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How One Couple Paid Off $74,000 in 2 Years

By U.S. News & World Report

In November 2009, after maxing out their credit cards, Alaya Linton and her husband, David Smith, were forced to confront their $74,000 in debt, a combination of $46,000 in student loans, $14,000 in credit cards, $10,000 in car loans and medical and tax debts. The Connecticut couple had a three-year-old and a 13-year-old, so the family drastically trimmed spending to pay off debt and start living within their means.

[See: 10 Easy Ways to Pay Off Debt.]

By December 2011, the couple was debt-free and Linton had discovered a new career path: Helping others slay their debt. She shares her insights on her personal finance blog Hope and Cents. U.S. News recently spoke with Linton about her debt repayment journey and how it inspired her to become a financial coach. The following excerpts have been edited for clarity and brevity:

What motivated you to get serious about paying off your debt?

A combination of things. For a while we just felt hopeless about our situation, and then we had a couple wake-up calls that kind of forced us to get serious. My husband’s hours were reduced at his full-time job. Each time they were reduced we didn’t make any adjustments, we just kept on living as if he had his full income, so that caught up with us and led us to relying on our credit cards more. After maxing [our credit cards] out one by one, we were left with one card. We literally used that card as a third income, so the second wake-up call came when that final card was canceled. We had no other way to support ourselves and our bad habits, so those events forced us to start living within our means.

Did you have to get your husband on board with that new mindset?

It took a while for us to be on the same page. My mindset started to shift a little bit as I got exposed to reading and … thinking around money. I tried to share that with him, and for quite some time he just resisted [shifting his behavior] and felt that we were fine as long as we were able to make our payments. I remember him having a lightbulb moment where we looked at our numbers and we saw that we were $2,000 in the hole every month. But he looked at me and said, “We can do this. We’re going to get out from under this.” Once he had his lightbulb moment, we were able to move forward together.

[See: Your Month-to-Month Guide to Savings.]

What sort of sacrifices or changes did you make?

We changed our lifestyle drastically. One of the amazing things about our situation — or I guess one of the frustrating things — was that we didn’t have big-ticket items or anything to show for our debt.

We looked at all of our monthly expenses. We slashed our cable subscription. We looked at our insurance and saw where we were overinsured and cut back there. We learned that grocery shopping was a huge budget buster for us, and we were able to slash that by a few hundred dollars a month. We cut back on anything that was not necessary. If we didn’t need to spend it, we didn’t spend it, and that process just showed how much of our money we were wasting every month. We did bring in some extra income during that time. During the 2010 census, I worked that summer as a census worker and my husband also took on some freelance jobs, but the needle was moved majorly by just cutting back our spending.

You were working in fashion when you started your debt repayment journey, but now your career has taken a different turn. Tell us about that.

During that process, I just became extremely passionate and excited about the [debt repayment] process. It was almost like I was exposed to another world. I thought that you have to live with debt, and this process taught me that that wasn’t the case. I started sharing this information with friends and co-workers. I would spend lunch breaks answering questions from friends and helping them work on a budget, and so I started informally coaching the people in my life.

I realized how much I loved it. [I want] other people to know that even though our culture points to debt and to living beyond our means, we can live within our means and still live well. I trained to be a financial coach, and so currently that is a part of my full-time job. I transitioned out of the fashion industry and actually work in church ministry now, and as part of my job I coach people, and … [on the side] I coach people one on one.

How did you stay motivated during those 25 months when you’d cut back so drastically?

It was difficult. I wanted the debt gone immediately, and so that was a challenge for me, but what kept us motivated was tracking our progress. We were using the debt snowball method where you pay your bills off in order from the smallest to the largest, and so I literally had the paper of all of our bills on our fridge, and each time one was paid off I would cross it off with a big red marker. Sometimes, I would just stare at that list on the fridge and daydream about it. But seeing that progress and seeing each red line kept me motivated, and it showed us how far we went and how close we were to the end.

We celebrated mini-milestones along the way, so when we paid off our credit card debt first, we gathered around and had a small $10 celebration with ice cream and, sometimes, a cheap bottle of wine. Having those kind of mini-milestones and then tracking our progress helped us stay motivated.

[See: 8 Financial Steps to Take After Paying Off a Debt.]

Anything you would have done differently?

I’m thrilled with the pace at which we paid off the debt, but in hindsight I wish that I was more intentional about creating experiences for my family. We have two kids, and I wish I had been more creative in finding free or low-cost opportunities and experiences for us as a family. I think [it’s important to strike a balance where you] are accomplishing your financial goals but still you’re prioritizing other things that are important like family.

More from U.S. News

10 Foolproof Ways to Reach Your Money Goals

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10 Items to Add to Your Financial Bucket List

How One Couple Paid Off $74,000 in 2 Years originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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