The Total Money Makeover
Since student loans are approaching us quickly we have begun to take a good look at our financial situation, or lack there of. I picked up Dave Ramsey’s book, The Total Money Makeover, in hopes of finding some answers before true money problems actually set in.
I found this book to be particularly insightful. I will admit that it is more geared toward those who find themselves sitting a heap of financial ruin, not those that are just starting out. The book presents a 7 step path to financial freedom. It begins with saving a tiny rainy day fund, then moves on to getting rid of debt, paying off the mortgage, all the way to donating your money and living “the dream”.
Ramsey has a very interesting approach to finance. He basically suggests that you should ignore your credit score and avoid credit cards at all costs. Some, including myself, could find this concerning if they are looking to obtain a mortgage or make any other major purchase that requires having credit. I will say that I love the idea of only purchasing what you have the money for at that moment. He also goes on to suggest, that if possible, a person should pay in full for his or her home. I think this may be unrealistic for most people to save up enough money soon enough to buy a home in cash. He does, however, mention that he realizes that it may be optimistic to challenge people to do that.
Lucky for us, the book offers a great launching point for tackling debt. He calls it the “snow ball effect”. He suggests that a person pay off the smallest debt they have as soon as possible, while continuing to pay only the minimum balance for the larger debt. After the small one is payed off add those old payments on to the next smallest debt. Eventually all the debt becomes eradicated!
My favorite part about this book is the worksheets he provides in the back. There are budget worksheets and helpful budget guidelines. Once we get a budget finalized, I will be sure to post a version of ours to see how it compares.
I highly suggest going to the library or the bookstore and picking up a copy of this book to read for yourself. It is full of helpful advice!