Everyone encounters debt at some point. It’s important to deal with it as soon as possible, or it can balloon into an unmanageable problem.
John and David Auten-Schneider, hosts of Yahoo Finance’s Living Not So Fabulously, know this problem all too well. They join this week’s episode of Financial Freestyle with Ross Mac to share their experience.
Despite working in financial services and advising others on money management, they didn’t always follow their own advice. The turning point came during a drive home from vacation when they fantasized about owning a second home. That’s when reality hit. They didn’t even own a home to vacation from!
“We are financial messes,” David Auten-Schneider admitted. “That’s when we confessed to each other that between the two of us, we had $51,000 in credit card debt.”
“That moment was a catalyst for us to sort of start having the money conversation,” adds John Auten-Schneider. Determined to take control, they headed to the library to research debt repayment strategies, weighing the pros and cons of the snowball and avalanche methods. Ultimately, they chose a different path.
They landed on identifying a way to get rid of the high interest— about 20% at the time. “We realized if we strategically used 0% interest rate credit cards,” says John Auten-Schneider. "We could use that to our advantage and expedite paying off our debt."
This became the foundation of their “Debt Lasso” method. Equipped with this strategy, they paid off their $51,000 debt in just three years.
Motivated by their experience, they set out to help others in similar situations. They wrote a book and launched Debt Free Guys, a platform dedicated to financial empowerment.
However, becoming debt-free and staying debt-free are two different stories. Even Auten-Schneiders slipped back into debt. ‘We paid all that debt off in under three years. And… about a year later, we found ourselves with $6,000 in credit card debt again because we did what most people do,” admits David. Auten-Schneider.
It wasn’t until the couple broke down the psychology of their spending that they were able to sustain long-term financial success. “We realized what we… weren’t keeping the habits that got us out of debt and making those permanent habits… That’s when we really kind of made some deep changes to who we were and the way we [spend,]” says David Auten-Schneider.
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