Motivational Book Club: The Total Money Makeover by Dave Ramsey

I have a confession to make.  I am in debt.  I am in debt up to my eyeballs.  At this point I have almost 50K in student loans.  Me and my husband are also wasteful spenders.  We kind of already know this but also ignore it.  You name it, we spend on drinking, restaurants, unnecessary bullsh*t that we don’t need.  We have no real money because of our debt.

So I picked up this book because I love the topic of money and managing my money and wanted to see if maybe there was a better way to go about it. We’ll let me just tell you, at first I was skeptical some of the changes he suggested, like selling your car or getting rid of your car lease in exchange for a used fully paid car,m.  It seemed severe.  But I did the math and Dave’s formula for money success made sense!  And maybe it isn’t the fastest way, its likely the easiest and clearest way for the Average American.  Its such a great book to read for financial literacy.

Key Highlights:

Debt Free- means no payments either for student loans/ car payments/ credit card etc.  Most people have this but Dave says “Imagine you didn’t have to pay those payments, how that would free up your income.”  In my opinion, he has a pretty decent though challenging system for clearing these debts.

Budget- goes into some detail about eliminating wasteful spending and avoiding “Keeping Up With The Joneses” mentality.  Me and Hubby don’t really need to be going to the fancy restaurant every week and taking Snapchat pics titled “Love BAE!”  Yes, I indulge in that behavior.  I am one of those people.  Wasteful spending is probably the first place you can tackle any money issues.

Emergency Fund- Most people rely on credit cards if a large emergency were to pop up.  If a spouse loses a job or a major medical bill/car bill hits you unexpectedly.  My dad had always told me that you should have at least 6 months savings for this reason, so I knew this was good advice when I read it.

Saving for Retirement/Debt Free/Home Buying and Beyond-Dave’s math makes sense.  Once you no longer have to pay off debt, that frees up your income A LOT.  I actually haven’t gotten to this point yet but it all seems very solid.  It would be really nice to have the freedom to plan your retirement and maybe even save to pay your house upfront!  

Overall this is a book recommended for others to get a grasp on their finances.  At the very least it should assist you with a plan to get out of debt. 

 There were some limitations.  

It’s really not going to be of any use unless you are willing to downsize/ change your lifestyle/ commit several years of your life to debt reduction/ if your spouse had a spending or gambling problem. 

I also thought that the ending was really rushed in terms of getting to major wealth.   Getting to the point of living off investments and no debts would require tremendous sacrifice for 15-20 years.  The last chapters doesn’t explain distribution of wealth well enough to feel obtainable. 

One last gripe I have are the stories that were used to support his theories and ideas.  He used about 30 stories.  I hope this isn’t petty, but there wasn’t enough minority representation.  It was mainly middle class White Americans with average or above average income who had  fallen into bad debt from their own misspending.   I’m Latina/Asian mix and the only representation of my race was a single Latina mom who had 2 kids:  Really?!  Come on, Latinos could have been better represented.  Also the stories with the single income family with homemakers also made me cringe, that’s also unrepresentative of a majority of families now. 

But overall it’s a great step towards financial planning as well as financial responsibility.  It’s a great book to read for those just starting to get a grasp on their spending.

So there you have it, after reading this book, I was able to talk to my husband put a budget together and make a solid plan for knocking out that 50K student loan in 1 year as opposed to 5.  This was better than student loan refinancing that would still take 3 year at at least 3%.  I also realized that the mutual fund I had was useless if I was spending 6% interest a year on a 50K loan.  Cashing out and being broke is better than  stringing myself along with debt. Will keep you guys updated on my progress.  

If any of you have read this book, feel free to share your thoughts in the comments below.  

tmmo_new

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