Dave Ramsey's Baby Step 2

Pay off all debt, not including the house. That's Dave Ramsey's financial fitness baby step #2. Rather than explaining why it's a good reason to get out of debt, my wife and I have already decided that it's a good idea, and I want to explain how we're working on it.
On the right-hand side of this blog is a list of the 7 baby steps. Let's talk about step #. Over the last five years, we have accumulated nearly $31,000 in debt ($14,500 on a school loan and $16,500 on our Jeep Liberty). As of June, 2008, we have paid off the school loan, and have $13,000 remaining on the car loan.
Because we would like to move on to step #3, we have three options:

1. Continue to pay off the car loan, making the regular payment ($344 per month). The loan would be paid off in January 2012.
2. Make additional payments on the principal (adding $320 per month would shorten the length of the loan to March 2010).
3. Make additional payments and sell the car ASAP.

We've decided on option #3. We're planning to start paying nearly $700 per month on the loan. We'll also put it in a couple of classifieds websites, and when an offer meets or exceeds what we currently owe on the car, we'll sell it.
Now, we'll still need two cars. Once the Liberty is gone, we'll need to figure out how much we have available to spend on another car. It may be that we'll need to take out an auto loan for$2000 or $3000, which we would pay back in a few short months.

Conclusion
Our goal is not only to get out of debt, but to create a self-sustaining account that allows us to buy newer automobiles the rest of our lives.