I, like so many others, have Identified a few areas of my life that I would like to improve during this year. One of these areas is Finance! One of my very best friends gave me a book for Christmas entitled “My Total Money Makeover” by
Dave Ramsey. I read it in just a few hours and I was hooked. That book made me see that I needed to live on a budget! It was the first time I could see a systematic way for met to get rid of the debt that I have, and build wealth for my future. This subject has weighed heavily on my mind recently. I’ve known for a while that by the time I retire Social Security will be a thing of the past. I don’t plan on collecting a dime from that program, so I have to plan my own retirement. Now I finally know how!
Here is the premise of the book in a nutshell.
- Get $1000 in an emergency (liquid) fund as fast as you can
- Order your debts smallest to largest
- Pay the minimum on all debts except the smallest. Throw everything you have at this one
- As you pay off the small ones, add that amount to the next smallest one (The debt snowball!)
- Revisit your emergency fund. Get it to the point that you could live off of it for 6 months
- Once you are out of debt, use all that money you were paying to creditors, and start investing!
- Invest, invest, invest!
- Once you can live off of 8% of your investments every year you have enough to retire
It’s not that ground breaking, and it’s nothing you haven’t heard from your grandmother, or from church. But, it’s the first time those concepts really made sense to me. I’m really excited because I have a plan now that will get my car paid off in just over a year!
So, if I am ever wealthy in the future it is safe to assume that Dave Ramsey had a lot to do with it.
