INDIANAPOLIS (WISH) — New data released the Federal Reserve Bank of New York shows that U.S. household debt balances are on the rise and so are late payments. 

Adam Young, area manager at Everwise Credit Union, stopped by Daybreak on Monday to offer some advice on how to manage debt.

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

He suggests tracking all of your income and expenses, then find out what expenses you can cut back on to increase your cash flow.

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

“You’ve got a fixed rate option – which you kind of think of with your mortgage or your car payment – and then you also have a variable rate debt. This is typically like more the variable rate, meaning that the interest rate can change and this will line more in your credit card debt – sometimes in a home equity line of credit. But it can change a little bit, and can offer a little bit of flexibility when it comes to how much money you have going out on any given month,” Young explained.

Young suggests people approach chipping away at debt in a variety of ways, one of which is known as the “Snowball Method”.  With the Snowball Method, you are committing as much income as you can to your lowest debt while making only minimum payments on the rest.  

“Stack up all of the different items that you owe money on and you take the one that you owe the least amount on – and you take all the extra cash flow that you have and you apply it towards that debt. While just maintaining the minimum required payments on all the other debts. Once that debt is eliminated, then you go back and you say, ‘All right, I’m going to go and hit the next one that has the most money that I owe.’ And you kind of keep snowball approach to that debt and it ultimately gets the last item and you’re debt-free at that point,” Young said.

Watch the interview for more advice on lowering your debt.