Getting out of Debt
A budget is nothing more (or less!) than a plan for your money. Paying off your debts is a plan within that plan. If you have multiple debts, the order in which you tackle them makes a big difference.
List your debts.
Make sure you have a category for each of your debts in YNAB, either through a Credit Card Payment category or a category in your Debt Payments group.
Choose a focus.
Select your debt with the lowest remaining balance. This will be your focus, where you direct extra dollars as you budget!
Set a Target for your focus debt.
Choose a Pay Off Balance by Date target ( here's how on mobile!) which will tell you exactly how much to assign each month to pay off your credit card debt by a certain date. The amount will adjust if you are making slower or faster progress than your original plan!
Set Targets for your other debts.
For other cards or debts, you're going to make just your minimum payment while tackling your focus debt. Set a Pay Specific Amount Each Month target to make sure you're prepared for that payment.
Celebrate and choose a new focus.
When that first debt is paid off, stop and celebrate. You've improved your cash flow significantly! Now it's time to decide how many of those dollars go towards your next focus debt. The more you can afford to send there, the faster you'll be completely out of debt.
What about high interest debts?
Paying off the highest interest credit card or debt might seem like the place to start. It's more important though, to free up cash flow, and completely getting rid of one debt payment is the way to do this. The quick win is a nice shot of motivation, too!