When John Kapetaneas graduated with $111,354 worth of student loans and credit card debt, he remembers thinking, "I'm never going to pay this freaking thing off."
"I couldn't see the light at the end of the tunnel," he tells Farnoosh Torabi on her podcast "So Money." Yet the New York City-based journalist managed to pay it all off in just two years.
Kapetaneas' journey out of the red started with a mindset shift: He told himself that, if other people were able to pull themselves out of debt, he could, too. Next, he took "a two-pronged approach: Increasing my revenue and decreasing my spending," he tells Torabi. "I knew I had to get my total earnings up and I had to get both my variable and fixed costs down."
The concept "is nothing revolutionary," he notes. "It's something that you've heard from every financial guru ever … But for me, this was very new because I was staring at this monster [bill]."
Kapetaneas, then 25, started by focusing on increasing his income, which meant taking on as many freelance projects as he could. "I had to take advantage of what I knew — my skills as a journalist and a TV producer," he says. "From there, I capitalized, over the course of two years, on every opportunity I could possibly find to work. That meant overnight shifts, holidays, weekends — every possible shift that I could pick up as a freelancer, I took."
The hours paid off: "I went from never making more than $20,000 a year before I graduated in 2013, to making six figures in one year. For me that was huge, but at that point, that wouldn't even be enough." That is where decreasing costs entered into his calculations.
He eliminated rent by moving back in with his parents. Living at home in Connecticut meant a much longer commute to work in New York City, but ultimately it cut his fixed costs by 75 percent.
Next, Kapetaneas went through all of his checking and credit card statements from the previous year and found out exactly how much money he was spending on things like take-out, bars and travel. "My goal was to slash [expenses] as much as I possibly could," he tells Torabi. "For a period of almost two years, that meant cutting out things like going out to drinks with friends, going out to eat and taking trips to go see friends from high school and college.
"Everywhere I could squeeze money out of my self expenditure and plow it back into my student loans, I did."
After two years of long hours and sacrifices, Kapetaneas made his final payment. It was one of the best days of his life, he tells Torabi.
How fast you climb out of debt is largely up to you, he says, since a lot is within your control: "What I learned is, how fast you do it will depend on what level of discomfort you're willing to endure."
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