#113 - How to Pay Off Debt The YNAB Way
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How do Ben and Ernie describe the YNAB approach to paying off debt?
I'm Ben and I'm Ernie and you're listening to Budget Nerds.
You are not alone.
No, you are not. Friends, welcome back to another episode. And this is going to be a good one. This is just going to be a good old fashioned debt pay down episode. Ben, it's been a long time since we've done one of these.
Yeah, you know, I think we kind of go in... We kind of have trends in our content. We haven't talked about debt in a while. And it's kind of like a big deal, you know? It's a huge deal in the personal finance community. So we should probably talk about it. And I really love talking about this because I really think... We have a unique way of talking about debt. One that's maybe a little more forgiving. I think we did an episode a while back where... I don't remember the title, but it was basically like how to pay off debt without making yourself go crazy. Yeah. But we also... Talk more. I feel like it's more holistic. It's it's it's more about kind of breaking your reliance on debt. So you don't you don't need it first.
And then you get into how to actually get rid of the debt you have. Right. So we'll talk about that. But I love talking about it because I really think it's powerful.
The way I describe it in workshops is humane and sustainable. Ooh, I like that. Humane. I don't know where I got that from, but as soon as I heard it, I was like, yes, the YNAB way of paying off debt is humane.
I really appreciate that. Treat yourself like a... Like a human person, you know? Yes. Yeah, it's good. All right. Well, we should just get right into it.
Let's get right into it. There's four steps.
Four steps. To this plan. So step number one, list your debts. List your debts. This seems like the simplest thing, but I think it's actually the hardest. It can be. For a lot of people. Especially if you're scared of your debt. I mean... you got to acknowledge it. And it can be really rough. Or it can feel really rough. But I think a lot of times when you start doing it, it's like... One of two things happens. People are like, oh, it's actually not as bad as I thought. And that's kind of nice. Or it is pretty bad. And you're like, oh, gosh, this is actually pretty bad. But I think it's always better to know. Know the truth. And once you do acknowledge it, you can kind of... you still feel better a lot of the time because you actually have boundaries to the fear.
You know what I mean?
Makes sense.
Yeah, it's like you're running from this amorphous monster and it's scary. And I've used this analogy before. I think it's really good. You're running from this monster of your debt, your financial situation, and it could be anything. You don't even know what it looks like because you can't look at it, right? Because you're running and you're running in front of you. And then you got to turn around and face it. And you might find that it's just a little fluffy Pomeranian.
Yeah, right.
Right? And you're like, what was I so scared of? Or you might turn around and face it and realize, no, it actually is a scary monster. But you might look down at yourself and you got like a sword and a shield and you're a knight and you can slay that monster, right? Like you're powerful. Maybe the monster's scared of you, you know, because you just turned around, right? But if you don't take that first step of turning around and facing it and saying, okay, what does this monster look like? You'll never know. It'll always be scary, right? Yes. So that's the first thing. So what does it look like to actually list your debts? Who do you owe the money to?
That's good. What's the total balance you owe? What's the monthly minimum that you're required to make? And what's the interest rate on that loan?
Yeah. And I'd write down the debt type. Is this a medical bill? Is this a credit card debt? That's part of who you owe. So I think all that information will help you make decisions on what to tackle first later on. And then I think tally it all up. Would you do that? I think you should. Maybe get a big number. That's what I did. I liked doing that.
No, I think it's part of that addressing reality.
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Chapters
4 chapters
1
How do Ben and Ernie describe the YNAB approach to paying off debt?
0:00–5:11
2
What is the first step: how should you list and organize your debts?
5:11–21:32
3
How can you find old or forgotten debts if you don’t know where to start?
21:32–48:08
4
Why must you prioritize necessities before aggressive debt paydown?
48:08–53:10
Speakers
2 identifiedMore from Budget Nerds
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