Baby Step 2 of Dave Ramsey’s Plan is to pay off all of your debt, except for your primary home mortgage, using the Debt Snowball.

The Debt Snowball is where you make a list of all of your debts, smallest payoff balance to largest payoff balance.  You then pay only minimum payments on all of the debts except for the smallest one and you attack that smallest one with a vengeance.  You throw every extra penny that you can scrape together at that smallest debt until it’s gone.  Once it’s gone, you take the money that you were using to pay on the smallest debt, plus every extra penny that you can scrape together and you throw it at the next smallest debt, while continuing to pay minimum payments on the larger debts.  You repeat this over and over until, finally, you are debt free except for your home mortgage, if you have one.

According to Dave Ramsey, the average family who works this plan is able to become debt free, except for their mortgage, within 18-24 months.  For us, it was longer…  It took us 3 years, 3 months, and 10 days, but when it was all over, we had paid off $80,820.37.

I’ll admit that we did not cut our lifestyle all the way to the bone as Dave recommends.  We did sacrifice in many areas, but we continued to do some things that delayed our progress.  For example, we decided to keep our season tickets and Lifetime Rights seats to NC State University football games.  The key is that we, my wife and I, made a conscious decision to keep doing some of those things with the full knowledge that it would take a little longer to get out of debt.  Also, we never took our eyes off of the prize of becoming debt free.

Dave’s plan, as the book title indicates, is all about having Financial Peace.  For those who are reading this and are on the fence about whether or not to get out of debt, try this exercise:  Close your eyes and imagine what it would be like to be debt free, except for your home mortgage if you have one, and to have $15,000 in cash in the bank as an Emergency Fund.  No payments.  Your most powerful wealth-building tool, your income, has been returned to you for use as you see fit.  How does that feel?  Can you breathe a little bit easier?

We have not borrowed a dime since July 2003.  No credit cards, no in-store financing, no car payments, no student loans, NO DEBT PERIOD.  When we want something, we save up and pay for it.  When we go to purchase something, we learned to stop asking, “How much down and how much per month?”  Instead, we learned to ask the question that wealthy people ask, “How much?”  That means, how much does that item cost for me to purchase in full, right now, if I pay cash?  Also, because I’m paying cash, I’m looking for a bargain!

On November 10, 2006, my wife and I got out of bed early and, before I headed off to work, we visited the First USA VISA web page for the very last time.  We entered in our final payment amount and, with both of our hands on the mouse, we clicked the submit button and we were finally debt free.

The sacrifice to get out of debt is not easy, but it is so worth it!  When you only have a house payment, you relax in places that you didn’t even know were tense.  Your paid-for cars drive better.  Your paid-for HDTV displays a sharper picture.  The air you breathe is cleaner.  Life is better on the planet when you are no longer a financial slave to the lender.