Chasing the Bull

In order to get the debt snowball rolling, Dave Ramsey suggests getting a second job. Of all the wonderful suggestions found within his writings, this is the one I have the biggest issue with.

Yes, I have debt. I also have an awesome family, with which, I love to spend my free time. Hanging out with my wife and son each night is truly the highlight of my day. After reading The The Total Money Makeover, I almost feel as if I am letting my family down by not finding a second job. I have also read numerous personal finance blogs that advocate the same thing.

With someone of my credentials, I could easily start a new business and make a decent amount of money rather quickly ($200 an hour would not be out of the question). This would mean I would have to start working on nights and weekends. The problem is that I value my time with my family more than that. This is the reason I took the job that I have now instead of continuing the career path I was on. I traded 100+ hour weeks, for reading Elmo to my son. I traded 200+ nights in a hotel each year, for mowing the grass on a Wednesday night. I traded money for peace and I am sure I made the correct decision.

What would you do if you were me? Would you start a new business, knowing that you could eliminate all of your debt within 12 months, or would you continue to budget and enjoy your rather enjoyable family life?

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I absolutely love reading personal finance blogs. You really cannot go wrong reading MyInvestingBlog, PaidTwice, or Frugal Dad just to name a few. Reading does becomes a problem, however, when you spend so much time reading about other people’s ideas and efforts that you really get nothing done for yourself. That is where I found myself lately.

I spend hours each night reading up on my favorite “friends”. Your success is MY success and I cheer you on wholeheartedly. Over the last few weeks, however, I kept asking myself why more good things were not happening to me. Why is my debt not going down? How is it possible that my net worth is actually going down?

The answer is pretty obvious, now that I stepped back and took a good hard look at myself and my free time. After reading Dave Ramsey’s The Total Money Makeover, I decided to act.

Of course, Paid Twice has been snowflaking for a while now, and I have read about it constantly of other great blogs. The key that many people overlook is that once you learn something new, you have to actually practice to get better. Major league baseball players do not just show up at game time and hit 300. Track and field stars do not expect to win anything unless they leave it all on the practice field, day in and day out.

My wife and I are now practicing what we have learned. I feel vindicated that the hours spent reading have actually turned into something I can use in my day-to-day life. Thanks for sharing your thoughts and blogging about it for the whole world to see. I truly appreciate it.

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By now, most people have heard of the “debt snowball” popularized by Dave Ramsey. The theory is that you should organize your debt from smallest to largest. Pay the minimum payments on all of your debt except for the debt with the smallest balance. For this debt, you attack it with any additional funds available until it is eliminated. Then you move on to the next item on your list.

I had never really paid much attention to my debt. After reading Dave Ramsey’s The Total Money Makeover, I have taken a second look at my debt.

As of today, I have the following debt:

Personal Loan @ 6% - $7,635.17
Student Loan @ 4.25% - $10,368.65

As I mentioned here, I am getting a large tax refund. Additionally, I will receive a tax rebate of $1,500 sometime in June. Finally, I sold the stocks in my cash account for approximately $5,155. In June, I will apply $6,655 from the tax rebate and stock sale to the personal loan. I will also take $238 from my tax refund to pay off this loan completely.

This will leave the student loan as the only debt remaining (besides my mortgage). To tackle this loan, I will take the payments I usually make to the personal loan and add it to the payments I usually make for the student loan. Doing so, I should pay off the student loan by May 1, 2010.

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