The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey ~Review
If there is a book I often recommend, it would be The Total Money Makeover because it is the most simplistic and effective approach to managing your finances I have found to date. I’ve had a chance to diagnose his approach and can’t wait to share it with you! Let's get into the introduction of the author, and then learn more about the book that has taken us all by storm!
Dave Ramsey is an expert in personal finance in America. He runs a company called Ramsey Solutions, and in it, he has his own radio show, hosts live events, and also runs financial classes that allow his experience and expertise to reach the masses. Throughout his career and time in business, Dave has learned rules that have gained him great success. He is a person who hates debt and has had his fair share of challenging experiences.
During his early to mid-twenties, Dave used to purchase property to build his net worth by owning real estate worth 4 million dollars. This difference of numbers was a huge deal of debt, bankruptcy, and everything that is enough to give a businessperson a wake-up call. During this time, he came up with a straightforward plan he named The 7 Baby Steps. His plan has helped many other people to change behaviors that we're keeping them poor.
This book is mainly for people looking for a structured plan to execute. People who want to do a total money makeover can benefit from this book tremendously! If your financial conditions are not improving and/or becoming more stabilized with a foundational protection approach for you and your family, then maybe this book could help!
The book review of this read includes the baby steps the author has devised to move from a poor to stable financial condition. This book weaves in short stories from people who utilized its contents and findings to win in the money game. The second half of the book advises you with steps to follow to get out of debt. The baby steps he has talked about are the ones his book is based upon.
The 7 Baby Steps are below for your review:
Baby Step One
Save $1000 named as the starter fund for any emergency. Having this money safe, somewhere aside from your daily expenses, will protect you in case of emergencies that may arise. This money will save you from falling into the need to use debt. I would like to throw in here, if you need it, let this catch you. However, when you do allow it to catch you, start the process over by refilling this account and paying yourself back. This becomes your main priority until your full safety blanket is back! For others, you may want to establish a larger emergency fund. Stick to the script and use the additional funds to knock out Baby Steps 2 and 3. Remember, these are baby steps for a reason!
Baby Step Two
The next step is to use the debt snowball to pay off all the debt you’ve accumulated, except the house debt. Here, the talk is about credit cards, store cards, student loans, and even the money your mom might have loaned you. This can be done by listing your debts from smallest to largest. Start by making the minimum payments on all of these, except the smallest debts. Pay off the smallest debt aggressively, and when they’ve been paid off, use the money you formally used to pay more toward the next smallest debt.
Progressively, move one step higher in the list, then the next, and then the next. This will help you eliminate all of the debt you owe. What I love here is how the smaller debts become small wins! Some debts will take MONTHS to pay off but having small victories along the way remind you it’s worth it. As you move forward, repaying debts, you recall the small relief you gained from each paid debt before the next, and you build the confidence to continue the method until you’re completely out of debt!
Baby Step Three
After you have paid all debts, excluding the mortgage, it’s time for Baby Step 3. Now, the money you were paying on different debts is free and can directly be routed back to continue building a stronger emergency fund base. At this step, it’s recommended to increase it to 3-6 months of living expenses. Baby Steps 2 and 3 are no easy feat! This process could take some 2-3 years to complete both. If you aren’t ready to head to Step 4 by the end of the year, IT’S OKAY! You are building a foundation that will give you peace of mind, security, and protection for you and your family. Don’t discount that fact. Once you are past this step, you think, move, and see things differently. You have a confidence about you that knows you are on the right path.
Baby Step Four
Once you’ve built your emergency fund according to steps 2 and 3, now you have room to make investments. The suggested investment is 15% of your income into retirement. Many do this through retirement funds, such as 401K and/or IRA. This is an easy way to get in the game, and many have signed up for plans through their jobs, banks, and other investment funds. If you are earning $50,000 per year, this means allocating $7,500 to invest. There are many other investment vehicles out there, including my favorite: Real Estate!
Baby Step Five
Baby Step 5 is where the College fund comes into play. Dave walks you through different saving instruments you can use and the average returns on various products. It’s best to shop around to see what plan meets your needs, given your family’s timeline and consideration. Click Here to grab the Time of the Essence Bundle today and begin creating better habits to achieve your goals faster and more effectively.
Baby Step Six
Pay your home mortgage at the earliest choice. This step might take the longest of your time, but this step lies as your only obstacle to having a free life with no debt over you.
Baby Step Seven
Build wealth. Now, as you are free from any debt, you can start progressing ahead. You’ve moved toward this goal, so no money is going toward old expenditures. You have the freedom to benefit other people in your community. Invest the time to enjoy the things you’ve always wanted to experience. Now is the time to live and give back.
Closing
Dave Ramsey’s book is living proof that you can fight debt. Debt is the one thing that will hinder your monetary success the most. It is best to fight your debt with both intense and focused efforts. It is best to focus on removing debt as a burden of your income. Once you do it, you have the whole world as a room to grow and prosper! This book by Dave Ramsey has helped many people fight their debt and live a life free from it. This book will be the guiding light when you feel lost in heaps of debt and feel there’s no way out of this condition. You can use Daves's experiences and his trials to learn how to solve your own.
Dave was only able to get out of this situation because he never lost hope, and this is the way you can win the financial fight as well. Once you are determined enough, you will overcome your debts soon. Read this book to find out what you are missing to win in the money realm. Dave's suggestions can be the floating-point for your career and your financial situations.
If you feel you are not consistent with reading, you can join the Avid Listeners Book Club, created to read one book per month. It will help you add value to your life, business, and relationships. The Avid Listeners Book Club's goal is for members to create an ROI of their time, energy, and resources with each title read. You are welcome to join us via audiobook or via tangible, physical books as well. Happy reading, ya'll!