BiggerPockets Money Podcast

BiggerPockets Money Podcast 88: Consciously Choosing to be Debt Free with Ashley Likely

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Ashley Likely grew up with parents who provided everything she needed—but not necessarily everything she wanted. They were able to pay for her housing in college but not much else. So (spoiler alert), she graduated college with $77,000 of student loan debt.

A conversation with a “preachy” co-worker showed her the light of paying down debt, saving aggressively, and starting to invest. They started encouraging each other at work, learning about investments, contributing to 401(k)s, listening to podcasts, and doing research.

Ashley stumbled across a blog post written by Scott Trench, where he shared that "reducing your debt is similar to increasing your income." She had $56,000 in student loan debt at the time she read the article. "Scott's post changed my life," she said.

She thought, if I could eliminate the student loan, what could that do for me mentally and financially? As a speech language pathologist, she has the opportunity for overtime, which she took every chance she got.

Her naturally frugal ways kept her from going into further debt with car loans, vacations, and all the trappings of “adulthood” by simply avoiding them. Doing so allowed her to bust out of her debt and prepare for her future as a real estate mogul!

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Scott: Welcome to the BiggerPockets Money Podcast show number 88.

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Speaker 2: 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 anyone who has money or wants more. This is the BiggerPockets Money Podcast.

Scott: How’s it going everybody? I’m Scott Trench. I’m here with my co-host, Ms Mindy Jensen. How are you doing today, Mindy?

Mindy: Scott, I am doing fantastic, like always. I feel like I always say that but I really just I'm always doing fantastic, like this is super exciting for me to be able to record this show all the time. And keeping with my super excited personality, I am super excited for today's guest. Ashley Likely reached out to you almost exactly two years ago. At the time she was 33 she was a single mom with quite the load of student loan debt. She had recently read an article that you wrote about getting your financial life in order before you start investing.
And she reached out to you for advice and you suggested that at the time maybe entering into real estate investing may not be the best choice for her and recommended really cleaning up her … cleaning up is not the right word. Recommended paying down her debt and getting into a more financially stable position before she started investing. And what’s really awesome about her story is that not only did she read your email, she took your advice, and then on top of all of that, she let you know that she took your advice. I’m so excited to hear her story today.

Scott: I love it when folks email me with questions like that. I will say caveat, if someone were to email me about a financial problem or something like that, I'm getting quite a few of these days so I can't respond to very lengthy emails. So if you do write me an email, please keep it to like a 100 words or less or something like that. But I love the ability to help folks with these types of situations. And we'll almost always fire back with a response because I just want to help with these things. And I was shocked a couple of years later when Ashley reached back and was like, "Hey, yeah, it paid off 50K in student loan debts and I'm now thinking about becoming an investor. It was amazing feedback and it's great to actually have her on the show here to walk us through that whole situation, how she got there and then how she got out of it.

Mindy: Yeah. And you know Scott, it’s not a huge surprise how she did it. She spent less than she earned and she aggressively took all the money that she had and threw it at her debt. This debt kept her up at night. This debt really gave her the anxiety and the heebie-jeebies and she decided, you know what, I don’t want that anymore. I’m going to get rid of it. And she took action and here she is today, debt free. Oh, I spoiled it.

Scott: Absolutely. And to caveat, some of the things she did in her journey worked because personal finance is personal and that's what she needed to do mentally and financially to get herself in position to begin attacking financial freedom from position of zero net worth or whatever. Somebody else might've been comfortable with certain amounts of student loan debt or a difference in situation, a different approach. So just keep that in mind as we go through the story. Fantastic, fantastic progress. Monumental progress over the last couple of years. I have no doubt she'll be a pretty successful real estate investor here over the next couple of years.

Mindy: I have no doubt either. And it all stems from the fact that she took action. That is something that everybody can take away from this story. Your debt isn’t going to go away. You’re investing isn’t going to start. Your life isn’t going to change until you make different choices.

Scott: That’s right.

Mindy: Okay, so let’s bring in Ashley. Ashley Likely welcome to the BiggerPockets Money Podcast. How are you doing today?

Ashley: I am fabulous. I’m so excited to be on this show. This is like it has not hit me. I’m actually on the BiggerPockets Money Show. Really?

Mindy: Well, Scott and I are super excited to have you. I get a lot of emails. I know Scott gets a lot of emails with people who are in some sort of financial imperfectness and they say, “Hey, what do you think I should do?” And we will frequently take the time to write them a note and then never hear them again. I don’t know if they haven’t taken the advice or if they haven’t done anything with it, but I was so excited when Scott sent me your note. He’s like, “Look at this. Two years ago, Ashley sent me an email and then here she followed up two years later and has … I mean, spoiler alert, has completely changed her financial outlook.” So I can’t wait for you to share your story with our listeners because sometimes you hear all these people, oh yeah, I’m already a millionaire, I’m already a millionaire. Yeah, great. Here’s somebody who is making huge strides, has made huge strides already and is now ready to begin her just meteoric rise to the top. So Ashley, tell me where your journey with money begins.

Ashley: Okay. I’m the oldest of three girls and I grew up in a very middle class family, two parent household. My dad was a well known principal in our city and my mom was a well known school teacher. So both my parents were in education, we were middle class. We had a nice two story home. We had everything we needed. We didn’t have everything we wanted but we did have our needs met. My mom basically handled the finances and in our household, my mom always was big about paying her bills on time, but she spent money as well. So my mom is the mom that whenever she goes out to the store she’s going to come back home with bags of stuff, just stuff, just random stuff. And it was not usually for her, for her kids. But she never bought us toys, my dad always bought that type of stuff, but it would just be clothes, shoes.
Even now that we’re grown, I’m 35 years old, my youngest sister is about to be 30. When she goes out. She will still bring things to us, like a kitchen wear, sheets for our bed, just things for our kids. So she’s always been a shopper. That’s what she does. And she typically [inaudible 00:07:07]shops on credit. So I learned later on in my life that once I realized that I was using credit cards too much, that I picked up the habit from my mom and I consciously had to break it. But she shops on credit, she will swipe that credit card, but she’s always paying it off, paying lumps on her credit card. But she uses credit cards. She’s never behind with our credit cards, but she uses credit cards.
She’s never behind on her bills. She always pays her bills up. But she does use credit card. So that’s the mindset that I realized that I grew up in. And I did realize that once I got to college and I went to Oregon University for my undergraduate degree and of course being a college student and you’re low on funds. My parents paid for my house and I because lived off campus. I had student loans to pay for my education, but as far as my housing and self care, my parents would send me money and they sent me an extra $200 every month. Well, $200 does not go far. And then I had two younger sisters. So I’ve never been the type to really ask people for things. So I just kind of made it work because I really needed some extra money.
So I’ll work side job to make a little extra money, but I did start getting credit cards. The first one I got was when I worked at Dillard’s at the department store. So as an employee we had to get a credit card in order to make our employee purchases. So I just started swiping away. I love shoes. I just started swiping away. I was a shopper too. And then as time went on I had more and more credit cards. You know if you go to Old Navy or T.J.Maxx or any store basically if you open a credit card, what do you get? Like 10% off discount.

Mindy: A discount. Yeah, that’s really sneaky that Dillard’s made you open up a credit card in order to get your employee discount.

Ashley: Yeah, it was. Initially we used to have a debit card. You could loan money on it if I'm not mistaken, but over time it turned into a credit card. And I was like, "What?" So I just swipe, swipe, swipe and swipe. Not having much credit history, I never had huge credit limits. I might have a credit limit of 200 or $1000, but when you have like five or six or seven credit cards that can really add up. So when I was in college, I worked and I would make my minimum payments on my credit cards with the money that I made working. And then once I graduated from college, I went to grad school and I wasn't working, I couldn't work, but I was still swiping credit cards. At that time, my dad was giving me like a $200 allowance though that $200 he gave me, I had to put it right back on my credit card.
So now here I am at square one, I don’t have any gas money because I had to put my money on my credit card. So now I’m swiping from my card. So it was a revolving circle. So 2009 I graduate from graduate school and now I’m working as a speech therapist in a school system in Mississippi? Well, when I first started working my first year, I don’t even think I was making $2,000 a month and I’m driving 45 miles to work one way.

Scott: Ashley. So when you graduate from college in this situation, how much total debt did you have from credit cards?

Ashley: I really cannot remember the total, but it wasn’t a lot, I would say maybe $2,000. The most credit card debt I’ve ever carried at one time was $4,000.

Scott: Got it. So you graduate and you have a couple thousand dollars in credit card debt and that’s pretty much your financial position when you go to start work.

Ashley: Yes.

Scott: Got it.

Ashley: Yeah. I graduated with 77,000 in student loans and about 2000 credit card debt.

Scott: Wow. That’s a lot of debt. Got it.

Ashley: Yeah. I was living with my parents, my first year that I worked. So I really only had to pay for my necessity. I didn’t have to pay rent or anything, but I also was not making, I might’ve been making right at $2,000 a month.

Scott: Got it.

Ashley: So with a couple thousand, we’ll probably, at this time I probably had my $4,000 of credit card debt. So my minimum payment was about a $100 a month at least. So by the time I do pay my little bills, had a little gas money before the end of the month, I was back in zero. So what am I doing? I’m swiping my credit card again. So I say, when I was in college I thought that I was broke because I didn’t have a lot of extra money. But when you don’t have a lot of extra money and you have debt, that’s broke, broke. That’s broke. So it was a cycle. It was just a cycle. And I realize that sometimes I’ll find myself not being able to sleep well at night because I would think about the credit card debt that I had and how am I going to pay this back? Or I think about how much student loans I wrecked that which mind you, all of that $77,000 was not necessity. That was shopping sprees, trips, all types of stuff that I used those student loans to do while I was in college.

Mindy: Oh wait, you didn’t just pay for college?

Ashley: No. [crosstalk 00:12:46].

Mindy: Who have we heard that from Scott? Didn’t somebody use a scholarship to buy an engagement ring?

Scott: Oh yeah. Somebody, yeah. We [inaudible 00:12:54]people doing crazy things with their student loans.

Ashley: [inaudible 00:12:58]. A lot of people do some crazy stuff with student [crosstalk 00:13:01].

Mindy: Students, if you’re here or you’re listening to this and you’re getting student loans, just use them for your education.

Scott: And minimize [crosstalk 00:13:08]as much as possible.

Mindy: But Ashley, you’re not the only person that’s ever done this. So I’m not like telling you you’re a bad person.

Ashley: I agree with you. Please [inaudible 00:13:19]. My mom tried to tell me, don’t you get those loans, you don’t need all that. I wouldn’t listen and then now to this day she was saying, “I tried to tell you.” Well I didn’t listen.

Mindy: You’re also not the only 18 year old who didn’t listen to their parents.

Ashley: Exactly.

Scott: Okay. So you graduate in this position, you’re making $2,000 a year with a long commute and crippling debt. So how long does that position continue for and then when do you kind of decide to attack the problem?

Ashley: Okay, so maybe within my second year of working as a speech therapist, I decided to use my tax return, my income tax return and pay off my debt on my credit card. So that’s what I did and once I did that … No it was the second year that I worked and it might have been before I went into my second year. I took my tax return and paid off my credit card debt, Then going into my second year, I bought a house. So I bought a townhouse that was a foreclosure. This was 2010 now. It was a very good deal. My mortgage was only like $500 and something for three, two and a half bathrooms. So my living expenses were … and then my income increased about $300 too.

Scott: And where was this?

Ashley: This is the Mobile, Alabama.

Scott: Mobile, Alabama.

Ashley: And so my income increased about $300. So at that time I was bringing home about $2,200 a month, which still wasn’t much, but took my tax return, paid off my credit card. I bought a house and what made me really buckle down and rethink the way that I was … re-shift my mind state as far as living and using credit card, because I’m living on credit was when I bought my house. I said, “Well Ashley, you have a house. It’s time for you to buckle down. You can’t do a lot of extra spending. You paid your credit card off. You know how it feels to be stressed out and worried about having debt that you really can’t afford to even pay.” So at that point I decided that I was not going to use any credit cards anymore. I was going to live within my means.
Like I told you earlier, I love shoes. I love to shop, but I literally went cold-turkey. What used to get me in trouble was when I would be bored or just wanting to waste time. I’ll go to stores like the mall ans say, well, I’m just looking and then I come out with bags because I have this credit card and I saw something that I really just felt like I really needed. So I just stopped going. I just stopped going to the mall. I just stopped. And when I bought my house, it was a nice house, but it was built in 1975 so it needed some touch ups, it needed some updating. I did the basics, I bought everything on cash. I bought paint. I had a paint party. My friends and I painted the downstairs. The floor had that like the little sticky vinyl that you stick down on the floor.
Some pieces were torn up, I didn’t replace it. It’s still not replaced. It’s 10 years later. Because I was not going to finance a thing to update the house. If I wasn’t going to pay cash for it, it wasn’t going to get done. And so over the years I still have the townhouse, which I’m renting out right now. But I guess we’ll get to the part of the apartment story, but I had other plans for my money instead of using my money to shop or make my house look so beautiful, I wanted to save money and start a journey of financial freedom.

Mindy: That's a pretty good plan. So you bought a townhouse, you decided I am not going to be in debt anymore. This is in 2010, you had credit card debt that you paid off with your tax return. You still had student loan debt, correct?

Ashley: Correct.

Mindy: And when did you graduate from college? I missed that.

Ashley: In 2009.

Mindy: 2009. Okay. So when did you start paying off your student loan debt?

Ashley: Okay. So you get a six month grace period once you graduate from college to start paying back your loans. You also get, I think is a 36 months of forbearance or deferment. So over the course of the first five years of my career when I worked in a school system making about $2,200 a month, I would work out payment plans with Sally Mae. I was like, "Hey, I can't afford this payment. What can we do?" And they lower my payment and then every so often I would also forbear my loan. So over the course of the first five years, I used my 36 months of forbearance and my student loan payment, the lowest that we were able to get was … Well when I was working with school system, I [inaudible 00:18:31]my payments were a little bit lower, I think like $300. I was on an income based repayment. I aggressively attacked my student loan debt in 2017.

Scott: Got it. Okay. So two years ago you started attacking the student loan debt. What was your situation going into that change? Was there a certain set of circumstances or did you just decide to get your finances in order or what was happening in 2017 from your income expenses, lifestyle that changed and prompted you to pay down the student loan debt?

Ashley: About 2015 I had a co-worker and she was all about debt freeness, having an emergency savings account, investing. I knew nothing about this stuff. I knew nothing about it. She was the one that got me intrigued and inspired to actually start saving money. So at that time I started saving money and we would talk about our savings, encourage each other to save as much money as we could. So that was the first time I ever had a real savings with account where I didn’t go back in and touch my money. So from there a seed was planted and then I just started doing research and learning about investing like in the 401(k). And I started looking at the podcast on my phone and then that’s when I came across BiggerPockets and other podcasts that was … It was just a wealth of knowledge that I didn’t even know existed. So at that point I was also interested in real estate. I hadn’t started doing any research. I just felt that that’s what I wanted to do. So in 2017 I have a cousin that’s a real estate investor, a real estate investor we linked up and we were going to start looking for an investment property.
And so how I got my down payment for an investment property was I cashed out my retirement in Mississippi where I was a school-based speech therapist because I wasn’t working in Mississippi anymore. I cashed out that retirement at about 26,000, might’ve been a little bit more. But after the penalty and the taxes, they sent me a check for $22,000. And at that time I also had some money, like probably four months to six months in my emergency savings account. So at that time I was going to use that money 22,000 plus about 10,000 from my own personal savings to buy an investment property. Well at that time I was being on BiggerPocket and I came across your blog, Scott. And I cannot remember the name of it and I searched the other day for the name of the blog, but I can’t remember the name of it. But basically, do you want me to tell what the blog post [crosstalk 00:21:38].

Scott: I can’t remember [crosstalk 00:21:38]I’m sure … It doesn’t matter, but you can … So you came across a blog post written by some guy.

Ashley: Yeah, I came across these blog posts, written by Scott and basically the blog changed my perspective on how I was going to use that money. So I was going to use that money to get an investment property, which of course I will be purchasing an asset but also it would have also been a debt as well. And at that time I wasn’t sure if I should go buy a property because even though I had an emergency savings account, I didn’t have a whole lot of capital. Like if something happened with an investment property or if it took me a few months to find a rent or something like that, then it would really crush me. So I found your blog post and basically you talked to us about how reducing your debt, decreasing your debt or eliminating your debt is a very overlooked but practical way to in so many words increase your income.
I mean you're not making extra money but your outgo, the money that you're spending out on bills and debt, you're retaining that money. So when I read that blog post, it just really made me stop about what I was about to do and think. And I said, well, you know what Ashley you have, at that time I had like 56,000 in student loan debt then. I said you just have about 56,000 in student loan debt. That's a huge chunk of your money. My student loan payment was $430 and I had a mortgage which was like $500 or something. I wasn't in a rush to pay off my mortgage, but if I could eliminate that student loan, what could that really do for me, like mentally, stress wise and financially?

Scott: Do you remember what the interest rate on that student loan debt was?

Ashley: I had a lot of different loans. I mean it was probably 17 different loans. So they all range from maybe like two point something all the way up to 10 point something.

Scott: When you paid them off, did you pay them off highest interest first smallest balance first. What was your kind of strategy of paying that off or did you just attack it with a large lump sum?

Ashley: I attacked it with large lump sum.

Scott: So you took that cash that 40 ish thousand or a big chunk of it and plopped it against the student loan debt?

Ashley: Yeah. So it was 36,000, 22 was from our retirement and then 13,000 of it was from my savings account.

Scott: Got it. And so then you were left with about 20 ish thousand dollars in debt?

Ashley: Mm-hmm (affirmative). It was between 18 and 20,000.

Scott: Nice. And then so you’re approached from there was to tackle and eliminate that debt aggressively from there?

Ashley: Okay. So you’re asking how did I aggressively attack that debt from there?

Scott: Was that what you did? Yes, that’s the question.

Ashley: Yes, that is what I did. So as a speech therapist, I can work per diem, PRN which is not … better known as just working extra hours. If another facility needs some extra help, they'll call me. I can say yes, I can work or no, I can't work and I can tell them how many hours I can work. So my plan to eliminate that additional, I think was about $18,000 of student loan debt was to just work as much PRN as I possibly could and just stack it all and not spend any of it on anything other than paying off my student loans. And mind you I did have like an additional probably $5,000 that I kept in my savings account. So that was still there too. So over the course of two years I work as much PRN as I could and I saved it.

Scott: That's awesome. Just like aggressive, extra income generation to pay down the student loan debt, all that kind of stuff. What about your lifestyle? Did you go even more disciplined on the expense side of it? Did you maybe do any cutbacks on the lifestyle or anything like that? Or was it mostly through extra income?

Ashley: Well, ever since I’ve been working and living in my home, I’ve been consciously very frugal. But some things that I actually did do over the course of those two years when I was paying down the student loans was I avoided getting a car note, within that course of two years, my car was a 2010 [inaudible 00:26:17]. And I started having a lot of problems with it, like minor problems, but it was one thing after another. So what I decided to do was my parents had to talk me into doing it because I was just going to continue driving that car. My sister bought a new car and so she sold me her old car for $3,000. So having to buy that car, pushed me back a few months as far as paying down my loans to zero balance. But I was able to pull from my savings account and instead of buying a new car and getting a car note, I bought the car for cash for $3,000. That’s one thing I did. I aggressively avoided car notes. Let me see.
I don't use credit cards. If I do use my credit card is for something that might be business related or something that I know I can pay back at the next billing cycle. I have have to add this too, I pay my tithe. So I think that's a big thing too, is tithing. What else have I done? I haven't vacation very much. That's something that I love to do. I really like to travel, but I have definitely not done that as much as I would have liked to because I've been shoveling as much money as I was able to shovel into my account for paying back my student loan.

Mindy: Listen vacation is nice. But you know what’s even nicer? No debt.

Ashley: You are right about that, I agree.

Scott: So what’s your position today?

Ashley: So my position today is almost free. I feel free. The only debt that I carry right now is my mortgage. As of March, 2019 I owe zero dollars on student loans and that’s all.

Scott: That's pretty good. So it sounds like you paid off $56,000 in student loan debt.

Ashley: Yes.

Scott: [inaudible 00:28:27]doing that.

Ashley: 2017 to 2019.

Mindy: That’s not bad.

Scott: So what’s next for you?

Ashley: Well I’m not in a rush to pay my mortgage down. I guess I could tell you about me, I’m house hacking [crosstalk 00:28:47].

Scott: Yes, please.

Mindy: [crosstalk 00:28:48]. And also cover why you’re not in a hurry to pay down your mortgage because I think that this perspective is important too.
Ashley: For me personally, I’m not in a rush to pay my mortgage down because my mortgage payment is not a burden on me, is the only thing … It might be $600 now because I think my property taxes went up or something, but it’s no more than $600 a month. It’s not a burden for me. And I think that’s really the only part for me, that’s the only reason I’m not in a huge rush to pay it off.

Mindy: Do you remember what your mortgage interest rate is?

Ashley: 4.25.

Mindy: 4.25 is still in the historically low range of mortgage interest rates and I would not be in any hurry to pay that down either. Although the only time really that I would recommend somebody pay down their mortgage is when they can’t sleep at night, “Oh, having this debt gives me the heebie-jeebies, I have so much anxiety.” Then pay it off. By all means don’t make me happy because you have a low interest rate and then keep yourself up at night. If it bothers you pay it off and if it doesn’t bother you and you have a low rate, keep it because you’re never going to get these low rates again. Although I keep saying that and then they keep going down. Hopefully they will go a little bit lower.

Scott: And it's importantly in distinction against the student loan debt, that four point … I just wrote the number [crosstalk 00:30:18].

Mindy: 25.

Scott: 4.25% interest rate that you were discussing here for the mortgage. That is actually still much lower than the blended interest rate across your student loans. Right?

Ashley: Mm-hmm (affirmative).

Scott: [crosstalk 00:30:30]student loans for those who are not familiar often come in at buckets of a few hundred, a few thousand bucks and have totally different student loan rates. You can get them all repackaged into one loan with a student loan refinance. But it sounds like yours were not, and it was a blended set of rates.

Ashley: Yeah. And for me, like what you just saying, Mindy, the student loans is what really stressed me out. That’s what kept me up at night. That is what I jokingly, but I was serious would always say, “I’m going to take these student loans to the grave. I’m not trying to pay these student loans.” Because the mountain was so huge and I just felt helpless. I mean, I’d never thought that I’d be able to pay out that much debt and I guess just for me to not really worry about it, I just kind of just pushed it in the back of my mind and said, “I’m not going to worry about these loans, I’m just going to do what I can do.” But when I decided that I wanted to embark on a financial journey of freedom, that’s when I decided that I wanted to go ahead and tackle it. And thanks to Scott, you are the reason that I shifted my perspective on it.

Mindy: Yeah. And you know what? I like that comment. I just felt like I put them in the back of my mind. I didn’t do anything about it. Well, if that’s what you’re going to do then they will stay there forever. You have to bring them back to the front and then aggressively get them out of your mind by paying them off. There’s no secret to paying off debt. It’s not like rub the lamp three times and then all of a sudden your debt is gone. The secret is pay more than the minimum. Keep paying it, pay it off, pay, pay, pay, pay, pay, and then they go away.

Ashley: Yeah. It’s sacrifice. It’s a lot of sacrifice.

Mindy: It is a lot of sacrifice. I mean, somebody gave you money in exchange, you got a college degree, but somebody gave you money and now you have to give them the money back. That's how that goes. That's how a loan works.

Ashley: Yeah, pretty much.

Scott: So tell us about your house hack.

Mindy: I was going to ask the same thing.

Ashley: Okay. So house hacking. Being active on BiggerPockets, like reading the blogs and listening to the podcast, often I just started trying to think of ways that I could just get more creative and increase my income or decrease my expenses and things like that. I’ve been pretty good with doing those types of things and I always, well, for the last several years I would think about if I could move in with one of my parents and then rent my house out. But like I told you previously, I’ve done minor upgrades to my house and I don’t think it’s at a point where I could get the maximum rent, there’s still some updating that I would need to do to it. But the situation just so happened to work out perfectly. This past April my sister got married, but prior to them getting married, I talked to her and her fiance about them renting my townhouse if they weren’t able to find a house that they wanted to buy it at that point. Because from the time they got engaged, their actual wedding was six months. So it didn’t leave them a lot of time to actually look for a house and possibly find something that they would be happy with.
So I told them, if you all don’t find a house right away, then why don’t you all rent my house out? I can move in with my dad and that’s what we did. So they’re renting my house. They are only paying my mortgage. I didn’t charge them anything extra. They’re paying the mortgage portion. So with that being said, I’m able to save about $400 extra a month. I moved in with my dad, he leaves in the house that we grew up in. So it’s a little older now and it also needs some sprucing up. So instead of me just giving my dad money for rent, I just take the money every month and just do something to upgrade or update the house like last month, I bought a mailbox and some other things.
And we got the mailbox because the mailbox was kind of the door was coming off of it. So I just do things to help spruce up his house. And my sister and her husband are paying my mortgage. Me and how I’m helping my sister is my mortgage is cheaper than what they then in apartment, they will rent. Like if they were to get a three bedroom apartment, my mortgage is cheaper than a three bedroom apartment. So it’s helping them to save money as well. So in this house hacking situation, I believe that we’re all helping each other.

Scott: Interesting. So how much money are you able to save every month under this arrangement in total for your personal position?

Ashley: I’m able to say about $400 extra a month.

Scott: What does that total, is that a couple thousand a month or with that …?

Ashley: Okay. So in total, well I guess I have to tell it to you like this, since I paid off my student loans, that’s an additional $317 that I’m saving. I was already saving $300 a month and now I’m saving by living with my dad, I’m saving an extra $400 a month after I paid him rent. Well, put money aside to help with the rent here, I’m saving an extra 400, so I’m saving $1,000 a month.

Scott: What are your plans with that money?

Ashley: I’m rebuilding my emergency savings account, which I like to call it a prepare savings accounts instead of emergency [crosstalk 00:36:18].

Scott: How big will that need to be for you to feel comfortable?

Ashley: Well, I think it should be about $25,000. I think that’ll be about five to six months of my income. And plus I just started listening to your book, Set For Life and that was one of the first things that you advised us to do is have $25,000.

Scott: Awesome. So after you get that $25,000, what are you going to do next? Have you thought to that level yet?

Ashley: I have. After I get the $25,000, I want to start purchasing rental properties. That is going to be my ticket to financial freedom. So I’m definitely all about becoming a real estate investor.

Mindy: That's awesome. I would recommend when you buy these rental properties, buying them as an owner occupant, which gives you the lowest interest rate on the mortgage possible. It comes with a one year occupancy agreement, which means that you promised to live in there for a year. You need someplace to live anyway. Then when you move out, you have this super low owner occupant interest rate for the life of the loan, but you don't have to live there anymore after the year.

Ashley: So owner occupants.

Mindy: Yeah. So you buy it now you do have to actually live there for a year. But that’s not hard. I mean, you need to live someplace every year. So you buy the property, while you’re there for the year, you fix it up to make it tenant ready and then you move out. Maybe move back with your dad, move in with your sister for a little bit while you’re not getting another property and just [crosstalk 00:38:07].

Ashley: I can be a nomad.

Mindy: On and on and on.

Ashley: That’s what you have done in the past, isn’t it Mindy? Have you done it?

Mindy: So I live-in flip. So I move in under the owner occupancy agreement. I actually have to live there for two years and then pay no capital gains taxes. But then I sell my properties when I’m done. I don’t rent them out. This is what Scott has done.

Ashley: Okay. I remember listening to your podcast episode, Mindy, when you were talking about the live-in flip and I had never heard of that before.

Mindy: That is a great way to generate … I don’t know, the Mobile market, so I can’t say that it’s a great way to generate in Mobile. But it’s a great way to generate income just by living in a house that’s ugly and then making it not ugly anymore.

Ashley: Yeah, I like that idea a lot.

Mindy: I do too.

Ashley: Thank you for that.

Scott: Yeah, I think you’ve got a lot of great opportunities in front of you and it seems like you’re going to be starting from a position where I imagine you’re going to have great credit. You have no debt besides a very reasonable mortgage and you have lots of different options ahead of you, which are going to continue to compound as you continue to build that … what was it called? It wasn’t emergency plan. It was planned …

Ashley: Always prepared.

Scott: Always prepared fund.

Ashley: Yeah. I love that.

Scott: All right. Well as you build that fund, you’re going to just find these opportunities multiplying before you and it seems like there’s really accessible real estate in your local market too in Mobile.

Ashley: It is. I would say it is.

Scott: It’s not $300,000 for a lower end house like it would might be in Denver for example. It’s probably much more affordable.
Ashley: It is a lot more affordable.

Mindy: Scott, I don’t know if you remember Rich Kerry from episode 268 of the Real Estate Investing Podcast, invests in Alabama and I thought it was Mobile, but it might be Montgomery. That is a great episode to listen to. I happened to co-host that episode, but that’s not why you should listen to it. You should listen to it because it’s good. It’s biggerpockets.com/show268.

Ashley: 268. I get it.

Mindy: He’s actually in the military. He lives in Korea and invests in Alabama. He pays cash for his houses and rents them out and is going to have quite the retirement fund through real estate investing when he gets out of the military.

Ashley: Wow. I need to listen to that.

Mindy: yeah, it’s a great episode. He’s really, really knowledgeable.

Ashley: Cool. Thank you.

Scott: Yeah. Also check the location. I want to say it’s Huntsville, but I know I could be wrong, you might be right with the Montgomery.
Mindy: Yeah. Well either way, he’s in Alabama, so it’s not like he’s in California doing this. He’s in a similar area.

Ashley: Okay. I’m going to definitely check that episode out.

Scott: Well, anything else you want to add before we move on to the Famous Four?

Ashley: No, we can move on to the Famous Four.

Mindy: Okay. It’s time for the Famous Four, these are the same four questions in one command that we ask of all of our guests. Ashley, are you ready?

Ashley: I am ready.

Mindy: What is your favorite finance book?

Ashley: My favorite finance book is the Millionaire Mindset by T.Harv Eker.

Mindy: That is a good one. I think Erin Lowry … I always mess up for last name.

Scott: Lowery. Yeah.

Mindy: Yeah. Erin Lowry from Brooke Millennial recommended that exact same book. Didn’t she’s Scott?

Scott: I believe that was her. Yes.

Mindy: Yeah, that’s a great book. That’s an excellent book.

Ashley: Yeah. It is.

Scott: I don’t know if I’ve read that one. What are some of the best things about it?

Ashley: So basically that book helps me to also change my thinking pattern. It helps you examine your thinking patterns. Like what are your thoughts around money? What are your thoughts around success? What are your thoughts around yourself? Like your internal thoughts. It helped me to realize what some of my negative thoughts were around money and success. Also what I love about this book is that it actually gives you actions that like at the end of each chapter, it gives you action steps, things that he actually wants you to do and put out there so that you can manifest those things. And it also has you to repeat a declaration like after every chapter. I can’t remember the declaration, but it’s something positive where you have to touch your head, then you touch your heart and then you say this declaration. That is awesome. To me that is a book that should not be read just once and put on the shelf, that’s a reread, like a yearly annual reread.

Mindy: Yeah. That’s awesome. And never underestimate the power of positive thinking because your mindset is going to take you so far. I mean, you have to do the work, but if you’re trying to do the work and, “Oh this is going to take forever and oh, this is so awful.” Yeah, it’s going to take forever and it’s going to be so awful. I feel like I am so excited to pay off my debt. I am going to do this. You’re going to do it.

Ashley: Yeah, that is true. And you will only go as far as your mind will let you go as well.

Scott: All right. What was your biggest money mistake? We talked about a couple.

Ashley: That was student loans. Why did I do that? That was student loans. I definitely should've been more conservative about those loans but it was ignorance. Ignorance is not bliss, but it was ignorance. I didn't understand credit and I thought that I would be making so much money when I graduated from school. So just being young and naive, but the student loan debt was definitely a mistake.

Scott: Love it.

Mindy: What is your best piece of advice for people who are just starting out on the same journey that you were?

Ashley: Okay. Of course, avoid debt if at all possible. Avoid debt. Don’t try to feel the pressure of trying to do what you see on social media. Living outside of your means, live within your means and be happy with that and just be happy with building your will and just having fun, being frugal. But the main thing I want to say is fear, fear, fear, fear, denounce it at all cost. Do not let fear guide your path in your life. If there’s something in your heart they you want to do, do it. My biggest regrets in life are the things that I didn’t do because I was too afraid to do them. Also do not let other people dictate to you how you should live your life. As far as don’t let people put their opinions or their fears or what they think you should do or would they’ve seen other people do or what they done? Don’t listen to other people’s opinion. If it’s something that you really want to do, do it. And that’s just point blank.

Mindy: [crosstalk 00:45:27].

Scott: I think it’s great. I think that that’s completely true except for when it comes to personal finance, in which case you should do exactly what me and Mindy say.

Ashley: I did it what you say.

Mindy: I love that.

Scott: As Mindy says for all the time, crystal finance is personal.

Ashley: [crosstalk 00:45:49]

Mindy: Personal.

Scott: Personal. That’s what it is. It’s do exactly what you want to do. And this is all up to you and your choice. I love that. I think it’s great. Don’t let fear guide it. I think a lot of fear probably comes from ignorance. So [crosstalk 00:46:05]the less you know about this stuff that maybe that can have impact on your life decisions if you’re afraid of money, whatever.

Ashley: I agree.

Scott: All right. What is your favorite joke to tell at parties?

Ashley: So I didn’t have too many jokes, so I found one that I thought was funny because it can be appropriate for the money podcast. A lot of us are investors who want financial freedom. We don’t want to be dependent on our W2 paycheck. Now, but let me preface it by saying this, I truly do enjoy my job. I love my co-workers and everything like that. So this isn’t for me, but I’m sure somebody can relate. And I just thought it was funny. So here it is. Why did the can crusher quit his job?

Scott: I don’t know why?

Ashley: It was soda pressing.

Scott: That a great one.

Mindy: Scott will now use that in the office. I can promise you.

Scott: Nice. I’m definitely going to use that one.

Mindy: I love how quick Scott is, but I hate his jokes because they’re terrible. I’m the only person in the office who hates his jokes. Everybody else loves them.

Ashley: Oh goodness. Don’t do Scott like that.

Mindy: I now I’m the president of his fan club. I’m just not the president of his joke fun club.

Ashley: The joke fun club. Well, you want the two Scott.

Scott: Fair enough.

Mindy: Okay, Ashley. Where can people find out more about you?

Ashley: Okay. So I’m not very social on social media. But I do have a Facebook page which is Ash Lyn, A-S-H-L-Y-N. And my Instagram name is just portion of my last name and my first name. So it’s L-I-K-E-L-A-L.

Mindy: I love that. And we will put links to this in the show notes, which can be found at biggerpockets.com/moneyshow88. Ashley, this was wonderful. I really appreciate you sharing your story with us and I’m so happy for your success.

Ashley: Thank you so much. I appreciate you all for reaching out to me. Thank you so much Scott, for responding to my email. I just put it out there. I didn’t know, I really didn’t think we were going to respond. But this was actually something that I said years ago like, “Maybe one day you’ll be successful enough to be on the BiggerPocket Show.” Like thinking of the real estate before the money show came out. I’m on your show, I can’t believe it. So God is good, first of all. And thank you all so much. Thanks Mindy, I really do appreciate it. It’s really been an honor, but most of all I really do hope somebody that’s in my similar situation will get some inspiration from the story. That’s my biggest hope.

Scott: Absolutely. We know they will. And I hope that we do get to have you back on the show, maybe on the Real Estate Podcast or back here after you become a successful real estate investor with a couple of rental properties and starting to cashflow those. So definitely [crosstalk 00:49:31]that no doubt that you’ll be there in a few years.

Ashley: Thank you. Thank you. Thank you.

Mindy: Yeah. And that’s why we do this show. Just like you said, you hope somebody gets inspiration. That’s exactly why we do this. We like to hear from different people and their stories. One thing we hear over and over again is that this isn’t difficult. This isn’t some big mathematical problem. Spend less than you earn, pay off your debt, start investing, over and over and over again. So we are in the start investing phase and I can’t wait to see where you go. Okay. Ashley, thanks again for your time and have a great day.

Ashley: Thank you. Bye bye you all too.

Scott: All right. That was Ashley. Mindy what do you think?

Mindy: Oh, hugely inspirational. Hugely inspirational. I love her story and like I said in the beginning, I love that she took action. That is the difference between Ashley from 2019 and Ashley from 2017. Ashley from 2017 was kind of plugging along, but Ashley from 2019 crushed it.

Scott: Yeah. I think it’s just outstanding and amazing progress. She said it best, I think I can’t remember what minute of the show, but she said it best when she was like, “I feel free. I feel free based on that …” That kind of really struck a chord with me that hey, that weight is off her shoulders and she feels ready to kind of attack the next phase of her financial journey here.

Mindy: Yeah. That’s the last check that you write to your student loans. I’m assuming the last check you write to your mortgage, although I’ve never paid one off. The last check you write is like the happiest check ever. Just well, I guess you probably don’t write checks. You probably do it online. But I wrote a physical check because the Internet didn’t exist when I paid off my husband’s student loans. And I wrote out a check and I was like, “Whew, last check. Yay.” So yes, it is very freeing to be out of debt. Scott, so we get out of here today?

Scott: Well, two things [crosstalk 00:51:36]-

Mindy: Sorry.

Scott: … before we get out of here. One is, we mentioned in the intro, but I want to just kind of show that her success here was compounded by the fact that she’s a single mom. She didn’t mention that a single time during the interview, but I do want to say that, hey, Kudos to her for also kind of overcoming child care and all those other obstacles that come along with being a single mom and achieving this over the last two years. Then second, we mentioned earlier in the show that she emailed me with her financial situation and asked, looking for some advice. I want to clarify that before I get a huge flood of emails from everybody who listened through this. From time to time, people do just send me an email and it’s got an entire financial situation with lots of detail and it’s a rather lengthy email. And while I tried to respond to these as best I can, that can put me in a little bit of a difficult situation sometimes.
So if, if you’re going to email me and reach out looking for advice, I’m always happy to chat [email protected] But I would appreciate a maybe short or succinct 100 word or less email that kind of maybe asked a specific question rather than kind of maybe an open ended question or that sort of thing. Ashley did a really good job and gave me very specific circumstances and a specific questions which made answering your email great. But just want to throw that out there, as I know that was a contextual part of this podcast episode, before I get lots of email, a flood of book long emails that have lots of detail that will be difficult for me to respond to.

Mindy: Yeah. I think that’s nice. Now shall we get out of here, Scott?

Scott: Let’s get out of here.

Mindy: Okay. From episode 88 of the BiggerPockets Money Podcast, he is Scott and I am Mindy and we will see you later alligator.

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In This Episode We Cover:

  • Ashley’s money journey
  • Working side jobs and opening up credit cards to get a discount
  • Total debt she had from credit card and student loans after college
  • What she did after college
  • Using her income tax return to pay her credit card debt and buy a house
  • Her journey to financial freedom
  • Aggressively attacking student loan debt in 2017
  • What got her interested in real estate
  • How she saved a down payment for her investment property
  • Her experience house hacking
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Tweetable Topics:

  • “Never underestimate the power of positive thinking.” (Tweet This!)
  • “Vacation is nice, but you know what’s even nicer? No debt.” (Tweet This!)
  • “Reducing debt is similar to increasing income.” (Tweet This!)

Connect with Ashley

The BiggerPockets Money Podcast is for anyone who has money… or want to have more! Join BiggerPockets Community Manager and Podcast Director Mindy Jensen and CEO Scott Trench weekly for the BiggerPockets Money Podcast! Each week, financial experts Mindy and Scott interview unique and powerful thought leaders about how to earn more, keep more, spend smarter, and grow your wealth. You'll get tips for getting your financial house in order and actionable advice from guests who have been in your shoes—and found their way out.