"Zero-Based Budget" w/ Cindy Zuniga 274

In today’s podcast episode Jim and Tyson joined Cindy Zuniga with www.zero-basedbudget.com. Cindy was born and raised in the Bronx, and lived there for most of her life with her parents who immigrated from Ecuador and Honduras, and two older sisters.  Growing up, she didn’t learn much about money management but was keenly aware of how money affects nearly every aspect of our lives. Cindy graduated law school in June 2015 and landed her dream job at a prestigious law firm, but found herself with $215,000 of debt.  She then set out to take control of her finances and begin her debt free journey in January 2016.

[email protected]

Listen to the podcast here.
Watch the interview here.

6:16 215k in debt
7:29 refinancing
13:23 sense of urgency
14:33 mindset tip
20:57 financial literacy
23:51 the things outside our control
26:02 create a budget

Jim’s Hack: The app Headspace for meditation. https://www.headspace.com

Cindy’s Tip: Book: The Simple Path to Wealth by JL Collins

Tyson’s Tip: Book: Hustle Harder Hustle Smarter by Curtis “50 Cent” Jackson 

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Run your law firm the right way.

This is The Maximum Lawyer Podcast.

Your hosts, Jim Hacking and Tyson Mutrux.

Let's partner up and maximize your firm.

Welcome to the show.

Jim: Welcome back to The Maximum Lawyer Podcast. I'm Jim Hacking.

Tyson: And I'm Tyson Mutrux. What's up, Jimmy?

Jim: Oh, Tyson. It's funny that you got your kids on the other side of the wall trying to do their classwork while we're recording our episode. The joys of home schooling and home working. It's a strange, strange time.

Tyson: Yeah. And I'm only doing it because I'm waiting for the internet to be set up in the office. It's just a bizarre situation. I don't know if the internet company is working from home. They’re normally really, really good. So, I'm trying to give them a little bit of slack but it's been pretty frustrating. It's kind of crazy.

So, yeah. So, how are you doing, man?

Jim: I'm great. I think I've stumbled upon a little thing that I've sort of like. I've been talking to Guild members on my walks, on Monday nights, when I go to Nur’s soccer. So, I think I'm going to make this sort of a regular thing. There seems to be some interest.

Tyson: You’re really get into that, man. I like it. It's good. I'm glad you found a productive way of using your time because you recently deleted a Twitter app, right?

Jim: Yeah, yeah. I realized that, when I'm on Twitter, I'm just sending out negative energy to the world most of the times. It's a struggle. I keep going back to it like an abusive husband or a spouse but, yeah, I'm trying to move on from that and maybe developing some new habits.

Tyson: Cool. All right. We want to get to our guest this week.

Jim: Yeah. Do you want to go ahead and introduce her?

Tyson: Yeah.

We have Cindy Zuniga. She graduated law school in 2015. I think this is going to be a really, really good one to go over because it's about debt - student debt. So, she landed her dream job at a prestigious law firm but then found herself $215,000 in debt, about 90% of the debt was from law school. Exactly 48 months after starting her debt free journey, so here we are, she became 100% debt Free. She's got an article on Forbes. And she was also featured on Rachael Ray.

So, Cindy, welcome to the show.

Cindy: Thank you. Thank you for having me.

Jim: Cindy, we always like to talk with people by, you know, sort of outlining their history, maybe after college, you know, how you went to law school. Maybe you could talk a little bit about what you were thinking when you took on all that debt, sort of, like what they tell you, what the what the promises are and then what the harsh reality is when you graduated.

Cindy: Yeah, yeah. No, definitely. So, I graduated from Stony Brook University, here in New York in 2012, and I went straight into law school. So, you know, I didn't take any breaks or anything and went straight through. And I actually went to law school because I had plans on running for office. That was actually the reason why I went to law school in the first place is because I wanted to go into government.

I had interned for several years for then Senator Hillary Clinton. This was back in like 2008. And then, for Senator Schumer for a few years. So, that was kind of my thing. I never envisioned going into the private sector. But, you know, then I started law school, and I was exposed to all these different areas of the law and, in particular, private practice and big law. So, you know, these larger, full-service type law firms in New York City. And, you know, I heard that these were the coveted jobs, the difficult jobs to get. And so, I was like, “Great. Challenge accepted. I want one of those.”

Yeah, so you know, to be honest with you, a lot of people they asked me, you know, “Would you have taken on all that debt if you knew you were going to graduate with, well, even greater debt when you take into consideration all the interest that accumulates and everything?” and, to be honest, my response is “yes,” because that's how I became a lawyer. I mean, full stop, I needed to take on that kind of debt. I mean, sure, maybe if I had chosen to go to a different law school, I could have taken on less debt or, you know, had I chosen on to go on to others, I would have actually taken on more.

But for me, in that moment, it was what was right for me. I am the daughter of immigrants. I was born and raised in a very low-income community in the Bronx, New York. So, for me, you know, I was sort of limited in my financing options for law school and, you know, I did what I had to do. Yeah, like you mentioned, I graduated law school with a whole lot of debt.

Tyson: So, I guess, I know you came out of law school with a lot of debt. You got a dream job and all that. I'm assuming that these jobs were not high-paying jobs, even though they're highly coveted, those positions you had. And it sounds like you would go back and do it all over again, if you could, is that about right?

Cindy: I would. I'm very glad I don't have to because law school is extremely difficult. But, yes, if I'm being honest, I would. And I don't regret going to law school. I don't regret taking on the debt that I did. But also understand that hindsight is 20/20, right? Like I was able to pay off all of my debt in four years.

I mean, I don't think that's the norm. You know, I don't have children or, you know, anything like that so my financial obligations were not so great that some of maybe my peers have had. And so-- yeah, sure. Now, speaking to me, I absolutely no regrets. But maybe if I had chosen a different path, maybe a different type of job, or even a different school, then maybe my response would be different.

Jim: So, walk us through how you actually paid down that massive debt. That's like $215,000. At least around here, in St. Louis, that's sort of a nice house. So, how did you go about it? Tell us sort of step by step how you did that.

Cindy: Yeah, sure.

So, you know, my first year of graduating law school, I had a $2,000 minimum monthly payment. And I was put on the normal, you know, debt repayment plan that people are put on. I think it was it was a 10-year repayment plan. And so, if you do the math, which I know a lot of lawyers aren’t so super fans of math but it's necessary here, you know, that would’ve been $240,000 total repaid on a $160,000 of debt that was taken out. And so, that's $80,000 of interest, you know, on that debt alone by following the normal repayment plan that I was put on.

And so, a year in, I realized that that was going to be my situation, all this massive interest that had accumulated. And so, I actually decided to refinance my student loans. And by refinancing, you know, for those that aren't familiar, you basically take on a private loan with a separate company that pays off your debt - in my case, to the federal government, and you now have that new loan with the private entity. And so, the biggest advantage there is paying a lower interest. And so, my interest was cut in nearly half. And I also shrunk my repayment period.

But with that came an even higher minimum payment, because I shrunk the repayment period. And so, my minimum payment went from being $2,000, a month in year one to $3,000 a month in year two. And that's when I started really budgeting my money very, very carefully. I live in New York City which is, obviously, an extremely expensive place to live. And so, I kept my rent cost very low. I, you know, shared my rent cost with my partner for a one-bedroom apartment in Harlem which is where I was living the whole time that I was paying off my debt. 

You know, honestly, I did the things that a lot of people don't do. I packed my lunch every single day. You know, a lunch in New York City can easily cost $15, very, very easily for just like a salad and a bottle of water. And so, I found ways to just, like I said, bring my costs very low, as low as I could.

And then, I threw everything additional to my debt. So, aside from my minimum payment, I threw bonuses, raises, you know, anything that I possibly could on there. So, if you're paid bi-weekly, for example, there are two months in the year where you get three paychecks in one month versus two. And so, on those two months, I would take that entire paycheck and put it towards my debt. So, I was doing things pretty, I think, radically, but it was effective and, four years later, I paid it all off.

Tyson: So, are there additional risks to refinancing and going with a private company because with these government loans there are a lot of benefits? I mean, what are some of the risks when it comes to going with a private loan?

Cindy: Well, I think, now more than ever, the risks are even more obvious. You know, when your loans are with the federal government, they're essentially-- it's kind of like having an insurance plan, sort of, right? I mean, if you were to get laid off, if your income decreases, there are options for you when it comes to your federal loans. When you sign on a separate agreement with a private company, I mean, they don't really care, necessarily, if you were to lose your job or something, you know, another life circumstance happens. So, for me, yeah, it was a risk. It absolutely was a risk.

And I think that also for lawyers that are in the public sector, there is, you know, public service loan forgiveness. There's that program that's really popular. And where you do, you know, you commit to 120 payments, you know, to your federal loans. And, basically, they get discharged at the end of 120 payments, but you have to work with a qualified employer in the public sector. So, obviously, that was not an option for me because I went into the private sector. So, you know, if you are in the public sector, I would ask you to pause, right, before going ahead and just refinancing and really evaluating what your situation is like.

Now, I had a friend that was in the public sector for a few years and she said, “This isn't for me. I don't want to be in public interest” and she shifted over to the private sector. And so, now she's on an aggressive debt repayment plan, where she decided to refinance her loans, etc.

So, you know, back then, to be honest with you, when I refinanced my student loans in very early 2017, you know, the economy was doing really well. I wasn't really at all hesitant on just taking the plunge and saying, “Yeah, let me go ahead and refinance.” But, with that said, I did refinance with the company called SoFi. I would say, they're one of the better student loan refinancing companies. They've actually rolled out certain protections for their borrowers which, you know, you can read more about if you go on their website. But not every private company is going to do that. So yeah, there are certainly risks.

Jim: Cindy, why was it important for you to pay off this debt as quickly as you did?

Cindy: It weighed on me and I needed to get rid of it. And this was something that it was my goal is to do it, you know, by the time I turned 30. And, you know, like I mentioned earlier, I'm the daughter of immigrants. I had nothing handed to me in my life. I don't have the ability to ask my parents to like, “Hey, can you kind of help me out a little bit with groceries, or with rent, or any--" That's just not an option.

For me, on the other hand, I need to actually be willing to step up to help my parents who did so much for me and my sisters. And so, for me, sure, you know, I don't have children, but I do have a family. I do have my parents that are older, that may need me, that do need me sometimes, you know. And so, for me, I needed to get rid of that like monster that I had, that I was responsible for getting rid of, you know. And I just had the sense of urgency that I need to I need to pay it off. And it's not just that I need to pay it off. I know I can pay it off.

I think that's a that's a key thing there, too, is that I knew that I was in a very financially privileged situation where I could afford to pay off my debt in, you know, five years or less. And so, I set out to do it. And I'm really, really happy that I did. You know, I have absolutely no regrets. I know.

People have asked me, “Cindy, with all the like student loan forgiveness proposals that presidential candidates have come out with, for example, like, are you going to regret it if they just like cancel student debt?” And, to be honest, no, because I did what was right for me, like I said, at that moment. And, in that moment, I knew I could pay off my debt. And so, I did.

Now, you know, if in the future, student loan debt is canceled, then that's great. I think that's going to be a great relief for, you know, thousands of borrowers across the country. But I'm still satisfied with my decision of going ahead and aggressively paying it off.

Tyson: Cindy, so what mindset tip would you give to the people listening to this right now that are getting a little bit shaky, they're getting a little bit nervous, and what they do is they typically, you know, block it out. They say, “You know what? I'm not going to take any action. I don't even want to think about it.” What mindset tip would you give those people?

Cindy: Yeah. Well, I mean, you know, I do personal finance coaching on the side. I am a full-time lawyer, but I also do personal finance coaching. And behavior is the key in all of this. It's not just about the numbers. You know, how much money someone makes, how much debt they have, or anything like that. It really does come down to behavior. And in that, mindset is key.

And so, what I would say is, you know, just write it all out, right? You might think that it's better if you just block it out but the truth is that it's not going to go away. At least, in this moment, it's not going to go away. It's there. It's very much present. Your social security number is very much tied to this debt. It exists, okay?

Once you're able to accept that, I would say just-- and this is what I tell my clients, “Write it out. Just know what it looks like.” You know, for many of my clients, before meeting with me, they hadn't even logged into their loan portal, right? They don't even know what kinds of loans they have. Are they subsidized? Are they unsubsidized? What interest rates you have, whether you have a fixed interest rate, a variable interest rate. Absolutely no knowledge on anything. 

So, I say, first, just look at what it is. You know, maybe you have credit card debt. What kinds of credit card debt do you have? What kind of interest does that credit card have, right? And so, write it all out. You know, you can do it on a spreadsheet, in a notebook. And then, once you see that, just ask yourself, “What would it look like if I wanted to pay this off in 10 years?” Right? You don't need to go as aggressive as I did with the four years. A lot of times, people hear my story and they're like, “Well, I can't do that in four years.” And I say, “Well, you don't have to,” right. That was my story. Maybe your story looks like 10 years. I don't know, right? But what would that look like? I mean, have you even asked yourself what that would look like? Maybe you can go ahead, and try to do that math, and see what that would be.

And then, what I would also ask yourself, and this was a big motivation for me to go, you know, to your previous question, Jim, was, I wanted to also see what could that money do for me in the future? You know, could I then invest that money that I was putting towards my student debt? Can I put that towards savings? Can I put that towards a home down payment or something like that? So, once you're able to confront those numbers, then shift the question to, “Oh, what could I do in the future once I'm out of all that debt, with that extra, you know, disposable income?” 

So, I think if you do those things, you know, you're going to be in a much better position to, you know, dictate your next steps.

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Jim: All right.

So, Cindy, when the topic of student loan forgiveness pops up on Twitter, I see a lot of lawyers who paid off their debts sort of really be mean spirited to the people that are graduating now with student loans and I'm wondering what's your mindset on that as someone who did so successfully pay off your loans?

Cindy: You know, I think that-- 

Well, first of all, I think Twitter is a very, very dangerous place to be in. I actually deleted my Twitter app about a month ago just because I can't believe how awful people could be on there. And I've seen that, too, you know. I've seen some. The social media platform that I mainly use is Instagram. I'd like to think that Instagram is a little nicer than Twitter but I certainly have seen, you know, people will screenshot tweets that they've seen and things like that, and they'll send them to me or they'll post them.

And a lot of times, you know, lawyers will say-- they either come from the vantage point of, “Well, I have all of this debt now that's growing uncontrollably. You shouldn't have your debt forgiven” or something to that effect. And I say, you know, first of all, we need good lawyers in this profession. And I think the cost of law school is the bigger issue than loan forgiveness. You know, I, personally, do think there needs to be some type of student loan forgiveness. Hands down. I do think that because I think that our economy is suffering, our generation is suffering because there-- I mean, the student loan debt is out of control right now.

But beyond the student loan forgiveness, I think there needs to be more of an emphasis on three things. One is financial literacy - mandated financial literacy classes across the country so that students are actually more educated on what student debt consists of.

Number two is, like I said, the cost of law school. I mean, my law school, the cost of attending my law school, when I was there, which was, you know, just like six-- seven years ago was $75,000 here in New York City. That number is now something like $93,000, in just about seven years, you know. I mean, it's really difficult for someone, for a current law student, to have any type of positive outlook on, when they graduate, they're going to have easily $300,000 of debt, you know. And I think that if we could do something about that, then we certainly should. And I think we need to have a discussion of the cost of an education, specifically at the higher education level.

And then, number three is interest rates. I mean, a big reason why debt is out of control is because interest rates are so high on student debt. You know, right now, the interest rate on federal loans is 0%, but that's because of actions from our government, you know, from Congress, and then from the executive actions that have taken place since.

But, we need to talk about why are some interest rates on these student loans at like 10%. I didn't even know those existed until I started coaching clients and I started seeing that. Some of the some of my clients have debt, that's up to 12% - 12% on student loans which are already a massive figure.

And so, you know, to lawyers that are just very mean spirited about the whole situation, I'd ask them to think about, we want good lawyers practicing in our profession. And I think that we really need to look at things beyond just a fix of student loan forgiveness. I actually think we need to be more radical than that. I think we need to do more of educating from when we're younger - educating law students on how this actually works, and then also pushing for legislation that will call upon, you know, some type of regulations on interest rates as well.

So, you know, when I see those discussions, I think, even as someone that paid it off, I still think that we should do a lot more for our current law students and for people that have graduated law school with the kind of debt that, I mean, I'm very familiar with.

Tyson: So, Cindy, you just mentioned a lot of things that are completely out of our control, especially whenever we're involved, right?

Cindy: Yeah.

Tyson: So, what are your tips to the people that are in law school now or that have just gotten out of law school, that are trying to manage their debt? Like, what are some tips for them to deal with all those things that you just mentioned that are outside of our control mostly?

Cindy: Yeah. So, you know, I think that I'm going to just go ahead and give my general advice that I give to law students, right. I get a lot of messages and they're like, “Cindy, I'm a 3L. I'm about to graduate. I'm nervous.” etc, etc. What I tell them is, “First, you need to know what kind of debt you have.”

I didn't. You know, I didn't actually understand the debt that I had until, you know, a few months after I had graduated law school. 

And so, the first thing is, understand what kind of debt you have. Do you have subsidized loans from maybe, you know, obviously, from law school? Do you have unsubsidized loans, maybe from undergraduate? Are you aware of the interest rate on your current loans and how your debt is growing?

You know, when I was in law school, I didn't know that my debt was actually growing due to interest while I was in law school. I didn't know that, you know. And so, that's something to look into.

Another thing is to, you know, are there ways that you can actually, you know, lessen the amount of debt that you're borrowing, right? That you're taking on? So, there's an opportunity to maybe live with your parents. Especially now, where a lot of schools are going remote is there's a way to live at home and save on, potentially, tens of thousands of dollars, you know, by not having to pay rent, maybe minimizing utilities, grocery spending, and things like that by, say, living with family. Then, I definitely think that'd be a great practical solution, right, is to go ahead and just lessen the amount of debt that you're taking on. Like I said, previously, educating yourself on the type of debt that you have.

And then next would be, you know, really evaluating what kind of job are you planning on taking not after you graduate? What does that job pay? What do you need to comfortably live - not luxuriously live, but just comfortably live in the city that you're looking to practice in? Write it all out. Like, create a budget. It sounds silly but you must do that.

You know, let's say, out of law school, the job you're looking into is going to pay you anywhere from $90,000 to $100,000. Great. Once you have that figure, go to smartasset.com paycheck calculator, okay. Plug in your zip code. And then, it's going to show you what your net pay will be. And it's very good. I've done it with my own figures, with clients’, and then, I compare our pay stubs. And the site is actually quite accurate. Not perfect but it's quite accurate.

Go ahead and figure out how much taxes you're going to pay on that because, of course, you know that even though you'll be making, let's say, $90,000, that's not how much you're actually going to net. Look at your net amount. Once you have that, build out your budget. Like, walk through it, line item by line item - rent, utilities, cell phone, transportation, dining out, food, everything. And, importantly, the debt repayment, okay. Like, you need to put that into your budget because you are going to have to pay your debt back.

And so, you know, depending on what kind of program you go through because, let's say if you go on income-based repayment which is a type of repayment option for federal loans, you know, your debt payment is going to look a lot different than maybe someone who's just on like a regular debt repayment plan. But whatever it may be plug in those numbers. I mean, those are practical steps that, I think, anyone, no matter what kind of lawyer you are, go ahead and take them, right.

So, number one, just self-educate on your current student loans. Two, look at the type of job that you're going to get and, you know, how your expenses are going to go. And number three, actually, I think I switched number two or three. Number three is lessen the amount of debt that you're going to take on in the first place, if you can.

Jim: How do people get a hold of you? And what does it look like to work with you?

Cindy: Yeah. So, I'm most active on my social media account which is @zerobasedbudget, no spaces, and, you know, people can message me on there. But, typically, if people want to work with me, they can go ahead and email me at [email protected].

I am currently actually full through the end of 2020. My coaching sessions filled up quite quickly when I released them last month for the fall and winter, but they'll start up again in 2021. And, you know, people just go ahead and reach out to me, and I sit down, and I work with them. You know, we have very honest conversations.

I've had clients that are doctors and lawyers. And I have also had clients that are, you know, teachers, social workers, your local barista. I mean, all different types of clients because I think no matter where you are, no matter the profession, even though here, we're specific to those in the legal community, everyone can get a little better with money, I think. I'm still working on that. So yeah, I definitely think it's great to always just meet with someone, and chat, and go through your own finances.

Tyson: Very good stuff.

All right. We do need to wrap things up. Before I do. I want to remind everyone to join us in the Guild. Go to maximumlawyer.com and check out the Guild. There's a lot of great benefits. Just talk to someone in the Guild and see what they think because I think that they'll tell you that they love it. So, there's a lot of great things going on in the Guild.

Also, if you don't mind taking just a couple of seconds, as you're finishing the rest of this episode, to give us a five-star review on Apple podcast, wherever you get your podcast, we would greatly appreciate it.

Jimbo, what's your hack of the week?

Jim: So, I just checked, I have meditated with the Headspace app for 33 days in a row, just for 10 minutes, and I think it's starting to sort of work a little bit. When I find myself sort of frustrated or angry during the course of the day, I just sort of tap into the earlier meditation and it seems to have reset things. It also has allowed me to sort of just sit and be in the moment more as opposed to thinking about, “What's next? What’s next? What's next?” So, Headspace. It's cheap. It's not expensive and it's been good for me so far.

Tyson: So, every time I give you a barb on the podcast, you have to go back into your meditative state to remind yourself not to get angry? Is that how it works?

Jim: No, but that reminded me my other real tip of the week is, if you're going to move offices and your law firm relies on internet, make sure that your internet gets installed before you move in and not after.

Tyson: No, I'm with you. No, it was because we were on a short timeline. That's why. Normally-- yes, you're absolutely right. I've been waiting for you to give me crap about that, but we did have all this setup. You know, it was just a short timeline, so it's what it was.

All right, Cindy, so we always have our guests give a tip or a hack of the week. Do you have one for us?

Cindy: Yeah. So, you know, I think that there's been a lot of discussion, at least in the personal finance community, on like financial independence and whatnot. I would really recommend checking out the book, The Simple Path to Wealth. It's a really great, easy read. I think any lawyer will appreciate, you know, a break from case books and whatnot. It's just a really good book that, like I said, is a very easy read and I think will expose you a lot to these personal finance concepts but also get you thinking just for your future, you know, what financial independence could look like. So, I definitely recommend checking out that book.

Tyson: Very good. Right on point, too.

All right. So, I have a book that I've been putting off for a long time listening to it. I'm listening to it specifically because of who recommended it and why. So, Christopher Nicolaysen recommended this book. I have so many books to read and I haven't really gotten to it, but it's Hustle Harder, Hustle Smarter by Curtis “50 Cent” Jackson. And it is really good. Again, the reason why I'm listening to it is he reads it himself. And it is really cool. It's a really cool book. He talks about his growing up and his background. And he really gets vulnerable. It's a super, super cool book. So, I really recommend listening to it. It's one of the most interesting audio books I've ever listened to. So, I really, really recommend checking it out.

Cindy, thank you so much for coming on. I think this is a really helpful topic for people. So, thank you so much.

Cindy: Yeah, of course. Thank you.

Jim: Thanks, guys.

Tyson: See you later.

Cindy: Thank you.

Thanks for listening to The Maximum Lawyer Podcast.

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