8. The FAMILY Method™ Part 2 | A - Attack Debt
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[00:00:00] Hey friends. Welcome back to the Household CEO podcast. It's Calista Anderson here, and today we're continuing on with the Family Method. If we haven't met yet, I'm Calista Anderson . And I run my household like a CEO. And I help other families do the same.
~I'm also a financial, I'm also a licensed. ~I am also a licensed financial professional, and I help families build long-term security in a way that actually supports real life. Just a quick note before we dive in. Everything I share on this podcast is for educational purposes only and not personalized financial advice.
If you haven't listened to the last episode. I would definitely recommend going back and listening to that one first, but if you're here now, no worries. I'll give you a quick refresher. So this is a series where I go over my family method and the family method stands [00:01:00] for f. Fund and manage cash flow. A attack debt, M, multiply income.
I ensure what matters. L, leverage assets and y your legacy. ~So this framework is how I help my, ~so this framework is how I've helped my own family move from financial stress and survival mode into stability, growth, ~and long-term legacy built. ~And long term legacy building. ~And to date, we're go. ~ Today we're focusing on the letter A attack debt.
~So running the household like a household, CEO,~
As a household, CEO, and a licensed financial professional. Financial health is one of the biggest things I focus on, ~and it's something I teach. ~And it's something I teach every single one of my clients and now am sharing on this podcast because when we talk about health, most of us think about food or movement and exercise, maybe sleep hormones or stress, but there's one part of health.
We [00:02:00] almost never talk about out loud, and that's financial health. When we're not financially healthy, it affects everything else. We don't sleep well. Our nervous system stays activated. Stress becomes constant background noise, and it spills into our relationships. It impacts our patients, our focus and energy.
You can be eating well, working out and doing all the right things and still feel exhausted. If your finances are in crisis mode. ~I ~financial stress can be a full body experience and for most families, the biggest driver of that stress is debt. today's episode is not about shame, it's about restoring financial health so the rest of your life can breathe again.
~So if you're ready to go over some financial health, let's.~
so if you're ready to go over some financial health, ~let's dive right into it. ~Let's dive right into it.
[00:03:00] All right, so before we talk about how to attack debt, we need to be clear about what kind of debt we're talking about because not all debt affects your health the same way.
First, I wanna go over what unsecured debt and what secured debt is. unsecured debt is debt that is not tied to physical assets, so this includes credit cards, personal loans, medical bills, and some lines of credit. ~There's no h, ~there's no house attached, no car attached. No income producing asset attached.
~That's why it's, ~that's why unsecured debt usually has higher interest rates, aggressive compounding, and long payoff timelines. If you only make minimum payments, unsecured debt compounds against you and produces [00:04:00] nothing in return. On the other hand, there is secure debt. Secure debt is tied to an asset ~like the mortgage.~
Like mortgages and auto loans, ~the interest rates, ~there are different interest rates on these and different timelines, different strategies.
So there is collateral that the bank can take away if you stop making payments.
~Now I wanna quickly break down even fur. ~Now I wanna quickly break down debt into three types even further. Once you understand unsecured debts, the rest becomes much clearer ~there. So there is bad or toxin. ~So there is bad. Or I like to call toxic debt. There is neutral debt and there is productive debt.
So bad debt is mostly unsecured, which includes high interest credit cards, lifestyle, personal loans, or buy now pay later balances. This is debt that actively works against your family. ~This the. ~[00:05:00] This is the debt we attack aggressively. ~Then there is neutral debt. ~Then there is neutral debt, which includes student loans, car loans, maybe medical debt.
Not ideal, but manageable with a plan. This debt doesn't build wealth, but it doesn't have to destroy it either. Okay. And then lastly, there is productive debt, which is a very strategic debt.
This includes mortgages, business loans, and some income producing assets.
So this debt can actually produce a return for you. For instance, your mortgage, your home value will hopefully continue to go up, and your building equity business loans will hopefully be making you a return on your investment and on your business.
And so these are debts that can actually work to your advantage over time.
[00:06:00] But this episode is focused on bad debt or toxic debt.
When people think of debt, it can be overwhelming because we lump everything together. Okay.
~And try ~and people try to attack everything at once. They don't know the interest rates or they rely on minimum payments. They never set a timeline.
If everything is an emergency. Which debt usually feels like an emergency, then nothing gets resolved.
Just to let you know that if you are in debt and you're feeling bad about it.
I just wanna let you know you are not alone. Here are some recent studies of where debt lies in America.
By the third quarter of last year, which was 2025, there was a record high and it was continuing to trend upwards
The debt of Americans in credit cards, and this is only credit cards, [00:07:00] rose to about $1.23 trillion.
The average balance per card holder with credit card debt was around $7,300.
In other studies, the average US household credit card debt
was more than $11,000 among those jets, 61% have been carrying it for at least a year.
And about 22% of cardholders say they only make the minimum payment, ~which can significant, ~which can significantly lengthen payoff time and increased interest costs.
~So if you are part of these,~
so if you can relate to these studies, ~I,~
I want you to take a step back and just hear me out. There is a way out
and there's actually several ways to attack your debt. Now I'm gonna go over some of them.
Now, if you look at your debt and you feel like you can attack this debt on your own [00:08:00] with just a little time and effort and discipline, then you may wanna follow this framework.
Step one, you wanna have full visibility of all your bad debt..
Just treat it like facts and don't attach emotion to it.
~So I want you to do it without shame list.~
Get rid of any shameful feelings 'cause and I'm speaking from experience, ~which, ~which I'll share with you guys a little later.
Just look at it as you have this issue, you're getting all your strategies together and you're gonna move forward. So step one, full visibility. List every debt list the balance. The interest rate, the minimum payment, and whether it is secured versus unsecured.
Now, even though we are focusing on the bad debt, the unsecured debt, it is good to still list your secure debt, like your mortgage and your car payments [00:09:00] if you have one. Because that is gonna help you calculate your cash flow for the month and how much you can allocate to each thing.
Okay? Step two, look at your list and
focus in on your unsecured debt, which is mainly credit card debt. And list them from smallest, balanced to largest.
Okay. Now that you've listed all your debt secured and unsecured, ~I want you to make. ,~ I want you to separate your unsecured debt. Now, looking at that list,
you can choose the attack strategy. ~I,~
and everybody is different, and you pick the one that you think will work best for you.
So dead payoff is not just math. ~There. ~Dead payoff is a combination of psychology and math. There's a lot of emotions involved in money, whether you have a lot of it or you are in the [00:10:00] red.
So looking at your list, ~there are three ways. ~There are three attack strategies you can choose from. ~The first one is the small. ~The first one is the snowball method, and in this method, you pay the smallest balance to the largest.
~So ~the goal ~is ~for the snowball method is to pay off the one with the smallest balance. Simultaneously. You're paying the minimum payment on the rest of your credit cards ~and ex, ~and any extra money you have, you would put towards this.
Credit card with the smallest balance.
This method will give you quick wins and you'll build confidence early. 'cause as soon as you pay off that smallest balance card, you will roll over what you've been putting towards that card into the next smallest balance card.
This is really good for families who feel overwhelmed 'cause you get that quick win and it's gonna help you [00:11:00] gain momentum and build confidence.
True. You may pay more interest overall, but you'll actually finish it because you'll have that positive motivation so it's really good for anyone who's tried and quit before.
The next method is the avalanche method. This method is a math first, very analytical. You would pay the highest interest credit card to the lowest, so this saves the most money long term.
This is efficient but requires a little more patience because ~it may take you longer. ~It may take you longer to pay off. ~This first, ~the first card you're attacking.
And lastly there is the hybrid method, which you can do a little bit of both. Maybe knock out one or two of the small balances for momentum and then switch gears to focus on the highest interest unsecured debt. This way you gain that [00:12:00] momentum ~and then you quickly. ~And then you quickly switch over to the ~interest saving,~
interest saving avalanche method.
So in my own debt experience, I've had actually two experiences.
My first debt experience was in college when I had no clue about how credit cards worked.
They were practically giving them away . ~They were practically giving it away. ~On my college campus,
I wasn't in the habit of paying monthly bills 'cause I was right outta high school. Didn't really have any bills and I wouldn't pay attention to the mail. Everything was paper mail back then ~and a few months later. ~And a few months later I realized I had this credit card debt, which was maybe just a few hundred dollars in the beginning, ~and then it turned, ~and then it turned into over a thousand the next year.
And ~that may not, ~that may not sound like a lot, but as a 19, 20-year-old. With barely a ~job, with a barely ~part-time job. That was [00:13:00] overwhelming.
~That time I didn't even know. I, I didn't, and I got a job and paid off that debt before I got into nursing school.~
~And at that time I was applying to go to nursing school.~
~I eventually got a, ~I eventually got a job and I worked really hard to pay it off. I didn't think about the interest or the balance. I just. Kept paying as much as I could as quickly as I could because I wanted to not have any debt once I started nursing school. 'cause I knew once I started nursing school I would be more than full-time focused on school and wouldn't be able to work as much.
And I did it. I was able to pay it off before I started nursing school and it felt really good.
The second time I experienced this bad debt situation was when we first had our two kids back to back 13 months apart, and my husband was just getting started with his business, his practice.
I wasn't that focused on money and the household finances, which I was in charge of because my husband was busy working, and the staying [00:14:00] of out of sight, out of mind is totally true. ~Again, this was, ~again, this was a flashback of. You know, my college days, but now as an adult with kids, and I said to myself, how did I get myself or our household into this situation?
Now the balances at this point were a little bit more now that I had a family and we had a home and all that stuff, and I had to be a little bit more strategic 'cause we had more expenses than when I was a college student. Okay, ~so for, ~so during this experience, ~I,~
I chose to do the snowball method because I really felt guilty and I had the shame, and I just, it just felt so overwhelming. ~And when I chose to do the snowball. Method. ~And when I did the snowball method, it really did give me confidence. Within a couple months, I had paid off the first small credit card and worked my way up to the next smallest balance credit card, and I [00:15:00] just got into this momentum and I was on a roll, and I would say it took about a year or so to completely get out of this debt.
And since then I have not carried a balance on our credit cards. I take that back. I may have carried a little bit when we renovated our house, but I made sure it was on a zero interest credit card for a year type of situation. I don't think I have paid interest on a credit card for.
15 years . I'm not sure, but it's been a really long time since I've paid interest on a credit card.
And what I learned is you do not attack everything at once. Just like any problem or issue, uh, you focus on either the smallest balance or the highest interest, ~and you, ~and before you know it,
your focus creates speed. ~I,~
~now we can tie this. ~Now we can tie this back [00:16:00] to the previous episode, which was all about funding and managing your cash flow.
The funding part of course, is our income, but the managing is really paying attention to your expenses. Like I had mentioned, ~forgotten. ~Forgotten subscriptions, autopilot purchases .
~And all the convenience. And all the convenience ~and all the convenience purchases we're used to like Uber Eats and.
unnecessary Amazon purchases.
~I ~So getting your monthly expenses really lean ~and lowering ~and lowering your monthly net. Can help you with this second step of attacking debt. Now, for some families listening, the issue isn't discipline or strategy. It's that the unsecured debt is so large mathematically they'll never catch up.
Common signs are minimum payments barely touching the principal. The interest [00:17:00] outpacing the income and credit cards are ~just used to survive, and credit is ~just used to survive. There is a difference between attacking debt and drowning in it. ~And for some families this is where debt relief this is. ~And for some families, this is where debt relief can be appropriate.
~So there are other debt resolution options out there. ~So there are other debt resolution options out there if you feel like. Your debt is unmanageable to do on your own, and ~it's different from, and obviously ~it's different for everyone. It's dependent on how much your debt actually is. It depends on what your income or your family household income is.
Because if your debt is too large, making minimum payments could take you over 15 years to pay off, and you will have paid ~above and beyond what you actually bought ~above and beyond what you actually purchased.
So this is where debt relief can be appropriate. I work with a company called Debter, and for some families this can be a responsible ~bridge forward. This can be a ~bridge forward
now [00:18:00] with this option.
The company helps with negotiating balances with creditors, ~creating one ol, ~creating one consolidated monthly payment, which will resolve debt for less than what's owed.
So it's not a loan, it's not a balance transfer, and it's not bankruptcy.
~So if you're listening, and ~so if you are listening and thinking, I might need support with my unsecured debt. You can go to Calista Anderson and that's Anderson with an SE n.com/attack debt to learn more and see if a debt solution makes sense for you.
So on there on callista anderson.com/attack debt. You can just put in minimal information and then. Someone from the team will reach out ~to make sure ~to see if you are a good fit for this.
Now, some of you may be thinking what is the difference between debt relief and bankruptcy? [00:19:00] So debt relief is going through a company like the one I just mentioned ~and. They negotiate a process ~and they go through a negotiating process
for you. And the number one question that's asked about this is, will your credit be affected? And yes, it will, ~going through this type of option going through. ~This type of resolution will lower your credit score, but chances are your credit is already being ~affected, ne ~affected negatively with a high debt to income ratio and maybe late payments.
~So yes, your credit. ~So yes, the credit score does get impacted in the short term, but most people are able to rebuild it ~faster, ~faster than they expect because you're cleaning the slate a lot sooner. Bankruptcy, on the other hand, ~which some people,~
which some people use. As their debt resolution is actually a legal court process.
Usually this is for an even larger amount of debt, [00:20:00] and the credit impact is much longer, usually seven to 10 years.
~It. ~For some people it is necessary to file bankruptcy,
~but the focus for any of these, but the focus for any of these, ~but the focus for any of these options is to get unstuck. ~Get reset. ~Reset yourselves for financial health.
~Was.~
~When I was using the snowball method, I became a smarter shopper.~
~Oops. ~When I used the snowball method, ~I. I, like I mentioned, ~I gained momentum, I gained confidence, but I also became a smarter and more disciplined shopper because as soon as you pay off that first credit card, you just know you don't wanna build it back up. ~And here's a side, ~and here's another thing I did ~after I paid off,~
after I paid off a few credit cards, I stuck to two credit cards that we used and stopped using all the rest of 'em. I didn't close it because I was told that it wasn't good for your credit to close credit cards, eventually, they closed it for me.
But I don't think that affected my [00:21:00] credit.
~Yeah. ~Something about, ~you know, ~focusing on not charging a bunch of things on my credit card. ~It ~just made me smarter in shopping.
~And it doesn't mean I was, ~and it doesn't mean I became a cheap scape because I would rather buy something that is more expensive, good quality ~than to have to, ~than to buy something cheaper, but then have to buy it twice later down the line.
So you can buy nice or buy twice.
In closing, ~financial habits are actually ~financial habits are health habits, and I wanna leave you with this thought. Financial habits that prevent debt are a lot like eating well and moving your body and taking care of your health. I'm not a fitness expert
or a diet expert. But no one eats one healthy meal and says, I'm done forever. No one works out once and expects lifelong strength. Money works the same way. Debt doesn't actually come from one bad decision. It comes from small habits [00:22:00] repeated long enough without a system.
We don't punish our bodies into health, ~and we don't punish our finances, ~and we don't punish our finances into stability. Paying off debt is like losing weight. Staying debt free is like maintaining health. This isn't about perfection. It's about systems that support you when life gets busy.
Financial health is health, and when you strengthen it, everything else gets lighter.
So because of my debt experiences, I've learned how to use credit cards in a way that actually supports my financial health instead of hurting it. I no longer carry a balance. I don't pay interest. And yes, I do enjoy the points, but the points are not the primary
reason I use credit cards
okay. Can I get your ~Can I have like three minutes? Okay. Okay. I'm just wrapping it up Okay. Because I'm using my computer to, to look at the screen here. Yeah, I understand. Okay. Okay.~
The primary reason I still use credit cards is because I don't wanna use ~my debit credit for. ~My debit credit card for everyday spending because of the risk of fraud.
When a debit card is compromised, [00:23:00] that's your money immediately tied to your bank. And so we don't wanna use our debit card for purchases.
~So today, credit cards for me are a tool and. So today credit cards for me are not a tool. Oh. ~So today credit cards for me are a tool, not a crutch. ~It's not a pay, ~it's a method of payment and not borrowed money. It's a way for me to protect my cash flow and not disrupt it. ~That shift only became possible after I got outta debt and learned how to manage our household cash flow.~
That shift only became possible after I got outta debt and learned how to manage the household cash flow,
and that's the key point. Credit cards are not the problem. Carrying balances is. When you're paying interest, the system is working against you, and when you're paying in full, the system works for you.
All right, friends, I hope that that was helpful. Full, and again, if you are somebody who is in debt and it is feeling heavy, there are options.
You can totally do this on your own and only [00:24:00] you know what is manageable. Now, if you feel like it is unmanageable, I'm gonna list the links in the resources, in the show notes ~so you can check out, ~so you can check them out.
~And if you are enjoying ~and if you are enjoying the podcast so far, please hit follow or subscribe and leave a quick rating or review. ~Also share with those who think, ~also share with those who you think this could be helpful to. It may seem small, but those things can really help this podcast reach more families.
And help build calmer, more intentional homes just like you. Until next time, friends, take care.
