How to Become Debt Free: Ashley Likely's Journey

TL;DR

Ashley Likely, a single mom, eliminated $77,000 in student loan debt through disciplined spending, strategic savings, and extra work hours. Inspired by financial advice, she focused on reducing debt as a means to increase financial freedom, setting the stage for future real estate investments.

Transcript

welcome to the BiggerPockets money podcast show number 88 it's time for a new American Dream one that doesn't involve working in a cubicle for 40 years barely scraping by whether you're looking to get your financial house in order invest the money you already have or discover new paths for wealth creation you're in the right place this show is for ... Read More

Key Insights

• Ashley Likely graduated with $77,000 in student loan debt and a couple thousand in credit card debt.
• She was inspired by a coworker to adopt a frugal lifestyle and save aggressively.
• A blog post by Scott Trench shifted her perspective, equating debt reduction with income increase.
• Ashley used her tax return to pay off credit card debt and avoided further debt by not taking car loans or vacations.
• She worked extra hours as a speech therapist to aggressively pay down her student loan debt.
• By 2019, Ashley had paid off all her student loans, totaling $56,000 from 2017 to 2019.
• She now saves $1,000 monthly and plans to build a $25,000 emergency fund before investing in real estate.
• Ashley emphasizes the importance of not letting fear or others’ opinions dictate financial decisions.

Questions & Answers

Q: How did Ashley Likely pay off her student loan debt?

Ashley paid off her student loan debt by adopting a frugal lifestyle, avoiding additional debts like car loans, and working extra hours as a speech therapist. She used her tax returns to pay off credit card debt and focused on saving aggressively to tackle her student loans, ultimately paying off $56,000 from 2017 to 2019.

Q: What inspired Ashley Likely to become debt-free?

Ashley was inspired to become debt-free after a conversation with a coworker about financial management and a blog post by Scott Trench that equated reducing debt with increasing income. This new perspective motivated her to focus on paying down her student loans and live within her means.

Q: What strategies did Ashley Likely use to avoid further debt?

Ashley avoided further debt by not taking on car loans or spending excessively on vacations. She lived within her means, focused on saving, and used her income tax returns to pay off existing credit card debt, which helped her maintain a debt-free lifestyle.

Q: What are Ashley Likely's future financial goals?

Ashley Likely's future financial goals include building a $25,000 emergency fund and investing in real estate. By maintaining her disciplined financial habits and leveraging her debt-free status, she aims to achieve financial independence through real estate investments.

Q: How did Ashley's upbringing influence her financial habits?

Ashley grew up in a middle-class family where her mother used credit cards frequently but paid them off regularly. This upbringing initially influenced Ashley's own use of credit, but she later consciously chose to break this cycle and adopt a more frugal lifestyle to become debt-free.

Q: Why did Ashley choose not to pay off her mortgage early?

Ashley chose not to pay off her mortgage early because the payment is not a financial burden, and the interest rate is relatively low at 4.25%. She prioritizes building her emergency fund and investing in real estate over accelerating her mortgage payments.

Q: What role did Scott Trench's blog post play in Ashley's debt-free journey?

Scott Trench's blog post played a pivotal role in Ashley's debt-free journey by changing her perspective on debt reduction. It highlighted that reducing debt is akin to increasing income, which motivated her to focus on paying down her student loans aggressively.

Q: What advice does Ashley Likely give to others starting their financial journey?

Ashley advises others to avoid debt, live within their means, and not let fear or others' opinions dictate their financial decisions. She emphasizes the importance of taking action, being frugal, and focusing on long-term financial goals to achieve financial freedom.

Summary & Key Takeaways

• Ashley Likely, motivated by advice from a coworker and a blog post by Scott Trench, paid off $77,000 in student loan debt through disciplined financial habits. She avoided additional debt by living frugally, not taking on car loans, and focusing on saving.

• Working as a speech therapist, Ashley took on extra hours to increase her income, allowing her to aggressively pay down her student loans. By 2019, she was debt-free, with only her mortgage remaining.

• With a $1,000 monthly savings plan, Ashley aims to build a $25,000 emergency fund. Her future goals include investing in real estate, leveraging her debt-free status to achieve financial independence.