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It took tough love, but he paid off his debt and prospered.

3 minute read

John from Frugal Rules graduated college in 1997, $50,000 in debt.

He says it was pretty evenly split between credit cards and student loans. He remembers the credit card companies on his campus offering free T-shirts and easy access to credit. John, like many other students, took the bait. But what got him in real trouble was his impulse spending.

“I used my credit cards to live the high life, or what I viewed as the high life,” recalls John. “There were months that I’d go to three or four concerts. I typically did not have the money to pay for them, so I used my card. I’d also go to the music store and buy 8-10 CDs on a regular basis.”

The most expensive impulse buy he made was a spring break trip to Chicago.

“I wanted to go with my friends but didn’t have the money,” John says. “I put the whole trip on plastic.”

John also spent the balance of his student loans that was not needed for tuition, and room and board.

“I’d take the balance and buy what books I needed and usually had at least $500-$1,000 left each semester that I’d spend on stuff I wanted instead of using it to pay back toward the loans,” John says.

The next mistake he almost made

After all the spending, John thought bankruptcy was the answer.

“I thought it was the easy way out, sort of a restart on my financial life,” John says. “The problem was that my financial mindset was still the same, so it wouldn’t have done any good. I was stressed dealing with collectors and viewed bankruptcy as the way out.”

Luckily for John, his roommate thought different. He understood a little about finances, unlike John, who grew up never wanting but was never taught money management skills.

“My roommate told me that I would be wrong to declare bankruptcy,” John says. “He said that I made the choices to spend the money and I had to repay it. He believed that I was effectively stealing if I went the route of bankruptcy.”

This tough love made an impact on John.

After his conversations with his roommate, John knew he needed to get on a budget and start saving money and repaying his debt. He also contacted a nonprofit credit counselor that helped him repay his credit cards. John took other actions as well.

“I cut back on everything I used to do. I picked up extra hours at work. I picked up side jobs,” John says. “I pawned items, so I could get the cash. I sold plasma. I did whatever I could, legally of course, to save money that could go toward the debt.”

He also started learning more about finances while working in the life insurance field. He worked life insurance for five years, then became a mutual fund accountant for two years and finally a stockbroker for five years. During that time his love for  finances brought him back to school.

“It drew me to get an MBA in finance,” John says. “I went back to school for my MBA in 2004 and graduated in 2006.”

In late 2009, John’s wife left her copywriter job and started to freelance.

“Over two years she had built up a big enough client base that we had to either hire someone or turn away clients,”John says. “We opted to have me leave my job to help her run the business and turn it into an ad agency.”

Frugal Rules

In 2012, John started Frugal Rules, so he could still discuss finances.

“The most rewarding thing about running the site is being able to help people make positive changes in their financial lives. People email me every day looking for help,” he says. “They think it’s impossible to make changes. Helping them is what keeps me going.”

I asked him for some advice that would help our readers.

  • Start tracking your spending. As the saying goes, knowledge is power. Tracking your spending shows you where your money is going and how much you’re spending on items.
  • Find one area to save. Many think it’s difficult to start saving money. It’s a confidence issue, so you need to find one area to save. Try saving on it for a month. Then find other areas to save.
  • Take advantage of free resources. There are so many free resources available that can teach you how to better manage your money — from investing to paying off debt. A little bit of knowledge can go a long way.

After turning his back on bankruptcy, John now helps people “pursue financial literacy and freedom.”

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About the Author

Brian Bienkowski

Brian Bienkowski

Brian Bienkowski has been writing about personal finance for over 15 years covering debt recovery, fraud, and credit topics. He has worked on several personal finance books and guides that help consumers navigate the US credit system. When he’s away from the keyboard he enjoys craft beer and fishing — and once enjoyed a cold Sweet Water IPA after catching a sailfish.

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