Dave Ramsey's book, The Total Money Makeover is one of the first personal finance books I ever read. While I don't agree with everything Dave preaches, this is a great book for anyone who is trying to get out of debt. He is a little extreme and believes that you shouldn't spend any money on anything other than absolute necessities until you are completely debt free. I think everyone needs to indulge once in a while or you will just fall completely off the wagon. By indulge, I don't mean go out and buy a new car, but maybe go out to dinner once a month or buy a new outfit once in a while. I like to make myself meet certain goals before doing this so that I know I am still coming out ahead.
Dave also has a 7 baby step system that consists of building an emergency fund, save 3-6 months expenses, paying off all debt (including mortgage), college savings, retirement, and building wealth. I think his system works great for those who do not have self discipline. For others, like me, it is helpful to use bits and pieces of his advice to fit your own personal needs. He doesn't like this and if you've ever listened to his radio show you know what I mean. Those who follow him religiously tend to stick to every detail of his plan and scold those who don't. However, if you are serious about getting out of debt, his "My Total Money Makeover
" online forum is a great motivator. It is free to view the forums, but if you want to join the conversation, you will need to pay a monthly fee (currently $9.95/month or $89.88/year). They are very active forums too with lots of daily activity.
Another thing that not everyone agrees with is the way Dave teaches how to pay off debt. His method is to pay off the smallest balances first. You will save more money in the long run if you pay off debts with the highest interest rates first. However, the reason Dave teaches the method of paying off smallest balances first is to keep you motivated. You will pay off your smaller debts quickly leaving you with less total debts and you will feel less overwhelmed. Also, with each small debt you pay off, that's more money you can apply towards your next debt.
Even though I don't agree and follow every detail of his plan, I still believe this is one of the best personal finance books out there and everyone could learn something from it.
Labels: book reviews