The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
by Dave Ramsey (Author)
The core of Dave Ramsey’s The Total Money Makeover is seven “simple steps” to financial freedom. Here’s Ramsey’s seven-step plan:-
Step 1: Save $1,000 cash as a starter emergency fund
This money is to be used only for emergencies- car repairs, medical bills, etc.
Step 2: Start the debt snowball
You do this with the debt snowball. Here’s how it works:
(1) List your non-mortgage debts from lowest balance to highest balance.
(2) Pay the minimum payment on all debts except the one with the smallest balance.
(3) Throw every penny you can find at the smallest debt.
(4) When that debt is gone, do not alter the monthly amount used to pay debts, but pay all you can toward the debt with the next-lowest balance.
Step 3: Finish the emergency fund
After you eliminate your non-mortgage debt, it’s time for some serious saving. To simply take the money you were applying to your debt snowball and convert it into a savings snowball. If you were paying $500 each month toward debt, now throw that money into a high-yield savings account.
Step 4: Invest 15 percent of your income in retirement
Now that you’ve paid off your debt and saved for emergencies, Ramsey says to invest 15 percent of your income into mutual funds.
Step 5: Save for college
Once you’ve begun saving for your retirement, you can turn your attention toward your children. Use an Education Savings Account or seek scholarships.
Step 6: Pay off your home mortgage
Once you’ve taken care of everything else, it’s time for a final, giant step- home mortgage.
Step 7: Build wealth
With the final step, you can enjoy the fruits of your labors. Invest. Give. Have fun.
In The Total Money Makeover (by Dave Ramsey), Ramsey’s advice is so simple and they provide tangible results. Don’t miss out.