Editor’s note: This article was first published in June 2013; statements that he is working on a second book and still has zero debt describe his situation in June 2013, and the view that the book promises to be a hit is the 2013 view.
We’ve spent this whole month talking about debt and giving it the importance it deserves, which is considerable, even though many people don’t realise it (read: The most profitable investment is paying off your debt). That’s not the case with Ken Ilgunas, a university student who, after taking out a loan for college, realised that if he didn’t pay it back quickly he wouldn’t be starting his adult life from zero but from minus $32,000, a debt that kept growing. Late-payment interest was already starting to push it up seriously.
In an interview with Business Insider, he explains how he didn’t really understand what he was doing when he took out the loan, because of the lack of financial education in the United States (he should try Spain, then). He didn’t hesitate to enter what I call, in personal finance, the financial prison, although Ken took it almost literally and turned a van into his home to save as much as possible.
Once he was debt-free (it took him two years), Ken had the business idea of writing a book, Walden on Wheels, explaining step by step how he got out of debt and managed to save money as well, what we’d call a “reformatting” of your finances.
The young man says he was studying subjects with few short-term job openings, English and History, so his employment prospects were zero, and paying off a $32,000 debt plus his everyday expenses was a pipe dream: his only job was pushing carts at a big store for $8 an hour. Obviously that wasn’t enough to cover day-to-day living and pay off his debt as well.
Trapped and cornered, he decided to move to Alaska. For two years he ate and slept in the back of his van while he worked and kept studying. He says it was the only way he could think of to avoid taking out more loans.
In Alaska, Ken looked for work as a local guide, a cook, an errand boy and anything else he could think of that people needed. He says he met a huge number of people. He cut his standard of living to the bare minimum. His only expense was food. Everything else, every dollar he earned, went to paying off his debts. “You’d be surprised how much you can save if you cut your standard of living to the minimum.”
When he needed to get from one place to another, he hitchhiked. It’s banned in many places, but Ken says it’s the cheapest form of transport there is 🙂
He began to make sure every expense served a purpose. He had to solve the problem of showering and washing, so he joined a gym where, for $40 a month, he could exercise and shower every day. To avoid paying for internet access, he made the town library his second home and his place to work and study, since it had free wifi.
He used some of the ideas we’ve suggested for earning extra money, such as becoming a lab rat: he took part in more than 12 medical studies that paid participants.
After one year in his financial prison, he had paid off $18,000, more than half of the debt. The following year he cleared it completely and promised himself he would never get into debt again.
Best of all, he met one of the main conditions he set himself before starting down this road: nobody could find out he was living in a van. And in fact, until he published his book and wrote about it on his personal blog, nobody knew. He also kept his second promise, which was not to ask anyone for money, not even his own family.
Asked whether what he did wasn’t a bit crazy, Ken says not at all: he had what everyone has, a place to sleep (he fitted out the back of his van perfectly), a place to shower decently (the gym) and a living room or office (the library). He says that after two months you get completely used to it, and that if nobody knows, nobody treats you like a vagrant.
When he finally graduated in 2011, he did so debt-free and with savings. Now, with his first book out, which looks set to be a success after appearing all over the media, he is working on a second one. And he still has zero dollars of debt.
Featured image: JoachimKohler-HB, CC BY-SA 4.0, via Wikimedia Commons.
