debt except for the Silent Generation.

Creating a sound strategy to manage your debt puts you in control of your finances and gives you more options for making purchases – from family vacations, to retirement, and everything in between. Most importantly, it can give you peace of mind. Todd Draak, VP Consumer Banking Regional Manager, provides insight on how to manage and pay off your debt using healthy financial habits.

What are the most common forms of debt?

It’s important to understand the different types of debt before borrowing money. Evaluating the benefits, risks and considerations of each category can equip you to manage your debt well.

  Secured Debt Unsecured Debt
Definition A secured loan is tied to something of value, like a car, home, or an investment. Unsecured debt is not tied to a piece of collateral.
  • Mortgage
  • Auto Loan
  • Home Equity Loan and Home Equity Line of Credit (HELOC)


  • Credit Card
  • Student Loan
  • Personal Loan


Benefits and Considerations
  • Usually easier for a consumer to obtain.
  • Typically has lower interest rates.
  • Can be a good way to build or rebuild credit.
  • An unsecured loan may come with higher interest rates and shorter payoff terms.
  • Credit decisions typically are based on an individual's credit history.


The Difference Between Revolving Credit and Fixed Loans

Revolving credit means your monthly payment fluctuates based on your balance. For example, your credit card may have a $5,000 credit limit – you may choose to borrow against some, all or none of it. Examples of revolving credit include credit cards, personal lines of credit, and Home Equity Lines of Credit (HELOCs). On the other hand, a fixed loan is set for a designated period and dollar amount, meaning the interest rate and principal stays the same each month. Examples include an auto loan for a vehicle or a fixed-rate mortgage loan for your home.

Is all debt bad?

Not all debt is necessarily a “bad” thing. In fact, debt managed well can often help you achieve a greater goal or increase your net worth. For example, a mortgage can help you attain a home or investment property; a line of credit may be used to help you make home improvements; and student loans can help you achieve an education that can potentially lead to a higher paying job.

Stay in control of your debt

Regardless of your financial goals, it’s important to stay in control of your debt with proactive financial strategies. Here are a few to consider.

Create a budget

  • Calculate your monthly net income (your take-home pay after deducting taxes, insurance, 401(k) and other payroll deductions).
  • List your monthly expenses like rent, mortgage, auto, insurance, average utilities, groceries, phone, internet, dining, entertainment, etc.
  • Label your fixed expenses (those you can’t avoid, such as rent, utilities, and food) and variable (those that are more flexible like gym memberships, dining out, travel, or streaming services).
  • Determine the average monthly cost of each expense category.
  • Subtract your monthly expenses from your monthly net income to see where you stand. If expenses are higher than your income, you need to make some adjustments.
  • Utilize tools like MyFinance Manager in the MyJFG online and mobile banking app to visually manage your budget and see which areas need attention.

Track your spending

  • Use an online app, like MyJFG, to track your spending. With MyFinance Manager, you can break down spending by category, understand your spending habits, and make adjustments to stay on track. Link credit cards or accounts from Johnson Financial Group or other financial institutions to view your complete financial picture.

Pay your bills on time

Missing or late payments could lead to more debt. Use a calendar to keep track of when bills are due, and set up automatic payments through an online app. With Bill Pay through MyJFG, you can easily pay your bills online and schedule payments within minutes.

Create a debt repayment plan

If your debt becomes unmanageable, consider how to create a debt repayment plan. Here are a few common approaches on how to prioritize your debt.

  1. Pay off the loan with the highest interest rate first. Prioritize your loans with the highest interest rate and work your way to the lower interest rate loans. High interest rate debt may include credit cards, payday loans, or even certain medical bills. Eliminating the highest interest debts first will typically be most effective for saving the most money in the long run.
  2. Pay off the smallest loan first. If you need motivation to get started, consider paying off your loan with the smallest balance first to gain momentum. Then, focus on some of the debt with larger interest rates.
  3. Consolidate your debt. Debt consolidation simply means taking out a single loan to pay off multiple debts. This may make it easier to make payments on time. Ideally, debt consolidation may reduce the interest rate you pay. Examples of debt consolidation may include a personal loan, Home Equity Line of Credit (HELOC) or a credit card balance transfer to pay down balances with a low introductory rate.

Is debt consolidation right for you?

Use our simple debt consolidation calculator and talk to an experienced financial professional to determine if debt consolidation is right for you.

Take the next step

Whether you need help developing a detailed debt management plan or encouragement to just get started, our team of experienced financial professionals is here to understand your unique situation and provide tailored solutions. Contact an advisor today.


Todd Draak

Todd Draak

VP Consumer Banking Regional Manager | Johnson Financial Group

As Vice President, Consumer Banking Regional Manager, Todd oversees the consumer banking offices of the Northeast Wisconsin region for Johnson Financial Group. Working with a dedicated team of financial professionals, he helps individuals and businesses achieve their financial goals.

Loans are subject to credit and property approval, bank underwriting guidelines, and may not be available in all states. Other loan programs and pricing may be available. Certain conditions, terms, and restrictions may apply based on the loan program selected. The term of the loan may vary based upon program chosen. Property insurance is required; if the collateral is determined to be in an area having special flood hazards, flood insurance will be required.