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Dave Ramsey’s “Total Money Makeover” synopsis
A Thread
#personalfinance #ejbfinance @DaveRamsey
Dave Ramsey’s “Total Money Makeover” synopsis
A Thread
#personalfinance #ejbfinance @DaveRamsey
1/15 Dave’s Total Money Makeover is a 7 step process that can help anyone become financially free if they are willing to “live like no one else” to get there.
His biggest philosophies are getting and staying out of debt at all costs.
His biggest philosophies are getting and staying out of debt at all costs.
2/15 Before jumping into each step, Dave preaches on some key personal finance rules like
Recognize your situation, your bills won’t go away if you ignore them, they’ll get worse.
Winning at money is 80% behavior and only 20% knowledge. Change your habits to change yourfuture
Recognize your situation, your bills won’t go away if you ignore them, they’ll get worse.
Winning at money is 80% behavior and only 20% knowledge. Change your habits to change yourfuture
3/15 Step 1: Save $1000
No matter how much debt you’re in, you need to save $1000 in order to accommodate for emergencies. If you start your journey and then have to go into more debt, you may just quit.
Save $1000 fast and keep this liquid for unexpected payments.
No matter how much debt you’re in, you need to save $1000 in order to accommodate for emergencies. If you start your journey and then have to go into more debt, you may just quit.
Save $1000 fast and keep this liquid for unexpected payments.
4/15 Step 2: Start your Debt Snowball
Categorize all debts beside your home and list them in order of smallest to largest AMOUNT (Interest rates don’t matter).
While staying current on payments start paying down the smallest debt. Then move to the next until you are done.
Categorize all debts beside your home and list them in order of smallest to largest AMOUNT (Interest rates don’t matter).
While staying current on payments start paying down the smallest debt. Then move to the next until you are done.
5/15 ...This step is the most important and usually will require extreme sacrifice because you have to be determined to find a away to eliminate the debt.
Ideas: get a second job, work overtime, sell your car to get something more affordable, downsize your home, rent out a room
Ideas: get a second job, work overtime, sell your car to get something more affordable, downsize your home, rent out a room
6/15 ... the idea behind this step is once you start eliminating the smaller debts you will have more money to use to get rid of the bigger ones.
Stay focused and keep to the plan and you will feel in control of your finances.
Stay focused and keep to the plan and you will feel in control of your finances.
7/15 Step 3: Build your Emergency Fund
It is suggested that you save 3-6 months of expenses in a money market account. You want this money to be liquid and readily available if you lose your job or have to cover medical bills.
This is the corner stone to staying out of debt
It is suggested that you save 3-6 months of expenses in a money market account. You want this money to be liquid and readily available if you lose your job or have to cover medical bills.
This is the corner stone to staying out of debt
8/15 Step 4: Save 15% of before tax gross income.
Make sure you are maxing out your company 401k match and then move to your Roth IRA. If there is money left over, put it into your 401k.
Dave shares his investment strategy, putting 25% in each category ...
Make sure you are maxing out your company 401k match and then move to your Roth IRA. If there is money left over, put it into your 401k.
Dave shares his investment strategy, putting 25% in each category ...
9/15 .large cap, mid cap, foreign funds, and small cap.
His main investment philosophy is to look at long term historic patterns and find funds that average 11-12% return per year. Some years will be better/worse than others but if you buy and hold, you can expect a good return
His main investment philosophy is to look at long term historic patterns and find funds that average 11-12% return per year. Some years will be better/worse than others but if you buy and hold, you can expect a good return
10/15 Step 5: Save for College
Student loans are massive part of household debt. Change your family tree by eliminating your kids’ school debt.
Dave recommends an ESE Plan or a 529 Flexible plan.
This is key to creating generational wealth
Student loans are massive part of household debt. Change your family tree by eliminating your kids’ school debt.
Dave recommends an ESE Plan or a 529 Flexible plan.
This is key to creating generational wealth
11/15 Step 6: Pay off your Home Mortgage
Dave recommends a 15 year fixed rate mortgage if you can’t save and buy in cash. The idea is that you save a lot of money in interest, over the years, for a higher monthly bill.
If you can save cash, you can probably ...
Dave recommends a 15 year fixed rate mortgage if you can’t save and buy in cash. The idea is that you save a lot of money in interest, over the years, for a higher monthly bill.
If you can save cash, you can probably ...
12/15 ... buy your home for a deep discount buy offering cash.
Of course that’s difficult to do but the point of this step is eliminating all debt and maximizing your greatest wealth tool, your income.
Also, refinancing your home can be helpful if the math adds up.
Of course that’s difficult to do but the point of this step is eliminating all debt and maximizing your greatest wealth tool, your income.
Also, refinancing your home can be helpful if the math adds up.
13/15 Step 7: Build Wealth
You’ve made it. You’re debt free and you are maximizing your take home pay so you can start your financial freedom.
Have fun, INVEST, and give back to the people/community around you.
When the unexpected happens you have the funds to pay for it ..
You’ve made it. You’re debt free and you are maximizing your take home pay so you can start your financial freedom.
Have fun, INVEST, and give back to the people/community around you.
When the unexpected happens you have the funds to pay for it ..
14/15 ... just make sure that you refill your emergency fund as soon as possible b/c you do not want to fall into debt again.
Keep doing this step until your money makes more than you do... then you are officially wealthy, congrats.
Keep doing this step until your money makes more than you do... then you are officially wealthy, congrats.
15/15Total Money Makeover was a great personal finance book that just makes sense. No get rich quick schemes and he makes finance easy to understand.
Everyone should read this book. It holds the, not-so-secret, secrets of building wealth that anyone can use starting right now.
Everyone should read this book. It holds the, not-so-secret, secrets of building wealth that anyone can use starting right now.
