The master plan: Baby Steps

I read Dave Ramsey’s The Total Money Makeover twice during the summer of 2011.  I read it the second time because I loved it and wanted to soak up all the information I could before returning the book to the library.  See, I was already frugal not buying the book.

My artist husband made a visual aid of the seven baby steps that we have posted on our fridge.  We have built in mile stones on our debt snowball.  As we reach a mile stone we are rewarded with little gifts to ourselves.  Our next mile stone won’t be reached for a long long long time BUT I know it will feel great when we get there.

If you look closely, you’ll notice that our mortgage is listed in our debt snowball.  This is not the norm.  We have a ten year mortgage with a balloon payment due in September 2015.  The value of our condo is still way less than we owe so we cannot refinance and we cannot sell it.  So, we’re planning to pay it off before that September 2015 deadline.

It would be much more satisfying to pay off the student loans.  There are four student loans between two loan servicers and we could knock them off one at a time and build our snow ball the way it is meant to be done.  Instead, we tackle the behemoth mortgage.

Before my husband was laid off we were able to put an additional $1500 a month toward the mortgage.  Now, we’re putting our extra money into our emergency fund until we have $10,000.  This is just a precaution.  Hopefully my husband will secure a new job and we’ll go back to the old plan, transferring the emergency fund money to the mortgage in the process.  Until then, I get to pretend we’re on baby step 3.