How This Family Moved To The “Hood” and Paid Off $120,000 in Debt

Recently, I decided to start a new series where I interview people who are doing extraordinary things with their lives. First up was JP Livingston, who retired with a net worth over $2,000,000 at the age of 28. Today’s post is about Aja McClanahan, who made big sacrifices to pay off $120,000 in debt! In…

Michelle Schroeder-Gardner

Last Updated: August 12, 2023

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Aja McClanahan made big sacrifices and paid off $120,000 in debt! She is now debt free and aiming for early retirement.Recently, I decided to start a new series where I interview people who are doing extraordinary things with their lives. First up was JP Livingston, who retired with a net worth over $2,000,000 at the age of 28. Today’s post is about Aja McClanahan, who made big sacrifices to pay off $120,000 in debt!

In this interview, you’ll learn:

  • How she got out of debt
  • How she kept up with her debt paying discipline
  • The sacrifices she made to get out of debt
  • Her tips for paying off debt when you feel like you have no money
  • How she increased her income so that she could pay off debt
  • What she would do differently, and more!

Her article, Hood Rich- How Living in the Hood Saved Our Finances, got me hooked. In it she says “We live in ‘Da ‘Hood.’ Corner stores, kids out late at night, gunshots, alley mechanics and all the glory of what the ‘hood life entails. Yes, this is where our home is located. A home on the next block is selling for $2,500.”

Yes, she paid off over $120,000 in debt, and none of their debt was even from a mortgage, and she did it all with a family to care for.

After reading about her story, I thought she would be great to interview for my series. Paying off that amount of debt and being debt free is no small feat.

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I asked you, my readers, what questions I should ask Aja, so below are your questions (and some of mine) about paying off debt. Make sure you’re following me on Facebook so you have the opportunity to submit your own questions for the next interview.

Here is how Aja paid off $120,000 in debt and is now debt free. You can follow her on her blog Principles of Increase.

1. Tell me your story. How much debt did you have and what was your debt from?

I was raised in the suburbs of Chicago and married my high school sweetheart at the age of 24. We did the best we could in tallying up all of our debt to have an established budget before getting married. The only problem was that we underestimated the student loan debt by the tune of $20,000 or so.

Once we were married, we started getting calls and letters about outstanding debt, which we did our best to pay down on one income. Soon after marrying, we had our first child. I knew that I wanted to stay home with her. The only way I could make the numbers work was to 1) pay off debt and 2) increase our income (but I’d have to do something flexible or from home).

Once we added everything up, we found out that we had $60,000 in student loans between the two of us. Later on, we would get a $30,000 loan for a luxury SUV, then I ran up about $30,000 in debt for my first crack at full-time business. In all, we were $120,000 in debt. We didn’t even own a home!

We decided, at one point, that we would pay off all our debt, no matter what it took. Through a combination of making more money and cutting down on expenses, we eventually became totally debt free in 2013.

2. Why did you want to get out of debt fast? What was your turning point that made you get serious about paying off your debt?

At one point, my husband’s paycheck was garnished to the tune of about $700 a month. Debt was dictating almost everything we could or could not do. There was no money to travel, have fun with our kids, or invest in building wealth for future generations. Debt was literally our boss and our master.

We knew that type of life was not for us.

The birth of our first child changed our perspective on money and debt. We knew that it would be difficult to raise our kids the way we wanted to if both of us had to work so hard just to pay debt.

The vision we had for our family was to raise kids that would receive as much of our attention as possible so they could be productive citizens of society. We wanted to train them to be money-savvy, creative, kind, and industrious. With both of us working full-time, it would be very difficult to do to the degree we had envisioned.

3. How long did it take you to pay off your debt and reach debt freedom?

This is always a hard question to answer. There were times that we made big progress in our debt only to take on more. It didn’t happen a lot, but it was a part of our story. Around 2008, we got really serious about our debt and began to pay the bulk of it down at that point. By that time, we probably had $100,000 of the $120,000 left to pay.

In December of 2013, we paid the last dime of our debt, which was my husband’s student loan. It was the most exhilarating feeling ever!

4. How on earth did you manage to keep up with the discipline on a consistent basis?

It was one of the hardest things we ever did. I saw my friends and family moving forward, having fun, and doing things on their terms. On the outside looking in, it seemed as though we were moving backwards: moving in with mom, driving old cars, and having to decline something as simple as a birthday dinner invitation (it just wasn’t in the budget).

One thing that helped me was keeping our family vision in front of me. I am a big fan of vision boards, and I would create a new one each year to remind me of our goals: debt freedom, family travel, owning investment properties, etc. I always kept my vision boards close by to remind me of what we were “struggling” for, especially when I was getting discouraged or tired of living so frugally.

The other thing I did was find others who were on the same path or even had finished their debt freedom journey. I listened to the Dave Ramsey podcast when I would work from home, instead of taking a nap like I really wanted to. Listening to the debt-free screams on the podcast would invigorate me each and every time. It also helped me log more hours to make more progress on our debt.

5. I struggle with the decision to a) start to pay off all debt now (mortgage on home, mortgage on rental property, car note) or b) start investing now. What should I consider when making this decision? What factors made you decide to pay off debt first before building wealth for retirement?

This was a tough decision for us too. I think the direction you’ll take depends on your situation. For us, we got great peace of mind knowing that we did not have debt. I do wish we had saved more because time = money. It can be difficult to get the money you lost from the time your investments would have been growing due to compound interest.

For us, we valued more the peace of mind that debt freedom would bring. We still have time to invest and save, and that is exactly what we are doing. It would have been nice to get the returns we missed while being in debt for the first 9 or 10 years of our marriage, but we are working very hard to make up for that lost time right now.

I would say it all depends on your risk tolerance. Living on one and a half income with little savings gave us a really thin margin to live and be prepared for emergencies, so getting out of debt was a way to reduce the risk of financial disaster for our family.

6. What’s the best way for a person to become debt free?

First and foremost find your “why.” I hate to sound cliche or corny, but it will help you in the tough times. If you don’t take time to find your why, it will be difficult to develop values that will tie you to your goal. If you are going to be on a 5,7 or 9-year journey to get out of debt, create some goals and even a well-stated vision as to why you need to accomplish your goal.

From here, you’ll need a plan to backup your vision. For us, Total Money Makeover was the book that laid everything out and helped us create a customized debt-destroying plan. All we had to do was stick to the plan. We weren’t perfect in it all, but we never quit.

To sum it up, find your purpose in obtaining debt freedom, then create an action plan to reach that place.

7. What sacrifices did you have to make in order to become debt free?

We made monetary sacrifices but also other sacrifices. On the money end, we curbed our spending and cut out things like cable, eating out a lot, and traveling. One time, we didn’t even get our air conditioning unit fixed that had been vandalized (during a record-breaking heat wave).  We decided to keep paying off debt instead! There were times that I had to decline invitations for destination weddings, birthday outings, or doing things that would cost more money than we could afford. At times, this could be very isolating.

Other sacrifices were emotional. There were times we seriously questioned if we were doing the right thing. Everyone had credit cards. Who didn’t have a car note? The whole world was comfortable with a 30-year mortgage. It seemed insane to even shoot for this goal when everyone in the world seemed to be just fine staying in debt.

Then, there were people who thought we were exposing our children to danger by moving into the inner city. We’ve been called everything from idiotic to other extremely offensive words.

It was hard to explain what we were doing because we really didn’t know other people who had the same goals or were on the same path. That has changed since I’ve become more involved in the financial media community, but in the beginning, we felt very alone.

8. I’d like to ask a few things: 1) What did it feel like driving up to that bullet-riddled home in the inner city? Can you describe that moment? and 2) What did you say to each other to make it through and push on?

It was scary. The first night in our home we noticed the noise level was so much more pronounced than our suburban surroundings we were used to. There were dogs barking, sirens, and even people yelling in the alleys. My husband and I looked at each other and asked, “What have we done?”

At that point, we were too far in: we moved our things in and had spent money on the rehab. We stuck it out by plugging into the community. Instead of, “This is just a means to an end,” we began to get involved in the community and find friends in our neighbors.

It was a good decision because not only were we able to get out of debt, but we’ve made great friends and have been involved in some awesome causes that have helped uplift the community. Things are much better since we first moved in 7 years ago and they continue to improve in our neighborhood.

9. How can someone start paying off debt if they are not able to pay off the everyday bills?

If you have the option to cut your biggest expenses, do that. It might mean moving in with a relative or “house hacking” by taking on roommates or living with a friend. Some of the world’s greatest minds freed up their cash by living on the cheap and conserving their money for things that would really matter: investing, creating a startup company, etc. It won’t be easy, but it will be worth it.

Also, look at your other expenses. Be honest with what are wants versus needs. Can you cut back on things that are not necessary? You might also have to consider adding more income to the equation. For us, adding more income was a game changer. With a combination of more income and fewer expenses, you should be able to make headway on your debt.

Bottom line: you’ll have to be creative. You’ll have to make sacrifices. But you’ve got to know it can be done. Then start doing it!

10. In what ways did you increase your income, and what did you try that didn’t work?

I started really simple: selling things on Craigslist. Once, I tried to order toys wholesale and then resell on eBay, but that was a bust. I also had a company that I had incorporated when I was 24 year old. I used that company to do side hustles like Spanish tutoring as well as sales and marketing consulting. I even provided translation services for hospital documents.

I tried a few things out and eventually landed on database consulting due to my business and tech background.

I was able to run that business from home and had 3-4 people as subcontractors to help with my workload. At the height of that business, I was making $10k per month from home. It was great and enabled us to really make progress towards paying off our debt.

If you are looking for a side-hustle, just start with something. It might be delivering pizzas. But, that’s ok. Once you start, you’ll find that your hustle muscle is awakened and you’ll see opportunity everywhere. It will just be a matter of time until you land on something that will be uniquely suited for you.

11. Are your kids in any sports? How do you afford their extracurricular activities on a budget?

My youngest daughter was in a free baseball program once. My oldest has also participated in several music programs. At the moment, my kids are enrolled in a free STEM/entrepreneurship program where they study the intersection of science, technology, engineering, and math with business.

If they participate in paid programs or activities, they actually help cover it. Because we are a debt-free family, I can spend more time with my children. I get to homeschool them and support their careers in entertainment. Both my children have been paid to appear on TV and do voice over work for radio commercials. This allows them to earn extra money to cover things like activities, school tuition for their online coursework, snacks, and entertainment.

12. If you were starting back at the beginning, what would you do differently?

Firstly, I would not have gotten into so much debt. In college, I actually worked so much that I probably could have paid for my tuition. Not once did it ever occur to me to pay back the money that was given to me via financial aid and loans. Even though I had the money, I chose to do other things with it.

Also, I would have educated myself more on how to negotiate with creditors. There were many bills we paid outright because we didn’t know about negotiating a better deal. One bill we actually negotiated down from around $12,000 to $3,700, but I later found out that the statute of limitations had passed and we technically didn’t have to pay the bill!

13. What is the biggest lesson you learnt about debt?

I learned that debt, if used carefully, can be a tool to build wealth. The problem is that, as a society, we’ve used debt to finance a consumer driven lifestyle. This use of debt can cause us to abuse and misuse credit and debt, which is what we did initially.

For a long time, we had no credit cards and were really scared of using credit after we paid off all our bills. We recently got a couple of credit cards and pay the balance each month so as to not go into debt. So it is possible to use credit responsibly if you know better.

You can definitely use credit and not go into debt, but if you’ve not demonstrated the ability to do that, don’t tempt yourself. Cut up your cards if you have to. Take a break and commit to getting out of debt once and for all.

Remember, the same things you get with debt, you can save up and pay cash for. The best part is you forgo paying interest and get to keep more of your hard-earned money. Debt means you operate on the lender’s terms, not your own. We prefer freedom, so we stay out of debt for that very reason.

So far, it’s been a very stress-free lifestyle. We pay cash for things like cars, renovations, vacations, and other big-ticket items. It’s really a blessing, and I wouldn’t live any other way!

14. What is your very best tip (or two) that you have for someone who wants to reach the same success as you?

Just start. You may not be able to make huge payments at first, but that doesn’t matter. Pay something extra on your debt, no matter what. If it’s $15, start there. You’ll be surprised at how addicted to progress you become.

But that won’t happen without taking the first steps and starting on the path to financial freedom by doing something. What is your something? Is it pulling your credit reports? Is it purchasing a copy of Dave Ramsey’s Total Money Makeover? Is it applying for a part-time job? Is it looking for a roommate? Is it cutting up those credit cards? Whatever it is, just do it!

What other questions do you have for her about how to become debt free? Are you interested in debt free living?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. Dave @ Run The Money

    Aja, your story is nothing short of inspiring. You often hear Dave Ramsey say, “Live like no one else, so you can live like no one else.” And you took that to the nth degree. You knew the risks (especially the physical ones) — and you did it anyway.

    I’m sure you had naysayers and those questioning your motives (not least of which keeping your children in that tough environment). But, again, you did it anyway. You had a goal and it truly meant creating a better life for your family.

    God has certainly blessed you with great strength. Thank you for sharing your story!

    PS: Michelle, hat tip to you for using my question (#8). I appreciate that 🙂

    1. Thank you for those encouraging words, Dave!

  2. Aja’s story reminds me of this quote from Teddy Roosevelt.

    “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well.”

    I completely agree with his view. I really admire people who are able to take on big challenges and make big sacrifices to achieve their goals. Congrats Aja on your achievement!

    1. Aja @ Principles of Increase

      That’s profound. Thank you for reading and sharing that quote, Owen.

  3. Tina @ Growing My Pennies

    Such an inspirational story, Aja! Your willingness to make sacrifices for the good of your family says volumes about your drive and determination.

    P.S. Michelle’s interview on the So Money podcast with Farnoosh Torabi was released today. It was a great listen.

    1. Aja @ Principles of Increase

      Thanks for the kind words, Tina!

  4. Nita

    Great perspective and experience. I grew up in the URBAN setting and moved to the suburbs, but more to country to give my kids a different experience. Both my husband worked, but one of us was more flexible with job/business choices that helped us get out of debt. Now we are ‘comfortable’ with our debt, but it creeps up at times when you have kids.

  5. Wow! Talk about Gazelle Intensity. Thank you for sharing.

  6. Robin

    I just moved to the ‘hood to save $1000/mo on housing. I cried when I left my beautiful townhouse but… that $$ plus upping my income is going to change our lives.

  7. Mrs. Picky Pincher

    Ayuuup, moving into an area that’s more affordable is a great way to get out of debt. We switched from a $1,200/mo apartment to a $900/mo apartment across our city to save money. Was it a little rougher? Yup. But it was worth the crazy amount of money we were able to save in the long run.

  8. Mao

    Thanks for sharing your inspiring story! It definitely takes a lot of determination and figure out the why to achieve such an aggressive goal.

    I have personally lived in a rough neighborhood and got robbed so I would rather living in a nicer neighborhood and not have to worry. But I am glad it worked out for you.

  9. Kathryn

    It’s so exciting to hear about other people willing to make different choices! My husband and I bought a home in an area our town called “felony flats” in 2008. Our friends think we’re crazy! Now we’re selling and moving to a cheaper state so we can buy a house with no mortgage. (We’re 30 and 31)! It’s nice to hear we’re not the only crazy ones out there. 😀

  10. Janet Khokhar

    The timing of this post is awesome because I just finished reading Ramsey’s Total Money Makeover just yesterday. I’m trying to get my husband on board. We, like so many others, have trying circumstances and we, like others, also have hope that we can and will conquer debt and create a life of peace and stability for our family.

    1. Aja @ Principles of Increase

      Yes, you can do it! For much of the time, we were on one and a half income. It can be done!

  11. Aja, loved reading this- and I am a subscriber to your blog, so was awesome to know something about you I didn’t before. At the end of the day, I think the key word is sacrifice. To get what we want in life, something has to be sacrificed. Too often people sacrifice their financial freedom to get their consumer-driven wants met. Inspiring to read a story where sacrifice has been more meaningful and purposeful.

    1. Aja @ Principles of Increase

      Thank you for following me and reading this article, Katie! You words are so encouraging to hear!

  12. Ember @ An Intentional Lifestyle

    Wow that’s an awesome debt story. You are amazing parents!
    Your vision board is exactly how we focused for our debt payoff. And my husband still listens to Dave Ramsey on the way to and from work. We never want debt again and have found listening keeps us focused and encouraged still.
    I love that you have your kids earning their money for things they want. I did that growing up, and it makes you much more aware of what what means.
    Congrats on being debt free!!

  13. I love your story Aja!

    When I’ve shared my budget with my readers, I got a lot of comments on how it could never work for them because of where they live. I totally understand, but I think a lot of people don’t realize that where you live is a choice.

    Your priority was to get out of debt, so you made sacrifices to make it happen. If someone’s priority is to live in a nice neighborhood, then they’ll probably have to make sacrifices in terms of their budget and high housing costs.

    Thanks so much for sharing!!

    1. Aja @ Principles of Increase

      The funny thing is that where we live is becoming even more desirable. We recently got a Wholefoods, Starbucks and Chipotle nearby!

  14. Hi Michelle and Aja,

    Wow! I love this. Your story is an inspiring one, Aja. Paying off such an amount of money won’t be easy but who can neglect the impact of sacrifice? Truly, no sacrifice goes unrewarded.

    There’s one amazing thing I picked from this post today. And that’s, “Cut down your expenses and make more money.”

    Thank you Michelle.


  15. This is SO AWESOME! I love when people live below their means in order to achieve such a huge goal. I think one of the hardest thing is not getting caught up in consumerism. Great job, and so inspiring.

  16. Sarah

    Wow, that’s intense. I don’t think I could do it but I’m happy to hear that things have worked out for Aja and her family. One of the biggest takeaways from her experience is the importance of sticking to your guns and coloring outside the lines every now and then.

  17. Becca McLelland

    WOW!!! That is inspiring. I just love how she said that they stayed in the bad neighborhood and actually improved it! How great is that? So good!

  18. It’s always inspiring to hear the transformation business success stories of people who started from the bottom online after experiencing so much adversity and catapulting themselves quietly and smoothly into potential online millionaires. I admire your success story Michelle because although you were earning a good salary while working a financial job with your Masters degree, you chose to take the huge leap of faith while working on this blog as your side hustle back in 2011 and becoming a blogging millionaire yourself and being featured in Forbes magazine. I respect you dearly for achieving that as well as showcasing others who also took the leap of faith like you and succeeded in today’s online business world.

    I have to remind myself and sometimes tell others before and after starting a business that it doesn’t matter where a person lives. It’s about the business mind and ambition. What’s in your mind and heart determines how far a person will go in entrepreneurship and the uncertain game called life. I know struggle very well because my mother worked for the City of New York in Brooklyn, New York for 35 years as I grew up in a middle-class family in the Flatbush section of Brooklyn. I personally know what it’s like to go without having the nice things you desire. I also know what it’s like live somewhere deemed less then desirable. I once lived in a small room at the YMCA 20 years ago and learned firsthand what it was like when people turn on you and having to hold your own as a working-class individual. Although I never live in the hood nor a New York City housing project, I was extremely humbled by coming down so low at the time in life and experiencing what it’s like through the humbling experience of living at the YMCA and experiencing other adversities to strive for excellence and hold my only independently. Through trial and error, I’ve learned valuable lessons along the way and value each day as a priceless learning experience in mastering the uncertain game called life. I’ve also learned that there’s more to life then succeeding in the online business world.

    It’s not where a person is from where they live. Nowadays, anyone with an Internet connection even if still living out of a garbage can with a Wi-Fi connection on their laptop and an ambitious will to prosper in the world of Internet business can succeed if they do the transformation business work at full strength and wholeheartedly applied themselves building their business respectively from the bottom. It’s always nice to build a business with your mate especially if you have a long history together dating back from childhood or teenage years. Even if things don’t work out with a potential mate you dated in the past, that shouldn’t deter a person from moving forward with their business ambitions. Yet, the aspiring entrepreneur should take their past bad experiences and use it as positive motivation to stay on track with building your business online out of inspiration or desperation to prosper. Do you agree, Michelle?

    Out of every negative experience whether it’s living in the hood or the YMCA or having a less than desirable underpaying job has hidden blessings in them. Unfortunate experiences are seen in DNN’s eyesight and mind as stepping stones to unsinkable spiritual and entrepreneurial greatness. I’m grateful for every experience in life because it made me who I am today and with a grateful heart to have experienced awesome trials and tribulations. Thank you for posting this wonderful blog. 🙂

  19. Kaitlynn Marie

    I’ve been longing for the day I could move into my own place and not live with my sister anymore. I think that I’m making the right choice by staying, even after I finally get a car. I have a decent amount of debt thanks to student loans and being an idiotic young adult who didn’t know how to say “no.” I just got a promotion, so I have decided to officially start my journey to being debt free. First up: get a car, and pay in cash! I’m looking for a cheap $500 car that will get me to work. I can trade up when I have more money!

  20. RichestManInLondon (@RichestManInLDN)

    This is so inspiring!

    A lot practical tips too… thanks for sharing.