What Is the Debt Lasso Method?

Young cowboy with lasso riding quarter horse on the open western range with mountains in the background.
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When you’re buried in credit card debt, finding a method to help you tackle the debt quickly and regain control of your finances can be a game-changer. However, with so many different debt hacks and systems out there, it can be hard to choose the right one.

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One of the newer strategies for paying down debt is the debt lasso method, which was created by David and John — aka the Debt Free Guys. This method helped them tackle $51,000 in credit card debt in less than three years. If you’re ready to free yourself from debt and would like to give this approach a try, here’s how the debt lasso method works.

Breaking It Down

The debt lasso method is the act of “lassoing” all of your debt into as few locations as possible at the lowest interest rate possible.

This method is similar to the debt avalanche method in that it requires you to tackle your highest interest rate debt first. However, it has additional steps, which the Debt Free Guys maintain is the quickest, easiest and most cost-effective method to pay off credit card debt that also will help improve your credit score.

Make Your Money Work for You

Before you get started with the debt lasso method, the first thing you should do is commit to not spending any more money using credit cards, and if possible, pay off any small credit card debts within the first month or two. Here is a summary of the other steps you need to take when using the debt lasso method:

  1. Create a spreadsheet and list all of your credit cards, with columns for current balance, minimum payment and current APR.
  2. Total up the minimum payment column, and then decide on an additional lump sum you are willing to commit toward your debt each month without fail. This will be the bonus payment that you’ll pay toward your credit card debt with the highest APR.
  3. Look for balance-transfer cards with a 0% APR or a low APR to eliminate or lower the interest you are currently paying. If you are unable to get approved for a balance-transfer card, consider a personal loan from your bank or credit union.
  4. Transfer your balances or pay off your debts with a personal loan if applicable.
  5. Set up automatic payments for all of your credit card accounts to avoid missing due dates, acquiring late fees and dinging your credit.
  6. Add the bonus payment to the minimum payment for the credit card payment with the highest APR, and pay the minimum payment toward all of your other debts.
  7. Create a reminder for two months before any balance transfer offers are set to expire. This will allow you to find another balance transfer offer or loan if you won’t be able to pay off the balance before the offer expires.
  8. Each time you pay off a credit card, add the amount you were paying to the bonus payment. And once you pay off the credit card with the highest APR, start applying the growing bonus payment to the account with the next highest APR until all of your credit cards are paid off.

Choosing and sticking with this method could be a good idea for a 2023 New Year’s resolution. Happy lassoing!

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Make Your Money Work for You

About the Author

Cynthia Measom is a personal finance writer and editor with over 15 years of collective experience. Her articles have been featured in MSN, AOL, Yahoo Finance, INSIDER, Houston Chronicle and The Seattle Times. She attended the University of Texas at Austin and earned a Bachelor of Arts degree in English.
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