We’ve Been Following the Dave Ramsey Snowball Plan But It’s Not Working for Us. – Shannon

“Dear Steve,

My husband lost his job in October 2009. We had to fight the company to get his unemployment, but eventually won. After about six months of searching, he found a job with a university that would give him the opportunity to go back to school to earn his master’s degree for about 90% off the cost of tuition, so he decided to take it even though he would be earning LESS than he was making on unemployment. He took it for both the benefits and because we didn’t know when the next offer would come around. At the time, we had two kids, ages 3 years and 18 months. We had two mortgages, a home equity loan, a car payment, my student loans, and a credit card that we paid off literally weeks before he lost his job. We were quickly surprised with a third (and final) child who is now four months old.

Currently, our combined mortgages/property taxes/house insurance are $1,570, the car payment is $140 ($3,569 until it is paid off), car insurance is $140, my student loans are about $250, the home equity loan is $259, utilities are around $255, cell phone is on a combined plan with my parents and runs us $40/month for both of our lines (no land line). Then, of course, there are the other living expenses like feeding and clothing three children and paying for medical insurance, gas, etc.

We got rid of cable TV yesterday (took the box back and had them cancel the service) and our internet should be around $50, I think. We don’t eat out. Period. We don’t go to movies. Period. I think the last movie I saw in the theater was Pirate of the Caribbean 1. I drive an 11 year old minivan with over 230k on it.

We bought our house five years ago for $215k (plus all of the taxes, etc). It is now estimated to be worth about $173k in our area. I don’t have the immediate numbers right now, but I know we still owe more than the house is worth with the dive in the housing market.

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All of our bills are current, but I think we have almost reached the point where we are having to pay the end of this month’s bills with part of next month’s paycheck. I have started couponing and watching sales to get our food/toiletries budget down.

We have been trying to do the debt snowball following Dave Ramsey’s pan, but we can’t seem to squeeze anything else out of the budget to make some room. We have sold stuff on Craigslist and eBay, and my husband will be looking for other potential jobs soon, but the thought of giving up his chance to earn is MBA for 90% off and our children earn their BA’s for 75% off is hard to swallow.

I own my own service business (transcription) and work it around caring for our three children. To put three kids into daycare in my area would be AT LEAST $1,800. My oldest will be starting Kindergarten in the fall, but kindergarten is only half-days, so he would need childcare the other half of the day for me to get a job outside of the home.

We have good credit other than being over-extended after my husband’s cut in pay. While he was unemployed, we didn’t miss a single payment.

Both of our incomes are variable and no quarterly bonuses to help us get ahead. Between unemployment and a partial year of work, our adjusted gross income last year was $41k.

What the heck do we do now? We are only making minimum payments on everything just so we can keep gas in the car for him to get to work and keep food on the table. Does debt consolidation sound like a good option in our situation?


Dear Shannon,

Before I begin, I have one very important question for you, is the goal to try and fix the past or fix the future to make it financially safer for your family and kids?

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Help me to understand which direction we are looking before we head off on this journey.

Post your answer in the comments section and I’ll reply.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

18 thoughts on “We’ve Been Following the Dave Ramsey Snowball Plan But It’s Not Working for Us. – Shannon”

  1. Thanks for the feedback on the site. We’ve worked really hard to make it better.

    OK then. If you feel you can make at least your minimum payments then use the free ReadyForZero.com debt reduction service. It will give your the guidance and data you will need to get out of debt by making regular payments.

    The only real solutions for getting out of debt for less than your regular payment, if we cross bankruptcy off the list, is a debt consolidation loan, which you may be eligible for from LendingClub.com if your credit score is 700 or above. The other solution is a debt settlement approach where you may be able to repay your debt for less than you owe. The downside is it will hurt your credit, you could be sued, and it it will take longer to repair your credit. For debt settlement solutions I suggest you talk to one of the AACC member companies.

    While I don’t have to agree with your decision I do fully support you by being here as you proceed along your journey.


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