The Total Money Makeover

The Total Money Makeover by Dave Ramsey               259 pages      

I was recently introduced to the name Dave Ramsey and told about the teaching series he offers on how to manage your finances.    I was unable to take the class, but, I looked him up at the Library to see if I could find his book on the subject.   Actually he has written several titles on the subject.   Dave Ramsey and his wife are millionaires who have lost everything twice in their lives and had to start over from scratch (ie. No income, debt out the wazoo.)   And now Dave has learned the secret to becoming debt free and better yet, becoming a millionaire in the process.    He does not offer a get rich quick scheme, his plan actually requires putting your all into getting out of debt over the next 3-5 years until you dig yourself out.    He recommends baby steps toward becoming debt free.   1^st do everything you can to catch your bills up to current payments if you are behind.    Make an honest assessment of everything you owe so you pretty much know what you’re working toward.    Then make a budget.   Ie.  Here are your monthly expenses, here is what you owe, here is what you need to survive the month – now work 3 jobs if you have to over the next however long it takes to get it all paid off.    He makes a number of really valid and understandable points.  He recommends selling everything you can that you now own that you can possibly live without, work over-time, take on more jobs, do whatever it takes.    His most recurring advice is:  “Live like no one else so that you can live like no one else.”    The struggle is worth it to achieve the prize of being debt free.   Being in debt is slavery to your creditors so don’t worry about how crazy your friends and family think you are by not going out to eat with them, or buying that big screen t.v. or new car you have your eye on.    Dave Ramsey recommends living on cash only NO running up credit card bills – that is what got you in this place – don’t add to it.    He thinks people should cut up their credit cards to stop the temptation.   Drive a car that is a few years old rather than committing to a long term 5-6 year onslaught of payments.    Cars a couple of years old are still reliable and so much cheaper, he says, you will thank yourself in the long run.   Dave also says once your bills are current, start doing everything you can to put $1,000 in an emergency fund.   Bad things will happen it is a given.    Dave’s recommendation is to have $1,000 on hand that you absolutely do not touch for anything other than a bonafide emergency – a sale on big screen t.v. is a want not an emergency – and that way you will have the assurance that even though you are still in debt at this point, you do have a cushion if the bottom suddenly drops out of your world.    He says after that go back to putting every cent you possibly can toward paying off your debt.    He also says to figure up all the balances on all your bills and start paying them off one at a time starting with the bill with the lowest balance.   If you have two bills with roughly the same balance check the interest rate and go with the one that has the higher interest rate.   Pay that one off first then the other one, then continue on until you have wiped out every debt and are debt free.    Depending on your debt load he says it can take from a year and a half to 5 years, and hopefully less.   He pushes debt reduction, emergency fund, setting up a college fund for your kids and a retirement fund for you and your spouse.   He says there is really no reason why once you are debt free and can use that freed up payment money to invest in mutual funds – there is no reason why at retirement you cannot have a million dollars waiting for you.   Of course the earlier you start the more you will have.     He made a lot of good points and I do recommend this book for anyone with a desire to get their finances together.      I plan to read his other titles, too.   He has a very down to earth easy to grasp style.    There are so many success stories included in this book that are inspiring, too.    A read definetly worth your time.