Book summaryTitle: The Total Money Makeover
Author: Dave Ramsey
Place of publication: Nashville, Tennessee
Date of publication: 2003
Publishers name: Thomas Nelson, Inc.
No. of pages: 240
The Total Money Makeover by Dave Ramsey is about creating a reasonable plan for getting out of debt and starting to save for different purposes.
The Total Money Makeover is a financial plan that consists of several steps. These steps should be followed precisely in the order they are presented. Otherwise, the result might be not exactly as expected. Here are the steps and their short description:
1. Save $1,000.00 for your emergency budget and do it as fast as you possibly can. Only if you have an emergency fund will you not get into more debt if something unexpected happens. But you can only use this fund for emergencies!
2. Start paying off your debt by saving every possible cent and putting it towards your smallest debt first. Begin with the smallest debt, because it will be the easiest to get rid of and will fire you up to work harder and to pay off more of your debts. You should make a list of all of your debts, starting from the smallest (the interest doesn’t matter).
3. Finish building the emergency fund. A real emergency fund should be able to cover 3 to 6 months of expenses. Depending on the risk in somebody’s life, it’s a personal decision whether a 3-month or 6-month emergency fund is necessary.
4. Maximize your retirement investments by putting 15% of before-tax gross income annually towards your RRSP. The author suggests to invest 15% and to learn more about investing so you could make more knowledgeable decisions.
5. Save for your children’s education in the RESP. It is the best you can do for your kids and for yourself. If you save money for your children’s education, the government will add some money to it, so it’s really worth it.
6. Pay off the home mortgage. This should take you not more than 15 years and after you have paid off other debts, you should be able to pay much more towards your mortgage every month.
7. After you have gotten rid of all your financial burdens, you live debt-free and all you have to do is to invest and multiply your money. Don’t forget to have some fun and to share your money with other people, because otherwise you might become a slave to money.
I personally like this book and I think it’s very convincing because the author gives many examples of people who managed to get through the Total Money Makeover and had their lives changed. I can recommend it to anyone who might be in debt and wants to get out of it and live better. It might be especially useful for newcomers who are very often lost in the new reality and are tempted by all the special offers, and end up with accumulating debt. This book will help you realize what is really important in life and that it is possible to build your new life without getting into debt.
