My wife and I are following something similar to Ramsey's Total Money Makeover plan (which is also very similar to Crown Financial Ministries' plan), but have modified it to our situation. Here's the details of our modifications:
- First goal was just get the house stuff current (mortgage & utilities). Our credit cards are so behind that we can't get them current. We are about done with this step.
- Save $3K initially. I know both plans say $1K, but we have no credit at all available to us if anything beyond $1K came up. We also know that we are going to need a car in the next few months that we are looking at $2K to spend. Once we get the car, it will stay at $1K
- Pay $10/month on the bills that provide us other services at this time or may soon in the future (eg: Chiropractor, marriage counselor). It shows to them that we do want to pay them something at least.
- Make a big pile of cash to tackle our smallest debt that is building interest. For example, we have a credit card that we owe approximately $1500. We will gather up $1200, offer them $1K to settle the bill, if they don't like that, we'll counter-offer with $1200.
- Repeat step 4 for 18-20 months until all credit card debt is taken care of.
- Repeat step 4 for 12 months on our non-interest debt (hospital bills, etc).
I know the best method is to tackle our highest interest first, but we are needing the monthly psychological boost that things are progressing, while at the same time keeping cash away from our grubby hands as much as possible. In our finances, the emotional side is what got us in this mess and the emotional side is what is going to get us out.