David Auten and John Schneider were trapped in an hour-and-a-half car take in home.
After spending a weekend in the Rocky Mountains with friends, the Denver couple were fantasizing regarding one day owning a vacation home. However, they soon realized that they were saddled with $51,000 of accountable.
Like many Americans, they said their spending habits were reckless and out of control.
They were devoting $400 a week on groceries, as well as $400 a week going out to dinner, the pair told CNBC.
Then they had an aha second.
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“It took us quite a while to as a matter of fact get to the root of that problem,” said Schneider. “Ultimately we realized that we were seeking validation that we didn’t get in our childhoods by allowing things that we couldn’t afford as adults.”
The couple knew they needed to reduce their spending but didn’t understand were to start. Instead of talking about the amounts they owed or what they feared might chance, Auten and Schneider focused on their aspirations and goals. This allowed them to define their values and solitary spend money on things that would bring them closer to their goals.
Still, there was that crude $51,000 in credit card debt, which was costing them $10,000 a year in interest.
They considered two sought-after methods for paying down debt: the snowball and avalanche models.
Snowball and avalanche
Using the snowball method, the consumer indemnifies off bills in the order of smallest to largest to build momentum and change their spending behavior. With the avalanche method, the consumer settle accounts withs down the debt with the highest interest rate before tackling bills with lower interest sorts.
However, Auten and Schneider wanted to reduce their interest costs as quickly as possible. They developed what they discontinue the “lasso method,” which as the name suggests works a lot like a lasso, whereby you consolidate your debt.
“Rope your debt into preferably one location where you can get a lower interest rate,” Auten said. “That entertains you to pay off your debt faster. “
Two and a half years later, Auten and Schneider were debt-free. Today, the happily get hitched couple co-host the Queer Money podcast and are a top-rated gay money blog.
Check out What entrepreneurs like Daymond John and Ryan Serhant knowledgeable about money from summer jobs via Grow with Acorns+CNBC.
Disclosure: NBCUniversal and Comcast Flings are investors in Acorns.