The Decision

The Date and I have decided to take Dave Ramsey's Baby Step program and alter it a little bit. Since I'm working a second job I'd like to be in the position to quit it sooner than the step program would allow. Meaning in step three the idea is to build a three to six month emergency fund. Step four is putting your retirement into place. Step five is to fund college and step six is to pay off the house.

I want to include the house into step two which is the debt snowball. Since we really don't have a lot of consumer debt, credit cards, and such things our biggest bills would be the vehicles and mortgage.

Step four is completed for me. I have a 401k and a pension plan. I'm kicking in 8% right now to the 401k and on October 1st I'll be putting in 10% and work it up to the required 15% automatically. It's got years to grow so it'll do fine and nicely supplement the pension plan.

Since I'm already working two jobs and the second job is getting easier I like the idea of swapping steps six and three, although step three is very important and vital to the overall financial health of a family. I want the house paid for sooner and with step four already in place I feel comfortable with it. The debt snowball will include the mortgage and it'll be paid down substantially or off completely before moving on.

It's a bit late to fully fund a college fund for The Things as one of them will be going off to college in less than two years, The Date is already in college, and Thing 2 is a freshman in high school. That step is not irrelevant but by the time they go to college we will have everything including the mortgage paid off and possibly have a new mortgage by that point. The Date will likely have a full time job and we'll be in the position to financially help both Things.

As I've said earlier and I've been reading a lot of accounts that a lot of step twos have over fifty thousand in debt to pay off before proceeding to step three. We don't have that. To me and our situation (and to allow me to quit the second job faster) it makes sense to include the mortgage in the snowball. It'll open up more of my income to going to the other things we want to accomplish, it'll allow the second job to go away at will, and it'll put us into the housing market to find a bigger house and have a substantial down payment on the next house.

That's the decision!

Eye on the prize!