This second step is all about getting rid of your debt.  It's about killing debt as quickly as possible using any means necessary a long as your actions are legal, moral and ethical.  This step will test your patience and resolve like no other step.  You will likely feel like giving up and I won't be mad at you if you do.  I know that there were many times during the last three and a half years when I found myself frustrated and depressed that things were not happening as quickly as I thought they should.  Thank God for a wonderful wife who helped me focus on what we had accomplished!  I recommend that you look at how far you've come when you experience those moments of doubt.  Those moments when you feel like you will never be debt free.  I've been there, I know what it feels like.  And I know that If I can get out of debt, then that you can too!

Ok, so how does one get out of debt.  Well, one dollar at a time as often as you can.  However, you must first determine how much money you owe.  Write down your total outstanding balances for any money that you owe EXCEPT any home mortgages.  Some of you may panic at this point as you may realize that the amount you owe is more than your annual income.  If this is the first time you've ever had a complete grasp of the total amount that you owe, then please stop, take a moment to absorb the seriousness surrounding how much money you owe.  It will be the last time you ever owe that much money, and, eventually, you will be completely free.  You will get to the point in your life where you don't owe anyone anything.

There are two schools of thought when it comes to paying off debt.  One involves paying off the smallest balance first while the other involves paying off the debt with the highest interest rate first.  Either plan will work, however, if you're like me, you will want to use the smallest balance first plan.  With this plan, you begin to see progress more quickly which lets you know that you are on track and provides the impetus to keep going when you find yourself tackling a large loan like a school loan.

Here's how the small balance plan works.  Pay the minimum payments on all of the balances, except the smallest balance.  Then throw everything you can onto the smallest balance.  Once you've paid the smallest balance off in full, then take everything that you were throwing at the first balance and tackle the next one on the list.  So on and so forth. 

Here's a sample of what a debt payoff might look like.

Pay the minimum payment on the car, both credit cards and the student loan.  Working your budget, an extra job and selling stuff on E-Bay you come up with an extra $1,500 a month to put on your debt in addition to paying the minimum payments.  Put all of this money together with the minimum payment for the furniture and the first month you drop 1,725 onto the furniture which leaves you with the following:

Now, do this again the following month.  Notice that we only owe $1,275 on the Furniture, so the $1725 we have to pay it will completely pay it off plus leave some for the car.  The numbers look like this:  1725 - 1275 = 450.  You will add the 450 to the car payment during this month, which will mean that you will write a check for $800 to the car company.  After month two, your balances look like this:

At this point things really begin to kick into gear because you will now take the extra money from your budget, plus the minimum payment for the furniture loan and add it to the minimum payment for the car loan.  This means you have 1500 + 225 + 350 = 2075 to pay toward your debt every month.  You continue to do this every month until all of your debt is paid off.

Some of you have far more debt than I used in the sample while others have much less debt.  It doesn't matter how much debt you have because the plan will work if you stick with the plan.  Here's the deal, if you focus all of your energy and money on your debt, you will completely an utterly annihilate your debt.  This means no vacations, no impulse purchasing and no going out to eat.  Getting out of debt needs to become your life's mission for a short while.  You can do it, it will mean sacrificing, taking an extra job.  Your friends will probably laugh at you, but at the end of the day.  You will have the last laugh.  You will be the one with paid for cars, a paid for house, oh and the best thing… you will have financial peace because you won't be worried about how you are going to pay the bills.