031: Finding Hope and Making Sense of Your Finances with Alaya Linton

Alaya Linton Hope and CentsAlaya blogs at Hope+Cents.

After years of feeling hopeless about her financial situation, Alaya Linton took the steps to climb out of debt.

Becoming debt-free gave Alaya a new passion and through her blog and coaching now helps others dump their debt and take control of their finances.

I know you’ll enjoy this hopeful interview with Alaya.

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I hope you enjoyed that. A big thank you to Alaya for giving us the gold today.

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A Willingness to Sacrifice

Sacrifice. That’s not a word that we enjoy using, is it? Especially when it actually involves us having to sacrifice something. But Alaya says that sacrifice is what has helped her to achieve the financial success she has had thus far.

Giving up the things we want right now for some future goal is not how most people typically define fun. Alaya credits her “crazy ability to sacrifice” with getting her where she is now. If sacrifice is so crucial to financial success, what should you sacrifice?

Alaya gave up what she calls “those everyday luxuries that become part of our lifestyle.” Things like eating out or ordering food in, cable television, etc. We don’t see those things as luxuries, but they cost money that we could be applying toward our financial goals.

Living Beyond Your Means

Alaya and her family were like most American families; paying for things with credit, spending more than they earned, and getting deeper and deeper in debt. It wasn’t until her husband’s hours at work were cut back that they saw just how much trouble they were in.

At first, things seemed to still be okay. But it soon came to a head when there was no cash for groceries or gas for the car. They were now relying on credit for daily living expenses. During all this time, they didn’t change their lifestyle in any way. They were just depending on their credit cards to get them through.

But the day came when every one of their cards, except one, was maxed out and using credit to buy groceries was no longer an option. That one card was their American Express card, and they had been treating that card like it was their income. But one late payment during the height of the recession caused that card to be shut down. They then found themselves without any alternative to changing their lifestyle.

First Steps to Freedom

Alaya and her husband knew they were in a huge mess, but they lived in total denial of just how bad things were. The first thing that had to change for them was their mindset. They had to sit down and add up all of the numbers they had been avoiding for so long and see exactly what they were dealing with.

The total debt wasn’t the only problem though, far from it in fact. The issue that was killing them was that they were overspending each and every month by $2,000. Up to this point, they had felt defeated when thinking about their debt. They were sure that they would never get out from under all of it. But that day, when they wrote everything down, Alaya’s husband said to her, “We can do this.”

Setting Priorities in the Budget

While Alaya and her husband had a budget in place, it obviously wasn’t a working budget, hence the $2,000 overage every month. Their next step was to get a true working budget in place.

They began to prioritize their needs over their wants. They slashed their lifestyle in order to stop the money hemorrhage. They took the time to go over every single monthly expense, including phones, insurance, food, etc. Alaya began using coupons at the grocery store which shaved another several hundred dollars off of their spending.

“All of the things we thought were necessary…all of a sudden they weren’t.” ~Alaya Linton

Increasing the Income

Not only did Alaya and her husband slash their spending, but they also found ways to bring in more income. 2010 was a census year, so Alaya spent the summer as a census worker. She was willing to do anything to increase the income, and even applied at the local supermarket for work.

Increasing their income was just one step on their journey though. They began by overcoming that monthly deficit, by slashing their spending and increasing the income. But for Alaya and her husband, that $74,000 in debt was the end goal.

Getting a Financial Education

Once they got started on their journey, Alaya realized that she had always had an interest in personal finance. She had bought and read books like Smart Couples Finish Rich, The Automatic Millionaire, and Smart Women Finish Rich, by David Bach.

She had actually started reading the books before everything fell apart for them, simply because she knew deep down that things were not fine no matter how much they said they were. But all the reading still hadn’t changed anything in their spending habits. It wasn’t until they got a hold of The Total Money Makeover by Dave Ramsey that Alaya felt like getting out of all the debt was something they could actually do.

Buying, and Losing, a House

In 2006, in the middle of all their consumer debt lifestyle, Alaya and her husband got “house fever.” They pulled money out of their 401K and purchased a house that they knew at the time was too much house for them. They were making the payments, but only by sacrificing their retirement contributions.

When they began to get focused on their finances in 2009, they were still in the house. Over the next 25 months, they paid off the entire amount of $74,000. By the end of 2011, they were debt free except for the mortgage. And then Alaya’s husband lost his job.

He was able to get another job fairly quickly, but it was in another state. They were underwater with the house, but because of the move with the job they qualified for a short sale on the house. It has now been 4 years since the short sale went through and Alaya is hoping to be a boomerang buyer.

Daily Money Strategies

Budgeting has become a crucial part of Alaya’s money strategy, and she and her husband do their budget together every month. They use a zero based budget so that every dollar is accounted for.

Through their zero based budget, they can prioritize the things that are most important to them, like giving and savings. They add things like regular monthly expenses and then move onto unexpected expenses like doctor appointments, gifts, etc. Over the years, they have made the budget fit their needs and their lifestyle.

Deciding to Pay for College

When Alaya and her husband got married, they were already in debt. Student loans demanded to be paid, and they became more and more of a burden as they had children and continued to increase their lifestyle. They knew that they didn’t want their children to face the same things they had faced.

“We signed on the dotted line without realizing what that would mean years down the road.” ~Alaya Linton

They have handled it with their oldest by having him start his education at their local community college and then transferring to a state school. He also must work to pay for one semester, then they pick up the rest. This ensures that he is not only attending college, but he also has bought into the system himself by picking up part of the tab.

Saving for Retirement While Paying for College

Cash flowing college is no small feat, and it tends to come at the same time that couples need to increase their retirement savings. Alaya and her husband are currently “straddling that fence” and trying to increase their income so that the savings part can stay on track.

They have dealt with this by letting their son know that the one semester is all that they can do, so if he can’t pay for his first semester, he will have to stop attending until he can pick up enough work to pay for that. They are willing to sacrifice what they can to help him through, but they can’t sacrifice their own future.

Deep in Debt and Discouraged

Alaya and her husband paid off $74,000 in 25 months. That was an amazing turnaround for such a large amount. Maybe you find yourself in similar circumstances and you feel like there’s just no way you can get your debt paid off, not in 25 months, and maybe not ever.

Alaya can identify strongly with those feelings. She clearly remembers looking at the numbers many times and thinking, “There’s no way we can ever get out from under this.” But it was that mindset shift that made the difference between thinking they couldn’t pay it off and knowing that they could.

“Whether you think you can or you think you can’t, you’re right.” ~Henry Ford

You have to believe that you can do it, decide that you are going to do it, and your actions will follow your thoughts and beliefs. No matter how bad it seems, there is always hope, so hold onto that hope when you are feeling discouraged and like you aren’t making progress.

Purchasing a Home the Smart Way

Earlier in the conversation, Alaya told us how she and her husband took money from their 401K’s to buy their first home. A home they couldn’t afford and would eventually lose. And even though they are now paying for college and funding retirement, they are planning to purchase another home. But this time, they are going about it much differently than they did the first time.

They are saving so that they can put at least 20% down; they plan on a 15-year mortgage; they
will take on a payment that is the right percent of their income. Unlike the first house which at times was nearly 50% of their income.

Right now, this all means increasing their income. There is still another child to put through college in a few years, retirement to contribute to, and saving for the down payment.

Increasing Income While Working in Ministry

When you work in ministry, increasing your income isn’t necessarily the easiest thing to do. Perhaps you work in an industry where you don’t have the opportunity for raises or overtime. Alaya has overcome those limitations by becoming a one-on-one financial coach.

This not only provides her with the increased income but allows her to fulfill her passion toward personal finance. Alaya trained to become a coach through Ramsey Solutions, and she has been able to use that training not only in her coaching business but also in her ministry position.

Her husband is a web and graphic designer, so he also has work he can do on the side to bring in more income. He designed Alaya’s site as well, so be sure to take a look at that.

Staying in Tune Financially with your Partner

Alaya and her husband still have their monthly financial meetings where they plan out the next month’s bills and spending. But what other things does a financially successful couple do to help them stay on track?

Before their journey to get out of debt, Alaya says they didn’t fight about money like many couples do, but they were definitely not on the same page. Since beginning their journey, they now make all financial decisions together. These decisions are typically made at their monthly budget meetings. These decisions include the monthly spending plan, anything extra that might come up during the month, assessing their goals (where they were, where they are, and where they’re going), and making sure that they are united on all financial matters.

Alaya and her husband combined their finances as soon as they got married, but not everything was out in the open. She was hiding things from him, like a late payment here and there. But even though the financial strife wasn’t there, they still weren’t working together to straighten things out.

Once Alaya decided to start working on the debt, but before her husband was on board with the plan, she began hiding savings from him. She thought that she was doing it for good reasons, like using it to pay off debt before he could spend it, but it didn’t take her too long to realize that
hiding money was no way to go.

What Would Alaya Change if She Could Do It All Again

Alaya’s story is pretty amazing. Paying off $74,000 in 2 years was a huge undertaking and certainly not without its challenges. But looking back now, even Alaya is amazed by what they have accomplished. Even she sometimes asks, “How did we do that? How did we make that happen in so short a time?”

But even with their success, there are still things that she would do differently. She missed out on some relationship opportunities and experiences because they hadn’t been prioritized within the budget. If she could do it again, she would have been more intentional in giving her younger child experiences that she feels he missed out on, and on building family relationships in creative ways without blowing the budget.

If you feel like you need a good dose of hope for your finances, visit Alaya’s site at Hope and Cents. Her goal is that every visitor to her site leaves with a “little information and a lot of hope.” She is passionate about letting people know that they can make a change.

Show Notes

  • 01:10 How a willingness to sacrifice leads to financial success
  • 02:35 When living beyond her means caught up with Alaya
  • 06:30 The first step Alaya’s family took to turn things around
  • 08:15 Setting priorities in the budget
  • 10:05 Ways that Alaya brought in more income
  • 12:00 How Alaya got her financial education
  • 13:35 Losing a house after paying off all the debt
  • 18:30 The daily money strategies that Alaya’s family uses
  • 20:00 How Alaya and her husband use a zero-based budget
  • 21:45 Why Alaya and her husband decided to pay for their kids’ college
  • 24:20 Can you fund college and save for retirement at the same time?
  • 27:10 Alaya’s advice for someone deep in debt and discouraged
  • 28:35 Planning a home purchase the smart way
  • 30:00 How Alaya increases her income while working in ministry
  • 31:20 Staying in tune financially with your partner
  • 35:00 What Alaya would change if she had to do it all over again

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This show is part of the FinCon Podcast Network and was produced by Steve Stewart.

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