Getting into a big pile debt is too easy nowadays.
But admitting to yourself your wrongdoings and making a pledge to get out of it, says a ton about your character.
Jason Larkins found himself being suffocated under $110,000 of debt at the early age of 23.
He could have given up, filed bankruptcy, crawled under a rock and pretend it didn’t happen.
He didn’t though. He made a commitment to pay if off and has currently paid off $60,000 of it. Here’s his story….
First of all for those that don’t know you, tell us a little bit about your background and why you started your blog.
Well, my name is Jason Larkins and I’m a financial advisor with a Registered Investment Advisor firm located in Kansas City, MO. The decision to become a coach/advisor really spurred from my personal struggle, and eventual successes, with money.
After a lot of pressure from one of my close friends, I started my blog, WorkSaveLive, in November 2011. After much thought and contemplation, I couldn’t ignore the reality that having a blog would extend my reach and ability to impact thousands of peoples’ lives – why only help 500 people a year when you can get thousands that visit your site on a monthly basis?
What first caught my attention was your tweet of how you were able to pay off such a large amount of debt in a relatively short amount of time. (See the Tweet below)
Can you talk about some of the reasons that led to you getting into so much debt?
During my “younger” days (yes, I’m still only 27) I viewed myself as just a normal person. Much of how I learned to manage money was through witnessing what my parents did as I was growing up, and seeing what my friends and others around me were doing at the time.
This lack of true financial education: knowing how to budget, understanding the importance of living on less than you make, and saving for the future, led to making some extremely stupid financial decisions such as:
- Going to an out-of-state school to play football (despite any scholarships)
- Spending far more than I made (taking friends out, partying, and eating out for every meal)
- Having no understanding of priorities (choosing to go out rather than paying my rent on time)
What was your “aha moment” that made you realize that your debt had gotten out of control?
I’ll preface this with: I know that many people reading this will be shocked about how dumb someone can be, but I’m comfortable with what I’ve learned and where I’ve come so being brutally honest doesn’t bother me. I’ll also willfully acknowledge that I was extremely stupid and stubborn at the time.
Despite receiving multiple collection calls a day, having a bank account that was negative for 30 days straight (thank goodness I had another one), and being so afraid and stressed out that I didn’t know what to do, my ‘AHA!’ moment didn’t come until:
A night that I took my girlfriend at the time (wife now) to eat at the Cheesecake Factory. I had done a pretty good job of hiding all of my struggles from her, but in the middle of dinner I received a call from my roommate notifying me that our rent check had bounced.
I was responsible for paying all of the bills: the roommate would give me her portion of the money (terrible idea at the time) and I would “pay” the bills. Who wouldn’t trust a roommate that was making $50,000+/year at 21 and lived a life that appeared to be to be that of someone with no financial problems?
So, realizing that I now had a negative balance in my OTHER checking account, I just looked at my girlfriend and told her the mess I was in. I didn’t really want to borrow the money from her so I offered to ask the Cheesecake Factory if I could do the dishes for the night, but she ended up paying for dinner and loaning me $1,000 on top of that.
Since that day everything has changed.
Once you had the aha moment what steps did you implement to begin the get out of debt process?
The first step was simply learning to get on a written budget and limit my spending. At that age I thought I was invincible because I made quite a bit of money, but the reality is that I still had bills to pay and I couldn’t keep living the lifestyle I wanted.
Dave Ramsey loves to say that finances is 80% behavior and 20% knowledge and I’m a perfect example of that. Budgeting isn’t hard. Managing money well is REALLY SIMPLE!
The problem is the person you look at in the mirror. It’s the unwillingness to make sacrifices, to be disciplined, and to tell people “NO!” That’s the difficult part and that’s why so many of us fail.
In my upcoming book I talk about having a battle buddy. Someone that supports you in all your endeavors. How important was it having a battle buddy in getting out of debt?
I don’t know if I would have ever been able to do this on my own. I dated my wife for 4 years and we’ve now been married for 2 1/2. She’s seen me at my worst and she’s been with me through the best.
Despite our progress, we’re certainly not at the end of our journey and even to this day it’s vitally important to have somebody that’s willing to tackle the mountain with me; to encourage you when you fall and to be your cheerleader when you succeed.
What were some of the hardest obstacles that you faced in trying to pay off all your debt?
There have been, and will continue to be, many obstacles. Shortly after that Cheesecake Factory dinner I decided to make a career move and take a job making 50% less than what I had been.
Talk about a tough time: I obviously didn’t know how to limit my spending when I was making around $60k so thinking I could live off of $30,000 was rather scary.
However, after I had got on a strict budget I realized I could make the sacrifices necessary to drop down to $30,000/year.
It was extremely challenging and the budget was very tight (considering all of my debt payments) but it worked out!
Our obstacle today is continuing the grind that getting out of debt is. When you start $110,000 in the hole (with the majority of the debt being student loans), the only way to get out is to sacrifice for a LONG period of time. It’s been 5-6 years now and we still have a few more to go.
Did you allow yourself to celebrate any milestones in the debt paying off process?
The first year and a half that I was on “the plan,” there was no play or celebrations: no eating out, no vacations, no movies, concerts, or other entertainment. It was all business.
It took me a little while but I eventually realized you can’t live like that forever, so we have scaled back our intensity and live life while still being responsible.
Over the past 6 years we’ve: paid cash for two cars (an old beater and two weeks ago we bought a 2011 Camry), we paid cash for our wedding, wedding rings, honeymoon, and we’ve gone on two vacations in addition to that as well.
What advice would you give to others that are in a similar situation but feel hopeless that they’ll never be able to actually pay all their debt off?
The remedy for hopelessness is progress and seeing that there is a light at the end of the tunnel. I’ve done some of the dumbest things a person can do, and I knew nothing about managing money, creating a budget, or living on less than you make.
If I can do it, then anybody can. (That isn’t intended to sound arrogant or any other way somebody wants to misconstrue that).
It starts with getting on a budget and creating a plan.
I firmly believe that a budget is the foundation to establishing a solid financial plan.
Once you know what your disposable income is, then it’s all about figuring out what you’re willing to sacrifice to increase that number (if it needs to be). I help all of my clients realize that sacrifice is a real thing and there are only 3 things any person can do to get out of debt faster:
- Some may have to increase their income by taking part-time jobs or figuring out a long-term career path.
- Others may simply need to cut things out of their budget.
- Some may have to sell some of their cars and start driving some beaters around to get those payments out of their life.
The question is are you willing to make the sacrifices that your goals demand?
Thanks to Jason for being so transparent in his past. Be sure to read more about his debt journey and other tips on personal finance at his blog Work Save Live.