Debt Reduction Book Review - Total Money Makeover

 This book will turn around your financial habits

From: Kate Rieger, President
Re: A debt reduction book review and a proven debt reduction program
Corydon, Southern Indiana
Monday 07:47pm

Kate Rieger  My favorite debt reduction book

Dave Ramsey changes peoples lives.

You may be a candidate for this book if you have over $15,000 in consumer debt (mortgage debt not included).  Perhaps you are making a solid salary, but you find yourself living from payday-to-payday squeaking out bills and starting to make late payments.  Late payments that ding your credit account with $15-$49 late payment fees.

I learned about The Total Money Makeover, a book by Dave Ramsey, when I attended a business networking luncheon.  Someone asked me if I worked with the Dave Ramsey Financial Freedom seminar.  I didn't, but was complemented that she felt I represented some of the concepts they teach in this debt reduction program. 

Now when people ask me about debt reduction I point them to The Total Money Makeover.  There is usually a copy in the local library or I'll loan them my copy. 

Here's Dave's succinct and memorable philosophy...

Ramsey explains: “If you will make the sacrifices now that most people aren’t willing to make, later on you will be able to live as those folks will never be able to live.”

This book has loads of inspiration and testimonials from real people who have taken this philosophy to heart, sacrificing the present for the sake of their future.

Ramsey outlines 7 “baby steps” to financial freedom.  You follow each step in order and don't skip onto the next until you complete the current step.

Step 1: Save $1,000 cash as a starter emergency fund
Before you do anything else, says Ramsey, you must save a $1,000 emergency fund. Starting an emergency fund can be as simple as depositing $100 into your savings account for the next 10 months. First set aside money for your basic living expenses, then put money in your emergency fund.

You may be tempted to skip this step, but sure-as-shoot you'll have and emergency - auto repair, unexpected broken tooth, or illness.  That's what the emergency fund is for.

Step 2: Start the debt snowball
Once you’ve built some savings, it’s time to tackle your debt. You do this with the debt snowball. Here’s how it works:

1. List your non-mortgage debts from lowest balance to highest balance.
2. Pay the minimum payment on all debts except the one with the smallest balance.
3. Throw every penny you can find at the smallest debt.
4. When that debt is gone, do not alter the monthly amount used to pay debts, but pay all you can toward the debt with the next-lowest balance.

Now financial geeks will point out that it makes more sense to pay off high-interest debt first.  Ramsey's approach isn't the most optimal mathematically speaking, but he states that "The reason we list smallest to largest is to have some quick wins.” Winning is important in changing your behavior.

Step 3: Turn the emergency fund into savings
Your $1,000 emergency fund was only a start — after you’ve eliminated your non-mortgage debt, it’s time for some serious saving. Ramsey’s advice is fairly standard on this point: accumulate three to six months of living expenses. For most people, that’s $5,000 to $10,000.

The easiest way to do this is to simply take the money you were applying to your debt snowball and convert it into a savings snowball.

Step 4: Invest 15% of your income in retirement
While you’re completing the first three steps (especially the first two), Ramsey recommends suspending all investment activity, even if you have a 401(k) with an employer match. He saves investing for last, once good habits have been established.

Step 5: Save for college
Once you’ve begun saving for your retirement, you can turn your attention toward your children. Ramsey writes, “Saving for college ensures that a legacy of debt is not handed down your family tree.”  If you don't have kids -- you get to skip this one!

Step 6: Pay off your home mortgage
Once you’ve taken care of everything else, it’s time for a final, giant step. Ramsey advocates prepaying your mortgage. He’s aware of the objections, but he believes it’s a smart step, anyhow.

Step  7: Build wealth
If you’ve done all these things — eliminated debt, built emergency savings, invested 15% of your income, and paid off your mortgage — you can begin to build some serious wealth, says Ramsey.

Not for everyone
Though I agree with most of Ramsey’s philosophy, I don't agree with his advice to avoid debt altogether — no credit cards, even after you’ve paid off your mortgage.  If you are running your own business, this is just impossible.  Of course, this program is meant more to improve the financial lives of non-business owners, but you know...your life is a business.

Credit cards can be a useful tool, if you have the discipline to pay them off every month.

Ramsey doesn't believe in separate checking accounts.  I simply don't agree with this.  I see so many individuals end up with zero or bad credit because of their spouse that I firmly believe couples should treat their credit individually.  Separate checking accounts, separate credit accounts. Yes, this means you might not qualify for the home loan right away, but if you follow Dave's methods you can save up a larger down payment on that home so that you can qualify for a smaller mortgage.

If you don’t have a problem with money, there’s nothing in the The Total Money Makeover for you, unless you want to recommend it to your kids..

Highly recommended
I highly recommend you check out or purchase this book for your debt reduction plan.  The steps work because they are simple, and because they provide results you can see and feel. Your $1,000 emergency fund is a visible reminder that you have succeeded, that you can save, that you can be smart with money. The debt snowball is built around quick wins, which give you the confidence to continue.

Start your own credit repair today by enrolling in my free online mini course called  "Extreme Debt Reduction & Credit Score Boosting Strategies That 98% Of Borrowers Will Never Know -- And How You Can Learn These Strategies Too..."

This course has 7 concise lessons that you can refer back to at any time. To start this free, online mini-course, please complete the short form below and you can start immediately -

Yes Kate - I want to start today!

What others are saying...

Hi Kate,

I do want to thank you so much for your quick and thorough responses to my questions. I am amazed at the amount of information you manage to deliver. Your  program is terrific.

You give an awful lot of personal attention that can never come from a computer program.

Thanks for everything - I mean it!

Melissa

Louisville, KY

Dear Ms Rieger,

God Bless You!

You treated me like I was someone important.  I thank you for that and for showing me how to improve my FICO scores. You are truly amazing!

Sincerely,
 

Roberta D.

Jeffersonville, IN  

Credit Rejuvenations Rocks!

Dave

Warmest Regards,