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Jeffrey D. Allred, Jeffrey D. Allred, Deseret News
Rusty Jensen plays with his son, Rush, at their home in Draper.

Rusty Jensen hit financial rock bottom just shy of his 23rd birthday, with more than $110,800 in non-mortgage debt.

He had been married for six months,and his first push into the business world failed. But in less than five years, he changed his financial future. His net worth went from negative six figures to positive six figures.

In his early 20s, he borrowed money to make purchases with the idea that he was building his credit score. Debt piled up: student loans, car loans, wedding expenses, credit cards and debt incurred to start a business. He ultimately lost $70,000 through his business, and woke up one morning buried in debt and in need of a plan to pay it off.

His was a familiar problem. In 2012, household debt measured at $11.3 trillion according to the Federal Reserve. Non-housing debt reached an all-time high of $2.75 trillion.

As Jensen and his wife considered options, they realized they could declare bankruptcy but said they didn't want to hurt the institutions they owed money.

"It's not their fault that we messed up. Enough people are losing their jobs right now, and we don't need to add to it," he said.

Jensen and his wife started living "well within our means," paying off about $2,660 per month. They sold a car and reduced their grocery budget to $120 every two weeks. Once their first child came along, they stretched that $120 to include diapers, adjusting their needs to match their budget.

The regular eating out expenses were eliminated.

They changed their cellphone plan and went from paying about $150 to around $70 monthly, and with their neighbors' permission borrowed their wireless Internet rather than paying for Internet on their own.

In six months, they reduced their monthly bills from $3,200 per month to $1,600.

They didn't go on vacation for three years. Free and cheap activities became their entertainment. They rented movies, enjoyed the occasional dollar flick or streamed episodes of "Star Trek: The Next Generation" online. They also enjoyed free rentals from the library, went on hikes and played in parks.

"No stone was left unturned. We squeezed every dime we could out of our budget during that time," Jensen said.

He was self-employed, working as a business development consultant. After realizing he would not be able to earn back his losses in his current line of work, he became an independent consultant. His income was inconsistent, but he managed to bring in around $25,000 per year, dedicating all the funds he earned to paying down debt. At nights he began washing windows, and made an additional $1,200 to $1,300 per month, which he applied to monthly bills.

His wife, Laura, was a data entry and implementation specialist for Qqest Payroll and brought in an additional $30,000 annually, which paid for their living expenses. She stopped working when they had their first son, Rush.

They were paying off their debt with an average combined income of around $50,000 a year.

"Now we're in a position of a lot more comfort than a lot of people have," Jensen said.

They began following principles of financial guru and get-out-of-debt author Dave Ramsey, first working to get $1,000 in the bank to use instead of a credit card for emergencies, then paying off debts from smallest to largest, creating three to six months' emergency savings (the Jensens have one year because of his high-risk job in sales), investing next in retirement, then in children's education, paying off their mortgage and eventually building wealth.

It is important to realize what is possible in terms of building wealth, Jensen said, and to be willing to act differently than normal people act.

Changing habits

The shift in their money habits and discipline ultimately led the Jensens to financial success.

Financial well-being comes down to habits, said Ann House, coordinator of the Personal Money Management Center at the University of Utah.

For those who are looking to make financial shifts, she said, the first step is awareness. This is important because it diagnoses problems early.

"You get rid of the stress the more that you know and the more control you have over your money."

It can be intimidating initially, but in the long run, she said, it can be liberating.

"Open up your mail. Find out where you are. Find out who you owe money to," she said.

She said people should look at their credit reports, check for errors and see if anyone else is using their name.

Overall, she said, be proactive. Take a look at things and catch financial problems early.

Jeff Lambert, a certified financial planner with 30 years of experience consulting clients in finances, said climbing out of financial despair and toward a prosperous future takes commitment.

His job is to help clients put money in its proper place so they don't think it is more valuable than it is. Once they stop seeing money as a means to happiness and instead see it as a tool to be managed, they can more easily make positive changes.

Getting out of debt means recognizing what you have, rather than looking at what you lack, he said.

He offered three ways to make practical changes, so families can go from not having enough to having more than enough money.

1. Foster a prosperity mindset: Self-defeating thoughts contribute to debt, Lambert said, so the belief that it is all right to have money is "hugely valuable."

"It's really easy to get caught in some traps thinking you don't deserve enough," Lambert said. When people believe that they deserve good things, they will begin to attract and recognize opportunities.

2. Commit and pay attention: "I think that the reason that people are in debt and get burdened with debt and can't get out is that they're not paying attention to the money that they spend and what's coming in," Lambert said.

This was the case with Heather McVey, who is married and a mother of three. She said her monthly budget expanded or contracted based on how much she spent. About 10 years ago, the McVeys looked at where they could cut back expenses.

They made the decision to have her increase her work hours and her husband worked three jobs to climb out of debt. They still live paycheck to paycheck, she said, but now they decide where their money is spent — in savings, investing and toward quality purchases — rather than the bills and debt payments making that decision for them.

"Money doesn't buy happiness but it sure helps you maintain it," McVey said.

3. Be nimble and flexible: Plans fall through, Lambert said, and families need to be flexible and willing to work around these changes. The Jensens said they learned this lesson when they were halfway through paying off their debt.

Rusty Jensen developed pancreatitis and was in the intensive care unit for seven days and in the hospital for four more. Because he was unable to work during this time, he lost his job as an independent consultant, so their family had no income. He was so sick for a month and a half that he couldn't even look for a job. His son, Rush, was then 9 months old.

"It was a devastating situation," he said. "A lot of people might look in the face of that situation and give up."

However, he and his wife were determined to get out of debt. Laura went back to work, first baby-sitting in the daytime and working in the call center for the census at night, then again working for Qqest.

When Rusty Jensen was able to walk again, he and a former colleague launched a lawn care fertilizer business, and began knocking doors to sell their product. They used knowledge they gained from consulting an agricultural firm to develop their product. A couple of months later, he began working with inContact, his current employer. He began working 100 hours per week. Last year he sold his business and has since been promoted twice at inContact.

He and his wife were disciplined in their plan but adjusted the way to reach their goals. On April 27, 2011, the Jensens made their last debt payment, exactly three years after they began their financial journey.

Growing wealth

Once cleared of debt, goals shift to building wealth.

Michael Bapis, managing director and partner with HighTower's The Bapis Group, said the best way for a young family to begin building wealth is to make one payment toward growing an asset, no matter how small. He said they should put this away, like a bill.

The Bapis group, a New York- and Utah-based financial consulting group, advises clients to measure investments as a minimum of five-year growth strategy because finances fluctuate.

As Rusty Jensen began his quest to get out of debt, he realized many people are daunted by the sacrifices it will take to make real progress and ultimately build wealth.

"When people really see what it takes to become financially independent, they shy away because it's too difficult, it's scary, and it's a long-term and challenging commitment," he said. "During the process you often feel like you are putting yourself in poverty and the only thing that gets you through the day is that vision of a future of true financial safety for your family tree."

He encourages those looking to get out of debt to set a clear financial path.

"If you don't have a well-defined path, all you're going to do is wander aimlessly. You will look up after 10 years and find yourself exactly where you started."

Advice from an expert

House, the coordinator of the Personal Money Management Center at the University of Utah, noted the following common traps people fall into:

Not saving early enough, especially for college.

Living without a budget or spending plan. Many simply check the balance in their checking account and spend until it's gone.

Failing to plan for emergencies. Planning for non-monthly expenses, such as car repairs, pet care, home repairs, etc., should be a part of planning and saving.

Best ways to save include:

Consider a financial adviser. It is harder to develop disciplined financial habits without an adviser to mentor the process.

Take full advantage of any matching fund programs in company 401(k) or retirement fund plans.

Direct deposit funds into a 401(k), Roth or traditional IRA. Directly depositing money is helpful, because generally people do not spend money they don't have coming into their checking account.

Obtain a certification or get training that will allow someone to work later in life, stretching income beyond their profession.

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