Passive Income

Last time we examined Baby Step #2, The Debt Snowball. In this step, we are methodically attacking each of our debts from the smallest to the largest. Proceeding in this manner, allows us to achieve minor victories almost immediately. Fueled with our recent success, we become more confident, more focused and are on our way to becoming debt free. As a quick refresher, here are the steps we have covered so far:

Introduction – Dave Ramsey’s Baby Steps – The Decision to Become Debt Free
Step 1 – Save $1,000 Fast – Build a Small Emergency fund
Step 2 – The Debt Snowball – Pay Off All Debt
Step 3 – Finish the Emergency Fund – Save 3 to 6 Months of Expenses
Step 4 – Maximize Retirement Investing – Invest 15% of household income into Roth IRAs and other pre-tax investment vehicles
Step 5 – College Funding – Provide a ‘Paid For’ Education for Your Children
Step 6 – Pay Off the Home Mortgage
Step 7 – Build Wealth Like Crazy – Then Give It Away

My Snowball Won’t Roll

When my wife and I started step two, we could not get any momentum. It seemed like all we were doing was paying the minimums on all of our debt. We knew this was not going to get us anywhere very fast. As the leader of our house, I knew it was up to me to take action. And man did I hate it!

I grew up in the early 80s. As a kid, I absolutely love Star Wars. I wanted anything, and everything, that I could get my hands on. I collected the action figures, glasses, posters, patches, vehicle etc. I loved it all. As I grew older I got rid of most of it, thinking it childish owning toys. Once I graduated from college, and got my first decent paying job, I tried buying back my lost childhood toys. I would surf eBay at all hours of the night, looking for deals and bargains to complete my collection. By the time my wife and I enrolled in FPU, I had at least one of 99% of the Star Wars action figures ever made.

Needless to say, our debt snowball crushed my collection. I took each and every toy I had acquired over the past 10 years and auctioned it off on eBay. When all was said and done, we had knocked out approximately $7,000 of debt. Did it hurt? Absolutely! Do I regret it? Never.

Having my wife sleep better at night was worth way more than the joy those toys brought me. Now I just need to get the courage to sell off some of my comic books. I am such a little boy

If you are having a difficult time getting your snowball rolling, try selling a few things that you no longer use. You do not have to sell any prized possessions, although it worked well in our situation. If you do not have anything to sell, consider getting a part time job during your free time.

I do not have much free time and the free time I do have I absolutely refuse to spend away from my family. This is one of the reasons I started writing for eHow. I knew that it would take three to six months before I would start to see decent earnings, but I knew I could do it. Eight months later, I am making over $100 a month, mostly from articles I wrote months ago. Each month, we throw these eHow earnings into our emergency fund. Truth be told, we should be paying down our student loan (our last remaining debt) but having an established emergency fund makes my wife feel more secure.

Lately, I have been spending time creating a few One Week Marketing campaigns. I view this stream of income the same way that I viewed eHow in the beginning. I know that it will take months before my campaigns mature enough to start seeing consistent income. Until then, I plan on plugging away.

The point is that it is up to you to start your snowball rolling. Whether you get a second job, create online income or sell stuff on eBay is up to you.  Just do something!

What did you do to jump start your debt snowball? Did you sell anything you later regretted?

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