With student loan payments set to restart in October, Zero-Based Budget Coaching Founder Cindy Zuniga-Sanchez joins Yahoo Finance Live to discuss her top tips for repaying debt, as someone who paid off over $200,000 in debt over four years.
Zuniga-Sanchez says there are “three main steps that you want to take.” “First, you want to go ahead and create your debt overview,” by collecting “your debt type, your debt balance, your minimum payment, and your interest rate,” Zuniga-Sanchez explains.
“When it comes to the timeframe, the best thing to use is a debt repayment calculator tool,” Zuniga-Sanchez says. Zuniga-Sanchez notes there are many free options available for the calculator tool including, Credit Karma, NerdWallet, and Studentaid.gov.
“Your debt repayment strategy is going to be key here,” Zuniga-Sanchez explains. There are two methods you can pick from, “the debt avalanche or the debt snowball method,” Zuniga-Sanchez says. Zuniga-Sanchez adds that “having deadlines, having dates, and having this information written down is really quite powerful throughout this journey.”
Video Transcript
- Millions of Americans are set to face the return of student loan payments in October. This comes as the US faces elevated inflation and higher rates. So how do Americans begin to tackle their debt?
For more on that, we're turning to our next guest, who is able to pay off more than $200,000 in debt in just four years. Joining us now to discuss is Cindy Zuniga-Sanchez, Zero-Based Budget Coaching founder and author of "Overcoming Debt Achieving Financial Freedom." It's good to talk to you today, Cindy.
It's worth noting that this is something you're very familiar with, given the debt that you had to shoulder from going to law school. Walk me through the process of paying that down.
CINDY ZUNIGA-SANCHEZ: Yeah. You know, I think that what I like to recommend people are to really see it as three main steps that you want to take. First, you want to go ahead and create your debt overview. Before you can actually tackle this-- maybe large amount of debt, you have to know what you're working with here, right?
So, I recommend collecting these four pieces of information-- your debt type, your debt balance, your minimum payment, and your interest rate. These four pieces of information are really going to be critical to set you on the path for overcoming that debt.
- Cindy, how should people be thinking about the timeline? Because I think when people, when they rack up a lot of debt, they get a little bit overwhelmed, thinking about how long it could potentially take to pay off. So how should they be approaching that?
CINDY ZUNIGA-SANCHEZ: Yeah. I think when it comes to the time frame, the best thing to use is a debt repayment calculator tool. There are so many free options, including a really great one from Credit Karma, NerdWallet. If you have student loans, studentaid.gov has a loan repayment calculator. Use these free tools so that you can calculate.
OK. With the payment that I currently have, how-- by when will I become debt free? Really, your debt repayment strategy is going to be key here. So you can pick really one of two methods-- the debt avalanche or the debt snowball method.
The debt avalanche method, you're going to go ahead and pay off your high interest debt first, and then you're going to work your way down to the lower interest debt. Or you go with the debt snowball method where you're going to pay off your smallest debt first, and then work your way to your highest debt. By using this type of strategy, you're actually going to be able to give yourself a date by when to pay off your debt.
And I think that having deadlines, having dates, and having this information written down is really quite powerful throughout this journey.
- Cindy, I'm curious about your own personal journey-- you know, how you, sort of, went from being a lawyer to what it is that you do now and offering these personal finance coaching advice. I mean, what prompted you to go in this direction?
CINDY ZUNIGA-SANCHEZ: Yeah, I think that for me, as a Latina, as a woman-- as a woman, as a woman of color, I didn't see much personal finance information really speaking to my community. And I thought that I didn't want to just share my personal story-- and yes, hey, I'm tacking down this debt, but I want to share the practical tools, the resources, the tips that I'm learning along the way as well with my community.
And now, we're seeing more and more diversity pop up when it comes to personal finance education, which is really crucial to really bridging that gap when it comes to financial literacy.
- Cindy, you've done an incredible job of scaling your business pretty quickly. What did the plans-- how do you plan to grow that business? And I guess, how do you approach social media and the various platforms as ways to reach your customer base?
CINDY ZUNIGA-SANCHEZ: Right. Well, social media has been incredibly powerful for growing my platform, you know? I mean, just think about how much time you and I spend on our phones, right? And the younger generations spend even more time on their phones, on their devices.
So why not use that time to really fill yourself with the knowledge that you need-- practically speaking for our day-to-day lives. So definitely, social media and growing that platform, creating educational relatable, but also entertaining content. I think, sometimes, people are intimidated by learning about money because they think that the information is very dry, very stiff, but in reality, it's really people, like you and me, educating our communities about this information that is truly so important to know.
- Cindy Zuniga-Sanchez, it's good to talk to you today. Certainly, a lot of people taking notes, especially with the resumption of those student loan payments. Thanks so much for your time.
CINDY ZUNIGA-SANCHEZ: Yes. Absolutely. Thank you so much.
