Dave Ramsey's Expanded Baby Steps - Baby Step 2.0

Baby Step 2.0: Do debt snowball, paying all your debts from lowest BALANCE to highest

2.1 If your second mortgage or home equity line is less than 50% of your take home pay, include it in the debt snowball; otherwise put it with the house in Step 6.0

2.2 DEBT FREE except the house--you can take your first vacation if you can pay cash for it.

Here are the personal steps we took as we began this journey:

1. Our snowball included a car loan and a second mortgage. We paid the car off in 6 months. We have been working on the second mortgage for 14 months and are about 3 months away from paying that off.

2. We were slackers when it came to this. We had the opportunity to go to Disney in FL with a free place to stay and splitting the gas, groceries for the kitchen, then buying tickets. We caved and went on a vacation while were still snowballing our second mortgage. For our situation it will only make about a month’s difference in the payoff so we aren’t regretting the decision but for some people this is not the case.

3. We cannot wait to call in on the Dave Ramsey Show and shout at the top of our lungs – We’re Debt Free!!!

Some people would disagree with the debt snowball method to paying off debt. I’m a numbers guy, so I understand that this is not mathematically the best way to pay things off, but the bottom line is it WORKS! If you’re interested in other methods of debt reduction check out these two articles from NCN at No Credit Needed:

· Debt Deluge – Modified Debt Snowball

· 5 Debt Reduction Methods

Previous Posts:
Dave Ramsey's Baby Steps - Expanded
Baby Step 0: Live like no one else…
Baby Step 1.0: Save $1,000 in Baby Emergency Fund (BEF)

Coming Up Next:
Baby Step 3.0: Save 3-6 months EXPENSES in Fully Funded Emergency Fund (FFEF)