7 Things to Know about Debt Payment

Whether it’s a credit card balance, student loans, a new car payment or a first time mortgage, debt is common.

Yet it remains a taboo subject that is not talked about nearly as much as it should be, since it is universal.

YouTuber Aja Dang recognized this fact when she decided to record her own $ 200,000 debt payment trip on her YouTube channel, share her monthly budgets and get on with it. to its 450,000+ subscribers.

For anyone who is paying down their debt or waiting to take the first step, Dang has some lessons she would like to know when she first started dealing with it. her own credit cards, car payments and student loans.

Below, CNBC Select outlines the seven things she hoped someone would have told her about paying off her six-figure debt.

“It may seem obvious, but you don’t really understand that hard [debt] and until you are there, “Dang says.

Putting money into your debt instead of going into other needs and wants, it offers a lot of promise not just to take in, she says . And, if you tap into a bunch of sidewalks to bring in more money, it can physically drain.

This level of commitment can pay off emotionally, especially if you are facing large sums of money. “I can guarantee you’ll hit a wall,” Dang says. “There will be a moment in your pay trip that you want to skip.”

For Dang, this was the moment after she paid off her third largest debt of $ 30,000. “I thought I would have a sense of accomplishment and excitement, but I felt it because I wasn’t even halfway to being debt free.”

What you can do: No matter how big or small your debt burden, create goals to follow along the path and reward yourself when you accomplish them. This can help you stay motivated on your journey. It may help to write down the kind of life you want to live when you are debt free to show your success no matter how far you are from getting there. Melanie Lockert, a personal finance blogger and author of the book, “Dear Debt,” created what she called a “debt freedom dream list” where she wrote down everything she would do once she paid. off her $ 81,000 in student loans.

Dang will say this is her maximum number to pay off your debts. She found her community through her YouTube channel where viewers left inspiring comments on her videos.

“You need people in your corner who can push you when you hit your walls,” Dang says. “For me, my support system has become a complete online alien.”

What you can do: It is an obvious support system for close friends and family. With the resources available today, you don’t have to be a YouTube star to find your community online, either. Online (and free) debt payment support groups that help provide emotional support, encouragement and open discussion include the Facebook Financial Common Cents group for those with credit card debt, the subreddits on Reddit for student loan lenders and Anonymous Debtors for compulsory debtors. Or, if you prefer YouTube, search for vloggers like Dang.

“It’s easy to be embarrassed about your debts and try to keep it a secret, but when you hide from it, it makes it harder to pay off,” Dang says. you are not alone on your journey. “

Don’t let others tell you what’s important (or unimportant) in your budget.

Dang learned this in the hard way when her viewers questioned why she included facials in her monthly budgets (she openly considered her expenses on her channel). To pay off her $ 100 a month, Dang found $ 100 to cut out of another spending segment that didn’t give her as much value. But not everyone understood this.

“You can spend money on what you want, but remember that it’s going to come at sacrifice for something else,” she says. “For me, I’d rather spend a weekend (gas money, outdoor dinner, drinks) than my facials. “

What you can do: Throughout your debt payment journey, do not sacrifice everything for debt relief. Whether it’s a routine or your weekly latte routine, pick one thing that’s important to you that you prioritize over any other optional expenses. Whatever that product or experience, make sure you allocate money for it elsewhere in your budget.

If you need help creating and managing a budget, consider signing up for a budget app that basically does the job for you. CNBC Select reviewed and compared over a dozen budget apps to rank our top five and found that Mint is the best free app for offering basic, extra-budget features on bill payment reminders, custom alerts when over budget and a credit check service.

“Paying off debt is a personal journey, but it will change the lives and relationships of those around you,” Dang says.

It took a while for Dang’s girlfriend to find out that she wasn’t going to jump on a plane for no more energy trips. The same thing applied to her friends: “My friends had to understand that if we wanted to meet for drinks, it would be a happy hour,” she said.

Prohibiting your spending will undoubtedly affect what you are able to do with your partner, roommate, friends and / or family. If you switch to home cooking instead of going out to eat, it is a sacrifice for you and the person you eat.

What you can do: You may be missing out on special limiting events, but the money you save will eventually allow you to have more control over your debts. Instead of forcing you from relationships so you can cut costs, find free activities related to your loved ones. For example, make dinner at home but dress up with your friend or partner to make it feel more like an event.

“You may lose relationships with people who don’t understand why this trip is important to you – and that’s great,” says Dang. “You’ll be a very different person when you find freedom finance. Pay attention to who is going around. “

One way of paying off debt does not work for everyone. Choose the strategy that works for you and consider the type of debt you owe, your debt, your income level and how you stay motivated.

Some may prefer to pay amounts with the highest interest rates first (the avalanche method), while others prefer to pay their minimum amounts until they are stimulated from the beginning (the snowball method). Dang chose the latter.

“I’m a very competitive person so I needed to see those quick wins,” she says. She paid off her credit cards in one night (what she estimates is around $ 1,200), her car in three months and then she left off most of her debts – her undergraduate and graduate student loans of around $ 180,000 – for last year.

What you can do: There are advantages and disadvantages to both avalanche and snowball debt payment methods. Theoretically the avalanche strategy saves you money in the long run, but some say it can be harder to stay motivated because you’re dealing with a bigger balance in advance. The snowball path will allow you to start writing off debt so you can see success more quickly, but the amounts with higher interest rates will keep adding up. This is why there is no right way; much of it depends on what drives you.

While Dang quickly credited her YouTube community for encouraging her on her debt payment path, her viewers were also embarrassed by her decisions.

“At the beginning of my journey, people asked me to be silly to take out student loans,” says Dang. “At the end of my trip, people said that debt is easy to pay off and that I should have done it sooner.”

What you can do: No matter how big or small your audience is, you know people will always have something to say. Find a safe place to share your debt problems and celebrate your successes. This could be your partner, friend, relative, colleague, therapist or one of the online support groups we mentioned above.

“I promise you, once you make your first budget and finally admit the amount of debt, you will start to feel good about yourself,” Dang says.

As you take on your debts and create a budget with goals moving forward, it makes you feel more secure in your future, she explains.

What you can do: Deal with your debt by writing down everything you have. Seeing your debts can help you create a budget so that you can then allocate your money strategically. This will help you feel more in control, which will give you confidence.

“When you recognize your debt instead of avoiding it, you are setting the building blocks to change your life forever,” Dang says. most avoid. That makes you special. “

And, when you last paid off your debts, you will also have built up big savings habits, such as how to put money aside each month. To start or build your savings, consider a high-yield savings account. Ally Online Savings Account offers a solid APY, no minimum account balance, no monthly maintenance costs, an easy-to-use mobile app and 24/7 live messenger service.