Dumping Debt: The 7 Baby Steps

Real quick, I thought I'd share the 7 Baby Steps for your Total Money Makeover:

Baby Step 1: $1000 to start an Emergency Fund

Baby Step 2: Pay off all Debt, using the debt snowball

Baby Step 3: 3 to 6 months of expenses in savings

Baby Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement

Baby Step 5: College funding for Children

Baby Step 6: Pay off home early

Baby Step 7: Build wealth and give!

We're in baby step 2, paying off our debt. Here is a little description from Dave Ramsey's website about using the debt snowball:

"List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first. 

The point of the debt snowball is simply this: You need some quick wins in order to stay pumped up about getting out of debt! Paying off debt is not always about math. It’s about motivation. Personal finance is 20% head knowledge and 80% behavior. When you start knocking off the easier debts, you will see results and you will stay motivated to dump your debt." 

 Andrew and I paid off my little school loans within the first couple of months of finishing FPU (Financial Peace University) and it's true, seeing those debts gone really is a motivation. Now we're tackling the big ones; his school loans and the Army Career Starter Loan But we couldn't do it willy-nilly, we've had to make a budget, which will be my next dumping debt post.