The Debt Free Guys ditched the wintery snowball and avalanche methods for a cowboy-themed combo of multiple debt repayment strategies.
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On a drive through the mountains of Colorado, John Schneider and David Auten looked out at the lush landscape speckled with swathes of private ranches, gorgeous houses, and the occasional farm animal lazing along and said to each other: Wouldn’t it be amazing if we could have this?
But that fantasy came to an end quickly. Once they opened up about their finances, the pair realized that there was no way they could afford something that luxurious, no matter how badly they wanted it. For now, at least, there could be no custom homes or acres of land.
“The further we got down the mountain, the less we could afford,” Auten said. “Finally, we pulled up in front of our place, got out of our car, opened up the doors, and walked down a flight of stairs into a basement apartment.”
Breathing in stuffy basement air was the opposite of smelling the sweet wind of a Colorado mountain range, and the stark difference didn’t escape them. “It was at that moment that we realized, even though between the two of us we have 13 years of experience in financial services, that we were financial messes,” Auten said.
Together, the couple had $51,000 in credit card debt. They knew they had to change something to realize the hopes and dreams they clung to. “Not only was it ironic that we had so much experience in financial services helping other people with their money – and not helping ourselves – but we were looking to own a vacation home when we didn’t have a home to begin with,” Schneider added.
That’s when their debt-free journey began. Now, they’re helping other people do the same with their own financial invention: the debt lasso method.
Debt Lasso and how it works
“One of the first things I did was an analysis of our spending, which was incredibly eye-opening,” Auten said as Schneider rolled his eyes at the memory. “Then I started looking at our actual credit card balances. We realized that in order to pay off our debt as fast as possible, we needed to take away the biggest hurdle that was preventing us from paying it off. And that was high interest rates on our credit cards. That’s when the idea for the Debt Lasso was born.” Basically, Debt Lasso combines the snowball and avalanche method by paying some low balances in the beginning, then “lassoing” your debt onto fewer cards with lower interest rates.
After their analysis, Auten and Schneider realized it would take them five to eight years to pay off their credit card debt. In their own words, they “didn’t have the patience for that.” So they started to “lasso” their debt by attacking the high interest. They reasoned that if they were able to get rid of these interest payments, it would essentially give them a $10,000 raise.
“We decided we were gonna give that raise to ourselves and use that money more strategically to expedite paying off our principal,” said Schneider??. This kicked off the lasso process, which the Debt Free Guys say is the fastest and cheapest way to get out of debt – and it could improve your credit score.
But is it just a fancy word for refinancing?
“Refinancing is like the engine of a car,” Auten said. “The better engine you have, the faster you can go. But you cannot drive anywhere if you just have an engine.” They made it clear that all steps of the Debt Lasso method work together to create the ultimate combo of repayment strategies. “That’s why there’s five steps to the Debt Lasso method,” Auten adds, “and the actual refinancing or ‘lasso’ portion of it is just one of those steps.”
The basic steps of Debt Lasso are:
- Commit to incurring no more credit card debt and making the same payment each month.
- Trim your debt down by paying some low balances for quick wins.
- Lasso your debt by using debt consolidation and balance transfer methods.
- Automate all your payments so you don’t miss anything.
- Monitor payments and debt balances.
These steps attack the interest rates at the source and expedite paying off the principal, and they’re exactly what the Debt Free Guys did to pay off all their credit card debt in just over two and a half years. “We estimated that it was gonna take us upwards of 5 to 8 years to pay off our credit card debt. We didn’t have the patience for that,” said Auten.
David Alton and John Schneider are husbands who worked hard to pay off $51,000 in debt, also known as the Debt-Free Guys. They say their debt lasso method is the fastest and cheapest way to get out of debt.
There are five steps to the process:
No. 1: Commit to incurring no more credit card debt and making the same payment each month.
No. 2: Trim your debt down by paying some low balances for quick wins.
No. 3: Lasso your debt by using debt consolidation and balance transfer methods.
No. 4: Automate all your payments so you don’t miss anything.
No. 5: Monitor payments and debt balances.
We talked to the Debt-Free Guys to learn more about this debt repayment method and how their own journey led them here.
When it comes to the snowball or avalanche method, how do you describe the main differences? And why this could work better for some?
People like the snowball method. It has a psychological benefit to it. What you’re doing there is you’re paying off your smaller credit balances first and increasing to the larger balances that can feel really fast especially toward the beginning.
So you’re getting a lot of quick wins there. The problem there though is that you’re not necessarily focused on the –whatever the high-interest rate credit cards are.
So, mathematically it could be more expensive for you in the long-run.
The avalanche method where you’re focused on paying the high-interest rate credit cards off first makes the most sense but it does.
So for some people seem to take a long time and not a lot of people have that kind of patience to stick with paying off their credit card debt and they fall off the wagons spend their money again all of a sudden.
They’ve accumulated the debt again or they’ve got more debt than they had before. That’s the fear that we had with ourselves we knew that we wouldn’t have the patience to stick with either method.
That’s why we thought, “well the problem is the high-interest rate if we can remove that or at least lower than considerably then we can expedite paying off our credit card debt.
So that’s really the big difference if you’re someone who needs really really needs quick wins. The snowball method might make sense for you if you’re someone who’s fine focusing on the mathematical value then the avalanche makes the most sense for you.
If you’re someone who wants to take advantage of essentially both of those strategies then the debt lasso method is the strategy that you want to follow. For most people, I would argue that’s probably the best method.
When I was reading about the debt lasso method, I noticed that you make it very clear that it’s not refinancing.
So how do you explain lowering those interest rates to someone and the way that it’s different from refinancing your credit card debt?
I think one of the biggest things to remember about refinancing is like the engine of a car, the better engine you have the faster you can go but you cannot drive anywhere if you just have an engine, right?
So that’s why refinancing is just of the overall package. That’s why there are five steps to the debt lasso method. And the actual refinancing or lasso portion of it is just one of those steps another thing on your site is of course living fabulously.
So in your own words what does that mean, and what does it mean to do that while you’re still paying off debt?
As soon as david itemize all of our expenses for the previous year we were sort of blown away with some of the categories that were clear outliers that no humans should be spending relative to the income that we had at the time.
What was ironic was that when we looked at how we were spending our money prior to that had you asked us if we had an amazing life we would be like.
Yeah you know it’s decent it could be better but on paper when you looked at how we were spending our money. We were like wow this is crazy. We are living like rock stars on a beer budget.
And we thought well we’re clearly not getting the ROI out of our spending that we should be getting we should have. We should be having a much better feeling of quality of life than we were at the time.
We thought well why is that so that kind of started a conversation for the two of us about what is it we really want in life. What actually makes us happy. What do we want to achieve? What do we want our legacy to be? And we realized it came down to three things:
- We wanted to be able to get back to the LGBT community.
- We wanted to save for a comfortable retirement.
- And we wanted to be able to uh what was the third one and travel as much as we can without using credit cards.
So we looked at our expenses all the clubbing; all the designer clothing; all the happy hours; all the expensive dinners; all of the expensive wine; lots and lots of expensive wine.
We thought well that’s really clearly not giving us the quality of life that we want but we sort of felt like we had to live that lifestyle because that’s what our friends were doing.
And in hindsight we were spending that way for two reasons:
One we were trying to make up for the past because we both came from times and places when it wasn’t okay to be gay.
So we were trying to make up for sort of that pain that we had not dealt with up until that point. But then simultaneously we were part of a new community and we thought if we didn’t sort of live up to their expectations we might be ostracized from another community and we were afraid of that.
But we realized that that wasn’t really providing us happiness and we weren’t having the quality of life that we wanted what would happen if we would spend according to our values.
That’s sort of when everything changed when we figured out what our why was. Then whatever strategy we were going to implement we had more of a commitment to pay off our credit card debt. So we would actually become debt-free and then start living a much more authentic life.
I would also say that for you kind of said it yourself very well when you’re asking the question in your own words what does fabulous mean and that’s what really it is: A fabulous life is what it means in your own words.
To you, what does fabulous need mean to you?
You know a lot of us to spend a lot of money to be able to post pictures on Instagram or Facebook or share stories with our friends at cocktail parties or virtual cocktail parties today.
You know we want to be able to share these kinds of stories because it gives us some momentary satisfaction or excitement.
But that eventually goes away and we know that what really makes people feel fabulous is when they feel happy long-term and that happiness long-term takes a little bit of time to figure out what should I be spending on to make my life long-term happy for other people different.
Maybe it’s having a family. Maybe you love animals and want to have a pet farm or something like that. Whatever it is for you those things that will bring you long-term happiness those are the things that make you feel fabulous.
That’s where it’s important to spend not on the things that are superficial or momentary do the steps of the debt lasso method help people build that life.
How John mentioned earlier when we removed that credit those credit card balances and having to spend $10,000 a year to pay towards high interest on our credit cards we basically gave ourselves a $10,000 raise.
That’s when we are able to implement the more fabulous life obviously we try to trickle it in while we were paying our debt off but the steps are really designed to have the mindset and the process to pay your debt off as fast as you can.
Speaking of the people that you have helped um you’ve helped people including yourselves pay off 300 000 in credit card debt um so tell me a little bit about how that worked and how you’ve worked with people so far we have uh our debt lasso calculator which is available and free on our debt lasso site.
But our real driver at helping people pay their off as fast as possible involves them going through a class or basically a course that hits all of the points as that are what helps people pay their debt off it’s the mindset. It’s the habits it’s the lassoing your debt.
It’s trying to figure out how you can make a little bit more money, especially in the short term so to put towards that so all of that is kind of wrapped up in our credit card payoff plan that plan is available in basically a couple of methods you can do it all on your own.
You can do it with group coaching and you can do it with one-on-one coaching with us and it’s the individuals especially in the group coaching who have gotten probably the most value because the group coaching they now.
I guess in an endearing term refer to it as their money therapy.
So we get together on a weekly basis.
We talk about challenges and wins and questions that people have while they’re going through the course.
And the nice thing is is that it gives people a little bit of accountability.
Because they see other people who are doing it other people we have had this happen a number of times where people will call each other.
You know what I did exactly what you’re doing I know what you’re trying to get away with which is kind of good sometimes to have somebody who’s not your coach saying I have already gone through that process and I know where what path you’re headed.
down be careful thanks so much for joining us today. And be sure to check out the Debt-Free Guys on their Queer Money podcast, as well as on debt lasso.
The philosophy of “living fabulously”
Their lack of patience was partially driven by a desire to get back to “living fabulously.” They didn’t want to give up all the fun in their lives to pay off their debt. “We were very social people, and we knew that we couldn’t completely give up being social and having fun,” Auten said, “but we started to implement steps in our lives that allowed us to pare back and to exchange things that we found value and fun in that were a lot cheaper than what we used to be doing.”
Auten and Schneider know that completely cutting out fun stuff would just make people want to quit their budgets. That’s why they focus on getting out of debt, but “living fabulously” while you do it. You don’t have to skip every single brunch with your friends to pay off your credit cards. You don’t have to worry so much about getting your special coffee every once in a while.
But the most important thing is to build a life that focuses on long-term happiness. “We know that what really makes people feel fabulous is when they feel happy long-term,” Auten said. “And that happiness long-term takes a little bit of time to figure out. What should I be spending on to make my life long-term happy?”
Long-term happiness looks different for everyone, and the Debt Lasso method is designed to fit with any lifestyle and adjust to people’s needs. But what makes it really great is the couple behind it. Auten and Schneider genuinely care about their community, and they want you to follow them on the path toward a debt-free life. Learn more about them and Debt Lasso here.
Published by Debt.com, LLC