The Total Money Makeover:
This is the title of a book written by Dave Ramsey, who I just finished reading, and would like to share some thoughts with you. It is a well-known book, highly recommended for people who need to start the search for financial freedom.
The book developed a plan what he calls “baby steps” which is what the author recommends to anyone who wants to achieve financial freedom.
The book highlights its importance as a key issue to achieve wealth:
1. Save $ 1,000 quickly:
This money is to create an emergency fund, and emphasizes the logic that is a short-term goal, relatively easy to achieve, and certainly will cause a positive mental effect once reached. He recommends you to become creative, find new sources of income, reduce your expenses, sell something you have at home that you no longer use, etc.
2. Pay your debts:
The payments of debts to create an effect called “snowball” this is to form the amount of money you are able to pay monthly, order your debts from smallest to largest (excluding home mortgage debt and other long term debts), and as you are paying a debt off, you use that money to pay the next.
In all debts you must pay the minimum, and any money you can save on expenses or increase your income, you use it to advance your plan.
3. Complete your emergency fund:
You must have an emergency fund of three to six months of income, if you become unemployed, have an accident, or just decide to change jobs or profession.
4. Maximize your retirement fund:
Complete your emergency fund, dedicate yourself to save for retirement. He recommended to be at least 15% of your income, in special funds that exist in the United States such as (401k, Roth IRA, etc.). If you do not live in America, you could find the equivalent, as could be private pension funds, for example.
5. Saving for College:
The issue that concerns many families, as the cost of sending a child to college is quite high, especially in the US, parents and students incur an astronomical debt for an education. In many other countries getting closer and closer to this situation, because the cost of education has risen dramatically.
6. Pay the home mortgage:
In this step you dedicate yourself to pay the loan for your home as soon as possible (if you have one). The point is that the faster you pay, the less interest you will pay, and less money you will pay.
7. Create Wealth:
Once paid the debt of your home, you dedicate yourself to invest your money, to maximize your earnings. He specially recommends using mutual funds.
Into the future it is assumed that your level of expenses will increase. And the money will superfluous at each stage, you use it to advance to the next step of your plan.
The conclusion of the book is that you organize your money, and control it, or else it will control you. The book is full of testimonials from people who were in deplorable economic conditions, and have managed to get ahead, pay debts, and find “financial security”.
One aspect that emphasizes again and again, is that the debt is not a tool. That he is totally against any kind of debt even to carry a credit card. The point is that if you want something, you must pay in cash, and if you cannot, you do not deserve it.
In short, a book that proposes healthy habits for your finances, which have more hackneyed than the average resident. Exercising finances in the form proposed by Mr. Ramsey, you will soon have a financial muscle to be free of worry, stress and debt.
For more information click here: