These days, it seems like there are a million ways to get out of debt once and for all. Still, despite all these methods, thousands find themselves in debt. So, one couple created a new method, called the “Debt Lasso Method.” Let’s see if this one works…
David Auten and John Schneider, a married couple, were very depressed about their financial situation just 12 years ago. At that time, living in their small and dark apartment, they realized that college loans and reckless spending had left them devastatingly in debt. Believe it or not, they had racked up nearly $51,000 in credit card debt! Auten and Schneider could not even afford to eat out at a restaurant!
“It was at that moment, sitting on that floor, that we made the commitment to become debt-free. No longer would we ignore our financial situation. No longer would we accept partial success. It was ‘Debt Free or Bust’ for us,” Auten said recently.
However, like so many others, Auten and Schneider simply could not find a method online to get out of debt. Nothing fit their situation! So, they came up with one that would work for anyone: the Debt Lasso Method.
The Debt Lasso Method
So, what is the Debt Lasso Method? Well, Auten and Schneider say that the first, and most important step, is to lower the interest rates of your cards as much as possible. “We first contacted all our credit card companies and asked them to lower our interest rates. Surprisingly, most companies obliged even if it took some explaining,” Schneider recalled. “It also helped that we explained how dire our situation was and that we didn’t want to miss or be late on future payments or file for bankruptcy. Therefore, it was in everyone’s best interest to accommodate our requests.”
Eventually, down the road, once you’re debt-free you’ll want to avoid getting into debt again. Once you get that far, Auten and Schneider recommend looking for credit cards with a 0% interest rate and no annual fees. However, these types of cards can come with stringent rules, so make sure to stick to them!
What’s The Catch?
Like any other debt consolidation method, the Debt Lasso method comes with a few matters to think about. First, “understand what happens if you miss or are late on a payment, what could cause you to no longer qualify for the promotion and, especially, what the credit card interest rate will be after the promotion ends,” Schneider recommended.
Meanwhile, to avoid a credit score drop, Auten and Schneider propose keeping the longest cards open even with a zero balance. “This prevented our credit scores from dropping as low as they would if we closed our accounts with the longest histories, and had a positive impact on our debt to credit ratio, which also helped our credit score,” they said.
After all, not every method will suit any person on the planet Earth. But, if you want to work hard on getting free of debt and then saving money for a house or a car, the Debt Lasso method is worth trying.
Sources: Good Morning America, PolicyGenius