Dave Ramsey is one of the most popular personalities in radio. His show, The Dave Ramsey Show, focuses more on the audience rather than on his personality. He is rather straight forward and direct. His book, “The Total Money Makeover Book” is one of my favorite personal finance book.
The book is about people and their personal finances. Reading the personal stories on how couples and singles applied the principles, focused on the baby steps towards debt-free, and living a life away from any debt is inspiring and motivating. The key principle of the book can be summed up in one sentence:
The borrower is always enslaved to the lender.
When you analyze that foundational principle, you will realize that the whole key of being debt-free is not about making more money. Instead, it is about eliminating your debt. But, since most people have acquired debt during their course of their lives, you have to approach being debt-free in steps (or in baby steps).
The seven baby steps should be done in order:
1) Have a $1,000 emergency fund.
2) Pay off all debt with the debt snowball
3) Build that $1,000 emergency fund into a full-emergency fund (3-6 months of expenses)
4) Invest 15% of income into Roth IRAs and Pre-tax Retirement Plans
5) College funding (if you have kids)
6) Pay off Home early
7) Build Wealth and Give.
Of course, during the course of going through the baby steps, you will experience issues. You have to develop strong principles in order to be debt-free.
If you do not stand for something, you will fall for anything.
The book has a great perspective on car buying, second mortgages, toys with depreciating values (e.g. boats, cars, etc.). Also, the book covers extensively and clearly about borrowing from relatives (or should I say, not borrowing from relatives). It is up to you to take part of being debt-free. I appreciate the direct approach about personal finance. Personal finance is more personal than financial. Most experts (or “experts”) focus on the financial numbers rather than the growth of the individual to become debt-free. That is the purpose of the baby steps. You will change and become a person who can handle money better and wiser.
Now, money is not the most important issue in your life. It is an important aspect in life that needs to be mastered. Debt gets in the way of life. This book will show you principles that will empower you to get a life- a great financial life.