The Total Money Makeover can show you how to conquer debt and regain control of your financial future.
According to CreditCards.com, we are a heavily indebted society today. As of March 2010, total consumer debt, which includes auto, boat, and mobile home loans, as well as credit cards, totaled $2.451 trillion. Nearly a third of that amount is credit card debt, which averages out to a $15,788 balance for each of the 54 million households that have credit card debt. If you are burdened with debt and overleveraged on your house, selling your house may be great way to eliminate debt and regain your financial footing. We buy houses with no commissions or fees even if you owe more than it’s worth. For more information, contact us at (714) 583-9004.
If you are burdened with debt and are tired of living paycheck to paycheck, Dave Ramsey’s The Total Money Makeover is definitely a book worth picking up and reading. It is easy and fun to read and is filled with anecdotes from other readers who implemented Ramsey’s Total Money Makeover, paid off their debts (including mortgages in many cases), and completely changed their lives. Reading these anecdotes makes it abundantly clear that achieving debt freedom may be more attainable than you think.
One thing that will probably stand out to first-time readers of The Total Money Makeover is that Ramsey really hates debt. Considering what debt put him through in his younger years, it’s easy to understand why. By the time he was 26, Ramsey owned over $4 million in real estate and had a millionaire net worth. Despite his success, his bankers grew increasingly uneasy with the amount of debt he was carrying and decided to mitigate their risk by calling in his loans. Almost overnight he went from wealthy to nearly destitute and endured two brutal years of foreclosure, bankruptcy, and lawsuits. His experiences gave him a firsthand understanding of why the Book of Proverbs warns “the rich rule over the poor, and the borrower is servant to the lender”. It is an understanding that completely changed his outlook on debt and today he is passionate about helping others avoid the pitfalls of debt and achieve freedom from it.
Ramsey’s formula for getting debt free is not necessarily easy; it is not the debt payoff equivalent of a get-rich-quick scheme. It is, however, a systematic plan that is attainable for pretty much anybody no matter their situation. The following is a general outline of the steps in Ramsey’s Total Money Makeover:
1) Establish a budget and live “like nobody else” now so you can live “like nobody else” later. If your friends (most of whom are probably broke) think you’re crazy because of your new scaled-down lifestyle, Ramsey says you’re probably on the right track. Just remember that your friends won’t think you’re crazy when you’re debt free and have cash in the bank.
2) Establish a small emergency fund so you can avoid borrowing to pay for unexpected expenses.
3) Begin paying off the smallest debts first and “snowball” the savings into the larger debts. Sell things around the house or take an extra job to accelerate the payoffs.
4) Once your debts are paid off, establish an emergency fund worth 6 months of expenses.
5) Save for retirement.
Many of the anecdotes in the book were about people that had a significant amount of debt and were able to pay it all off in a surprisingly short amount of time once they really focused on it. Being debt free – including your home – really is more attainable than one might think! The Total Money Makeover makes it abundantly clear that it is not inevitable to live a life of servitude to car loans, mortgages, and credit cards.
If you have a lot of debt, it may not seem like you have a whole lot of money right now. But take a few minutes and tally up the payments you are making on a monthly basis toward your debts. What if all those payments were gone? How much more money would have in your pocket on a monthly basis? How much easier would it be for you to aggressively save for retirement and take that vacation you’ve always wanted? If you had 6 months of expenses saved up in the bank, as the book suggests, and no debt, how worried would you need to be about losing your job? Would it really be that big of a deal? How much freedom and peace of mind would you gain by dumping all your debt?
The Total Money Makeover is a great book that is definitely worth reading. If you are burdened with debt and are ready to make a change, pick up a copy today. It could very well lead you to a better financial future.
-CH
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