Introduction
You’ve no doubt heard about the snowball method and the avalanche method, but what about the debt lasso method?
The debt lasso method is yet another strategy for paying off bad debt like credit cards and car loans.
How the debt lasso method works
The idea of the debt lasso method is to pull or “lasso” your credit card interest as close to 0% as possible.
Here’s how it works:
- First, list out all of your debts.
- Then, organize them in order of highest to lowest interest rate.
- Next, contact all your credit card companies and see about lowering your interest rates. Most companies are willing to help you out if you explain your situation.
- After you’ve succeeded in getting your interest rates lowered, find a credit card with a 0% interest rate and no annual fees. Make sure you read the fine print and compare different cards to find the best offer.
- Finally, transfer your balances to the new credit card and begin to pay off your debt using the money you’re saving on credit card interest.
Using the money saved on interest rates, you can pay off the amount you owe.
Conclusion
Although the debt lasso is a fast and effective way to pay off credit card debt, you should keep two things in mind when deciding which method to use:
First, you need to stay on top of all your payments and understand what could happen if you miss a payment or make a late payment.
Second, opening and closing credit cards will initially hurt your credit score. To minimize the damage, the Debt Free Guys suggest keeping your oldest credit cards open with a $0 balance while you open and close the 0% interest rate credit cards.
Whatever method you choose, be sure to keep it up until you’re living debt-free and remember the wise words of billionaire Mark Cuban: “Freedom from debt is worth more than any amount you can earn.”
