Recently, we shared our perspective on the first baby step. As you might have guessed, we aren’t in lockstep with Dave on Step 2 either. While we agree that, after having enough saved up for an emergency, tackling debt is the next logical step, we’re not rigid adherents to the debt snowball process. If you are reading this post, it’s probably safe to assume you have heard this term numerous times but, just to be sure, the process is to pay off your debts working from the smallest balance to the largest.
First things first. If you owe the government any money, you should strongly consider taking care of this first and as soon as possible. Owing the government is not something to be taken lightly as any government — be it federal, state or local — has the power to completely alter your life, and in some cases destroy it. Clearly, this is priority one. To be clear, it may not be necessary to get such liabilities paid in full immediately (i.e. you may be able to work out a payment plan), you definitely want to never miss a payment, especially if you’ve worked out a special plan.
