How much debt do you think you could rack up this weekend? It took this week’s guest 72 hours to spend $26,000. He’s here to tell us how it happened, but more importantly, how he got out of debt using a simple, four-step plan. Marcus Garrett is an entrepreneur, motivational speaker and author of the book, Debt Free or Die Trying. Marcus draws on both his professional and personal experience to help others build a plan to get out of debt.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Did you know that 57 percent of Canadian adults don’t have a will? Willful has made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you’ve put a plan in place to protect your children, pets and loved ones in the event of emergency. Get started for free at maplemoney.com/willful and use the promo code Maple Money to save 15 percent. Now, let’s chat with Marcus…

Tom: Hi Marcus, welcome to the Maple Money Show.

Marcus: Thank you for having me.

Tom: You have an interesting story about getting in debt and how you paid it off so I want to work through all that. But just to set it up right off the bat, how did you get into debt?

Marcus: Well, my most painful story (and people’s favorite) is that I got $26,000 in debt in 72 hours. It was one extravagant weekend. I’ll give a little bit of the back story because I’ve told it 1,000 times. Then I’ll move through the nuances on why it didn’t actually end there. I had about $9,000 of debt after school. That was across 3 credit cards. And then I filed for a consolidation loan. I didn’t know what the hell that was. They said, “Consolidate your debt in one low monthly payment,” although technically, I read it on a flyer. But that’s how I read it in my head though. I thought, “One monthly bill? This makes sense. I’m 22 years old. I’ve got $9,000 of debt…” So, I mailed it off. I chose the most colorful one. Actually, whoever did the marketing for that envelope deserves a raise, even though they’re probably a multimillionaire from scamming everybody. So I filed it off and forgot about it. I graduated college and moved on. For some reason, in my head I thought they were going to consolidate it for me because they asked for my creditors and everything like that. And I got this check in the mail for $10,000 or $15,000. I can’t even recall for sure. First of all, I had never seen $10,000 in my life, period. Let’s just go with that number for ease of math in my life. And I’m 22. The highest paying job I’d had at that point was $9 an hour. And I said, “Ball up! I’m going to make it rain with this check.” Why, you may ask? Well, I was 22. I graduated in 2005. You go to college to make six figures, obviously, so after four years of college I didn’t want to make anything less than $100,000 a year. I wasn’t worried about a little pocket change about the loan. My girlfriend and I went shopping. And before it was all said and done, I had bought a $13,000 car. I actually need to find this guy and send him or his grandchildren both a thank you letter. I went to the dealership, pointed at the vehicle and said, “I want that one.” He asked me if I wanted to negotiate or talk him down in price. But I said, “Nah, I’ve got $10,000 brother. Don’t worry about that.” And he literally took me to the local bank. Mind you, I grew up in a small town, so he probably knew the bank or whatever. So, they walked me through my credit. They were really nice to me, nicer than they had to be. They signed me up for this used car. It was still a $13,000 car mind you. He didn’t discount it at all. He signed me up and they walked me through the process and before it was all said and done by the end of the weekend, I had paid off one credit card. I was a little responsible. I paid off one credit card and left the other two. Bought the car… well, technically, I put a down payment on the car. I think I put down $2,000. Now, I have a $13,000 car, a $10,000 loan—whatever the math is, it adds up to $26,000 that I spent in 72 hours.

Tom: How did that $10,000 lead to a loan, though? Was it just this spending mindset where you said you were going to get all the things?

Marcus: In my head, I’m paying monthly payments across three credit cards for whatever their rates were. And this is another thing I’ve learned over the years, I didn’t know anything. I did not know my credit score. Honestly, I don’t even think I knew my total monthly payments. It just all seemed like a good idea. And at that time, I distinctly remember thinking the banks know what they’re doing. Why would a bank offer me, a 22-year-old who’s never had a full-time job, $10,000 on a loan unless I could afford it? Obviously, they had done their research and analysis because they’re a bank. All these things have been proven to be untrue over the years but I just put all my faith and trust in this large institution because at that time I did not understand why you would not. The reason I took the loan is because they offered me the loan. If someone stopped you on the street and said, “Hey, you want $10,000?” what would you do? Especially at 22 years old. I’m 37 now so maybe I might think about that a little bit longer. If they were still offering $10,000 for free, it might be an easy decision. But at that time I did it because they offered it to me. I don’t remember giving it too much thought.

Tom: I had a similar story. I think you’ve got me beat, but I was about 19 and just starting college. I got my student loan money here in Canada. It was just for college. It wasn’t a lot of money. I think the tuition was paid directly through the student loan if I remember correct. It’s been awhile now. But there was still money remaining for textbooks, living expenses and such. I don’t know what you were supposed to do with it. But what I did with it was buy a new car stereo. I already had the car, thankfully, but I must have dropped $2,000 or $3,000 on car stereo equipment into a car that was probably only worth $2,000 or $3,000. I had the same mindset (just like you) where you’ve never had a job and you’ve never seen that kind of money. You don’t think, “Oh, I need this for the future.” I did buy my textbooks so I thought my responsibility was done. I was good to go. I had this extra money so I was going to spend it. Then, going forward, I’m living in an apartment by myself and things started coming up like rent, groceries and I didn’t really have a lot of money for that. So I got a college credit card. I didn’t get any flashy Frisbee or T-shirt. I literally got that card because the picture of the college was on the front of the card. I thought that’s what you were supposed to get. It was heavily marketed at college, too, of course. So I got that card and then I’d start paying for things like groceries on the card not really knowing how I was going to deal with all of this. I was just pushing everything down the road. And even beyond that, it got to the point where I knew credit card debt was bad so I decided to get a credit line. That’s not too different than your consolidation loan, but it just an open credit line where I can pay off the credit card and have a cheaper debt on the credit line. But then I was going to spend on the credit card again because I still needed those groceries. It kind of begins the cycle, similar to yours, where you have one debt and you get a new debt and it just keeps piling up and you don’t actually deal with it at all.

Marcus: Well, unfortunately, you’ve taken me down memory lane. That’s why I enjoy doing these podcasts because there will be things about my own life I forget about. In my case, you reminded me of two things. Debt is normalized, but it’s funny how you go about funding it. I had credit cards at, I think, age 18. I also had friends who had student loans so we were in this lifestyle competition, both funded by debt. I’m not sure this is the same in Canada, but in the U.S. when you get a student loan—I have to talk about this conceptually because even now it still kind of blows my mind. I actually don’t even know how it works. I’ve just heard stories. You have your student loan that pays for school and whatever is left over, you get a reimbursement check. I remember my friends would get these reimbursement checks. They were effectively living on student loans but I think you were supposed to use those reimbursement checks to pay off the student loan balance, the outstanding balance. But, of course, these are 18 to 22-year-old kids. They would just use that reimbursement check to buy cars with rims or whatever it was. They definitely didn’t put it in a savings or emergency fund. Like I said, I can only talk about this conceptually because while I was right there beside them. I’ll tell you… I’ve never seen this man work a day in his life yet every two weeks he has $4,000. I thought, what the hell is going on here? This man is rich. He must have a rich uncle or something. That’s another thing, you never talk about it. Everyone’s spending all this money but I never had a conversation with my fellow 18-year-old friend who’s living on his student loan check while I’m living on my credit card, about how we’re spending and coming up with this money. We just all did it. It was five, 10, 20 years later when we realized that was stupid saying, “I really wish I hadn’t bought that car with 22-inch rims on my student loan check at 18 percent interest. I really wish I had thought about that a little bit more.” Another thing you reminded me of that I honestly completely forgot about—Well, maybe I blacked it out. I had moved in with my roommates. We stayed in the dorm the first year. I had a good friend and we were roommates the second year. We got an apartment together. I remember going over to the apartment, paying rent in cash a few times. But one time I went and they said, “Hey, did you know we accept credit cards?” So I started putting my rent on my credit card. Even now, this decision blows my mind. But I did it for months—and this was after college. This was after I already had the consolidation loan. I remember rent would come up and I would just pay for it in cash. But typically, I figured I had this free money over on this credit card and a minimum payment is only something like two percent. The way I looked at it was, I’m going to be making six-figures pretty soon anyway… I always had six figures in the back of my mind, as you can see.

Tom: Yeah, I think with both of us the story continues beyond that to where we just kind of hit total rock bottom. It’s where you have to kind of make that pivot. You have to do something. For me, most of my 20s were wasted. It took me until about 30 to have this “light bulb” moment where it’s like, “Okay, I’ve got to get rid of the debt. I’ve got to start investing. Do all the right things. Be an adult. What did that look like for you? When did you turn that around?

Marcus: It was at age 27. I know that because I specifically wrote about it in the book and there is actually a chapter called, Rock Bottom. But to your point, it is very fascinating how long you can fund a lifestyle on debt. Just do the math there. In 2005, at the age of 22, I graduated and I was 27 before I hit rock bottom. And I was living on credit cards roughly that entire period. I didn’t pay for everything with credit, but I paid for a lot. The only reason I was able to function that long was because I was able to make the minimum payment. It’s crazy how long you can make the minimum payment until you can’t. And then by very definition, if you can’t make the minimum payment, whatever your total balance is, divide it by two percent. Divided by two percent, that’s going to be a big number—an outstanding balance. And that’s when most people, like myself, have their wakeup. For me, what started the debt tsunami (in my case) was I actually missed a payment on accident. I had never missed a payment since age 18 with a credit card, because it’s almost instilled that you have to pay. But for some reason I had this mentality where I figured you could not miss credit card payments no matter what happens. No one taught me this. But they make you feel guilty. You sign this contract that no one reads so you have to make the minimum payment. And I missed one. Now, me and this credit card industry—if we see each other in the streets we might get to boxing because I say I didn’t get the statement. And they say, “That’s your bad!” And whatever the interest rate was at the time, it jumped because the high interest rate you can have in the States right now is 29.9 percent interest. So whatever it was, overnight my statement went from two percent to 29 percent. I could not make that payment. I literally could not afford that outstanding payment. Think about your balances right now. Hopefully, they’re zero, but multiply that by 29 percent and imagine you had to pay that next month as a college student loan. So I called them. I’d been with these entities since college. I decided to call up my boys over at the credit card industry. We’ve been cools since I was 18 so we’re just going to talk this out. And they said, “No, give us our money.” Forget this 10-year relationship. I remember I did several stupid things that night. I closed that line of credit. I figured I was going to teach this billion-dollar industry today. I was going to hit them on the chin. The reason that’s done, (and I assume your credit score is roughly calculated like this in Canada as well) is because of your credit card utilization. I literally screwed myself twice with one decision. I closed that credit card so I lost the credit history, which is nearly 30 percent of your score and I reduced my credit utilization because I lost that balance. I transferred it over to another credit card at another large banking institution. That was me really teaching them a lesson. I didn’t know anything about my credit score at that time but that drove up my balance on this other credit card (even if it wasn’t at 29 percent). I finally did the math and quickly realized that I was at a point where in the next three months, bankruptcy was going to be the conversation. There was no way I could make these payments, period. Mathematically, I couldn’t afford it. And as an added bonus, I was already working three jobs at the time so I had no more hours and day. I had no more jobs that I could get. I still wasn’t making six figures (despite graduating college) so that was my rock bottom. I’ll stop there because that was only part one. It’s a two-part story and there is an epilog but that’s part one of my rock bottom.

Tom: You mentioned the minimum payments. I realize even then that those were small. For $1,000 you might have a minimum payment of $50. It was small. Where I hit a wall early on… I think my first credit card was only $1,000 or maybe $2,000 at the time. So what I was hitting was, my credit card was full to the point you can’t even use it anymore. Even though the minimum payments were still low, I definitely hit a point where this became a problem. But I decided I could go get a different credit card. It was easier to sign up for another credit card than it was to try to get my balance increased. I started collecting some credit cards, and thankfully they were all low. Maybe we do better at that here in Canada than in the States. I don’t know. But when you’re young and don’t have any money, at least they’re smart enough to keep you on these very minimal credit card limits. That way you can only do so much damage. But there’s nothing stopping you from going to other banks.

Marcus: Honestly, what’s so fascinating is how little you remember about your own life story. I don’t know how I did it. I do remember part of the shell game I used to do. The irony is that part of the reason I was able to acquire so much debt is literally the age and time in which I grew it up. I say that because I used to mail checks—I would postdate checks and mail the check knowing I didn’t have that money in my bank account. Let’s say I was getting paid on Friday. It has to be postdated by the date due. They actually don’t have to receive it by the date due. And I’m sure they probably changed this loophole. Anyhow, I would postdate it on Friday knowing that Saturday and Sunday are not business days and my paycheck would hopefully direct deposit on Friday morning so that by the time they get in on Monday (if everything has worked out perfectly) I’ll have the money to cover the check that I mailed Friday. Another thing I used to do is to roll balances to a zero percent interest credit card. I’d either get close to maxing out a card (or that card that had 29 percent) and roll that balance over to a card with zero percent interest for 18 months. I just kept doing that until they stopped coming. Because eventually they’ll catch on too. They’ll see a guy is $30,000 in debt and makes $19,000 a year and know it’s going to end poorly. And they don’t want to be the bank funding it when it does. Eventually, the offers stopped coming which brings us to part two. Remember the epilog—the foreshadowing. Part two of the story picks up where Marcus Garrett is on his bedroom floor, nearly crying. I hadn’t seen consolidation loan in months at this point and one came in the mail one faithful evening. At this point, I already knew I wasn’t going to be able make the monthly payments. I called, and I still painfully remember this conversation. It was some little teenage in a call center and I thought, “If he doesn’t come back with a, yes, I have no idea what I’m going to do.” There was no Plan B. There was no part three to this epilog. But he said, yes and I continue crying on the floor. I remember him asking what I now understand are some fairly basic questions like what my outstanding balance was? How many credit cards did I have? What is my monthly utilization? What is my interest rate? And I could answer none of those questions. I’ve joked over the years that if it were the SATs, the only thing I got right was my first and last name. That’s all I knew. And I might have stuttered through those. That was rock bottom, part two. And fortunately, he came back with, yes. But when I flipped my phone closed—and that probably gives you an indication of my age, here. When I hung up the phone I decided, whatever it takes, I will never be in this position again. And that was the start of me getting out of debt around age 27. And that’s why I distinctly remember it so well because you remember your traumatic events.

Tom: I want to get into your debt plan but I do have one question about that. Did you get that consolidation loan?

Marcus: I did. I want to say that one was for around $18,000 at the time for folks doing the math at home. I still got the $13,000 car but I’ve been paying on it for a few years now. I got this $18,000 consolidation loan. And I remember this loan was going to pay off everything. It wasn’t like last time where I paid off half the things. At least I learned something from these traumatic experiences. I’m a little bit old. I wouldn’t call myself mature. A little bit older— 27. And like I said, I was working three jobs at the time. I had so I had my 9 to 5. I had side hustles before. Side hustles are a popular hashtag because I needed the hashtag passive income to literally live my life—just to afford my day-to-day. I had to the 9 to 5. I worked nights at a hotel chain. I would work days during the week, nights on the weekends at the hotel chain. And then there was a company… I’m not going to say the name because they might sue me eventually where I was putting computers together on contract at a warehouse. They only offered it seasonally throughout the year. They paid great money. I think was like $16 an hour. I would pick up that work at the warehouse. I say that because I hated that job. I probably slammed some computers around. So if you’ve got a refurbished computer right now and it never worked for you, if you can figure out which company that came from you might want to look me up. I’ll graciously reimburse you, maybe. Like I said, there were no more hours in the day. There was no more money to be made. I just had to figure out a way out.

Tom: Where I wanted to go at that too is, did you actually use that consolidation loan for good? You did pay everything off?

Marcus: I paid everything off except the car that time. I wouldn’t say I used it for good. I used it from trauma—the PTSD of being in that rock-bottom situation. Living paycheck-to-paycheck was traumatizing enough for me to finally do the right thing financially.

Tom: I think consolidation loans can be useful. The good thing is that they’ll reduce your rate and make it a lot simpler where you’re just paying the one payment. Where things start to fall apart is it doesn’t come along with an instruction manual on how to deal with your finances. In a lot of cases, it just adds to people’s debt load like it did with you the first time. Even if you’re cycling, you did pay everything off the first time. Ultimately, now you’re sitting with a loan and empty credit cards so it becomes about cycle. Consolidation loans can be helpful but you need that mindset, first, before you take that risk of new debt.

Marcus: Yeah, you raise a great point. I don’t know exactly but it’s almost like a recidivism rate how often people go back. When I read about it, I think it was something like 40 percent. So 40 percent of people who get consolidation loans end up running their credit card payments back up to either the original amount or a larger amount, meaning now they have the consolidation loan plus the credit card they had paid off. And this is actually what I did that first time. I didn’t even realize it was a practice. I just did it because I did not want to see them in front of my face anymore. I cut all my credit cards up when I got that consolidation loan. I still had the lines of credit. I was smart enough now to learn not to close the credits so I still had the benefit of the credit, but I did not have the credit cards physically accessible to me. That means that 6 out of 10 succeed. It may be 2 out of 5, I don’t know, actually. But I don’t want auditors out there to email me later saying, “Hey Marcus, we’re actually very disappointed in the industry by your head math. You’ve been extra extradited from the audit community.” It can be done but what you and I are focusing on is it is the exception, not the rule. Most people fail which is why most systems (well-known in the states) like Dave Ramsey’s Snowball recommend just paying off the credit cards. Because most people can’t successfully move credit card debt even to another vehicle like a consolidation loan and also be responsible as well. I kind of just look at that as a lifestyle change. Typically, a consolidation loan is like a diet for most people. It’s a debt diet. I think everybody on this podcast (self-included) has failed at a diet. I think I failed at a diet last week. So the success rate is minimal. So coming up with a lifestyle change you can implement to get successfully get out of debt is not temporary.

Tom: Yeah, I love it. So I do want to run through your debt plan based on your book. First of all, can you define your acronym and what debt means to you?

Marcus: The book is, Debt Free or Die Trying – How I buried myself $30,000 in debt and dug my way out by age 30. If you’re going to do the math there, through all that irresponsibleness—and I try to share this optimistic part—when I really got focused it took me 10 years in total to outlive that 72-hour weekend. But three years of focus to actually put it behind me. I’ve written two editions of the book. The second edition is out now. I did the acronym for Debt which makes it a four-step plan for paying off debt. So it’s D, define the problem. E, establish the plan. B, build a budget (or budget for success). And T is trust the process which is also really just a continuation of the time path on his own. One thing you don’t have to worry about regardless of what decision you make, is that time will pass on its own and you can decide where you want to be at during that 10-year period. Someone told me this when I was speaking once. They came up to me after hearing my story and said, “You know, the key to overnight success is the first 10 years.” And I’ve been repeating that quote ever since. I give them credit for it though. They follow me on Instagram so here is a shout out to them. And that’s it—where do you want to be in the next 10 years? Of course, I also point out that I got out of $30,000 debt in 36 months using that four-step plan.

Tom: Can we unpack each one of those? Define the problem, what do you mean by that? What steps can people take?

Marcus: I’m going to use the American one, but I assume there’s an equivalent here. We have annualcreditreport.com. It’s actually a federally mandated website where you can go and pull your credit report. I tell people that’s like the classes you take throughout the semester. Your credit score is like your GPA. It’s like how well you did in those classes. For example, I went to class. I did not do particularly well in those classes. And that’s what you get for your credit report. You can pull that in the States at annualcreditreport.com. It’ll come from each of the three major credit card bureaus. The reason I say that is because what I found when I was at rock bottom is that I honestly had no idea how much debt I had. I was putting all my faith and trust in these institutions. If a bank gave me credit, I thought that meant I could afford it. It took me decades to learn that it’s my responsibility to manage what is now broadly understood in the personal finance community. I didn’t learn that until my late 20s. Another thing I like is to teach others early, what you learned late. I learned late but I hopefully some listening to this are going to learn earlier than I did to make that change. The other is to establish a repayment plan. I go over four in the book. I do not have those committed to memory so I won’t walk through those. But where I got mine is, bankrate.com/calculators. They have a smorgasbord, a plethora, if you will of many calculators. I don’t think bankrate.com has a debt calculator for a scenario that cannot apply to your life. In our particular situation, I pulled down a minimum payment calculator that shows you how much it will take you to pay off what you owe if you only do the minimum payment and how much you need to add each month to pay it off. Another thing that I like is that all of this is free. You can PDF it and print it out. It would tell you exactly how much you need to pay each month to pay off your debt. Now, of course, you know these youngsters— these kids can do this on an app now. Nerdwallet.com is other great resource. For budgeting I also use Mint. So it’s a lot more simplified these days. Everything is easier. The third step is to build a budget. That’s as straightforward as it sounds. I give four to six budgets system examples. I call them systems because I’m trying to establish a lifestyle plan and my personal belief is the best plan is the plan that works. So choose the budget that you can reasonably apply for life. I also talk about why some people don’t need a budget. Most people can just automate the choice. If you use that plan, you automate your payments and don’t have to think about it for 36 months and suddenly you’ll be debt free. That’s what I did, except towards the end I got impatient and started throwing all my money at it because I wanted to see it at zero. Build a budget. My favorite one is a 50-30-20 budget. That is 50 for needs. Let’s talk a little bit about this one. Fifty for needs, 30 for wants and 20 percent for savings (or paying off debt). And the reason I want to talk about that is because I have been amazed and impressed by the number of emails I’ve gotten over the years about what’s a “need” and what’s a “want.” My response to that is, that’s not for me to define. But I will say that usually for a need it’s like Maslow’s hierarchy. It should be shelter, food and water. Those are all your needs. I would not squeeze restaurants, beer and alcohol under food by the way. Anything you don’t need to survive (like oxygen) or someone doesn’t come looking for you (like a mortgage) doesn’t fall under the need category. I actually added another category in the updated edition. I put in luxuries. Again, it’s that mindset of, “Well, if I want it, I need it, Marcus.” And I say, no. That’s not how any of this works. Wants are things like Netflix. I like Netflix. I use it all the time. But if the world were near an end, Netflix would go. Put Netflix over in your luxury category. I wanted to break that down a little because people struggle with needs and wants. Lastly, it’s just to trust the process. So set it up and automate everything possible. Remove yourself from every single mistake you could potentially make because I see those all as risk. Automate all of those, trust the process and it will literally take care of itself mathematically and systematically. It’s not a matter of if. You will get out of debt if you automate the process.

Tom: I think that’s a great checklist people can start with to get this under control. The only thing I have to add to that is for credit scores, were not as well organized here in Canada. We don’t have a single site. You can get a credit report for free by contacting the two different bureaus we have here. But what I recommend is Borrowell and Credit Karma. Each will each give you a credit score and credit report. Obviously, they come with some upsells. They have your information so they’re going to want to profit off it, but you don’t have to. It’s a legitimate credit score and credit report and even some tips on how to improve as well. I’ll link to those two sites in the show notes as well. Thanks for running people through all this. I think it’ll be a great starting point for them. Can you tell people where they can find you online?

Marcus: I’ll just quickly add for the States listeners as well, with Credit Karma, I don’t use them personally but I’ve heard great things about them. They’re a great resource. Folks can find me at, themarcusgarrett.com. I’m universally branded, most active on Instagram. So it’s themarcusgarrett.com. If you visit, you’ll get 12 weeks free from the TMD team, including one of my most popular posts and frequently ask questions; how much debt can you afford on a $30,000, $50,000 or $100,000 salary? Again, that’s themarcusgarrett.com.

Tom: Great. Thanks for being on the show.

Marcus: Thank you.

Thanks, Marcus, for sharing your story. It’s sure to be one that resonates with many, many people. Your four-step plan for getting our debt is rock solid. It’s simple and easy to follow. You can find the show notes for this episode at maplemoney.com/120. The Canadian Financial Summit starts October 15th. This is a virtual summit that features many of Canada’s top experts in the personal finance and investment communities, including yours truly. If you’d like free tickets to the entire summit, head over to maplemoney.com/summit and sign up today. I look forward to seeing you back here next week when we have Khushboo Jha on the show to discuss the subject of fractional real estate and how you can get started.