- Cindy Zuniga, an associate attorney at Venable LLP law firm, racked up $215,000 in student loan debt after completing her law degree at Benjamin N. Cardozo School of Law in 2015.
- Zuniga's experience resonates with about 45 million other Americans who owe more than $1.6 trillion in loans, according to the Federal Reserve.
- She decided to refinance her loans and created a zero-based budget, which helped her fast-track repayment by five years.
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Nothing could have prepared Cindy Zuniga for adulthood and $215,000 of student debt — not even law school.
Zuniga, 30, completed her bachelor's degree at the State University of New York, then went on to pursue a 3-year law degree at Benjamin N. Cardozo School of Law. She graduated with cum laude recognitions and earned a full-time offer as an associate attorney at business law firm Venable LLP shortly after — all in exchange of more than $200,000 in loans. About 90% of her loans were from law school, 5% from college, and the remaining 5% from credit card debt, she previously told Good Morning America.
Zuniga is not alone. About 45 million other Americans collectively owe more than $1.6 trillion in student-loan debt, according to the Federal Reserve. College tuition rates have surged over 538% since 1985, and 3.9 million undergraduates with student debt actually dropped out during fiscal years 2015 and 2016 to pursue alternative career options, according to the US Department of Education.
"I went from a broke college student, to a very broke law student, to earning a six-figure salary as a lawyer in New York City," she said. "It was a major life change for me, and the transition was like overnight."
Zuniga was raised by two immigrant parents in a low-income community in the Bronx. She lacked financial literacy and took a standard approach to paying off her debt in the first few years. Like many others, she was automatically put into a 10-year repayment plan of a $2,000 a month. Everyone around her followed the federal plan and paid whatever the government told them to pay, so Zuniga did the same, she told Business Insider.
Zuniga never thought twice about the strategy until she received a loan statement in 2016 confirming that only $4,000 of the $24,000 she paid in the first year went towards her debt repayment. The rest went to interest.
"That was my breaking point," she said. "That was the point where I realized I need to get a hold of this. I refuse to be in debt forever."
Here are the exact steps Zuniga took to pay off $215,000 in four years.
Here's the budget she used
Zuniga was employed at a New York City law firm right after graduation, and earned a six-figure salary. She declined to state what her salary was at the time. Here is Zuniga's budget breakdown based on post-tax income. The percentages represent the portion of her total income that she allocated for each expense.
She turned to influencers for help
Zuniga went to Google for answers.
She needed a crash course on the basics of money management, like budgeting and saving, and the internet served as a non-judgmental space for her to ask questions.
"I was just Googling when I came across this whole world of personal finance influencers — these finance gurus — and I just started following them," the lawyer told Business Insider.
Three influencers that stood out in the process are Bola Sokunbi, founder of finance blog Clever Girl Finance, Jamila Souffrant, founder of podcast "A Journey to Launch," and Yanely Espinal, who runs the YouTube channel MissBeHelpful.
Zuniga started following these influencers on social media. She listened to their podcasts, followed them on YouTube, and kept tabs on their Instagram pages. She explained that these influencers weren't over-complicating the financial issues the way that a lot of books had been doing, and she was able to understand money concepts a lot easier.
For example, Zuniga knew that she wanted to learn more about investments, but she first needed to understand budgeting and saving beforehand. By simply Googling, "How do I get rid of student loan debt," she was able to access thousands of different strategies.
Refinancing her loans sped up her repayment plan by five years
In the midst of self-educating herself and engaging in media platforms, Zuniga decided to refinance her loans.
The way it works is: She took out a new loan with a private lender in exchange for lower interest rates. Under her private repayment plan with SoFi, Zuniga decreased her interest rate from 9% to 4.5%. She saved more than $40,000 in return.
Nevertheless, refinancing was just one part of the equation. The strategy that allowed Zuniga to cut down her time in debt by five years was her meticulous budgeting system — the zero-based budget.
For example, if you make $5,000 a month, you should know the exact proportions in which it will go toward your groceries, rent, loans, savings, and so forth. You can devote $2,000 to your living expenses (rent, utilities, and cell phone bill), and the rest can be assigned to pay off your debt and personal expenses. When you account for every dollar with a specific "job," you should be left with zero.
"Every dollar you bring in, whether it's through your income or side hustle, it's designated to a specific category," she told Business Insider. "Every single dollar gets a job."
A zero-based budget doesn't mean you have to spend every dollar and live paycheck to paycheck. Assigning a "job" to every dollar simply helps you keep track of exactly where your money is going. Zuniga used the EveryDollar budgeting app to help organize expenses. She was very strict with spending during the first few years while paying off her debt. But she struggled to stick to the plan because limited spending is hard, she told Business Insider.
"I hated budgeting, and I thought it was a waste of time." she said. "I was constantly going over budget until I finally got a hang of it and realized it was actually really useful and effective. It worked."
Zuniga's zero-based budgeting strategy has been successful for others, including Andy and Nicole Hill, a couple who paid off their $195,000 mortgage in under four years, Business Insider previously reported.
How much you should spend on living expenses and your debt payment each month depend heavily on your income and lifestyle. Zuniga stressed that her strategy is entirely different from that of a married person or someone with children. She said a general rule is to dedicate 50% of your income to necessary expenses, 30% to personal unnecessary expenses, and 20% to your financial goals like paying off debt. Nevertheless, the associate attorney admitted that she was a lot more "aggressive" with her debt repayments and made more transactions to speed up the process.
Paying off her debt inspired her help others
Zuniga created an Instagram account in 2018, focused on developing personalized budget plans, and soon picked up a side hustle in finance coaching.
She told Business Insider that she works seven days a week, juggling between a full-time associate attorney job and about a dozen clients a month from her side gig.
"My goal is to have one session with each client, and leave them with a custom plan for the next couple of months," she said. "It's not like I'm meeting with the same client every week or anything like that. That's not my business model."
The majority of Zuniga's clients are women, and most of them are women of color in their mid-twenties and thirties. Though Zuniga is currently debt-free, she sticks to her zero-based budget and she advises her clients to do the same no matter what.
"The goal should never be about debt freedom," she said. "It should be financial freedom. That includes increasing your net worth. I want to make sure that my money is still working for me and it's still going towards my overall financial goal — financial freedom."
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