Dave Ramsey's Total Money Makeover. If you haven't read it, I suggest you do whatever it takes to get your hands on this book. I am not a reader, It's hard for me to stay focused and interested on a book. I would really rather watch or listen. But this book is worth my effort. It talks about how you can be debt free! Now wait a minute... I know you're thinking, "Debt Free???? There is no such thing!". Yes my friend, it is possible. In this book, he talks about 7
Step 1: Start an EMERGENCY FUND. ($1000) - I think the key here is to know what EMERGENCY is. It should be an unexpected event in your life that you can't plan for. Like if your car breaks or you cracked a tooth and don't have dental insurance at the moment... anything unexpected that will cause you hardship, not those Ferragamo shoes that's on sale right now at Nordstrom or that Tory Burch bag you've been eyeing for months and they finally lowered down the price. Just in case you're wondering, NO, that is not an emergency. This $1000 may not always be enough, but for small situations, it can definitely save you.
Step 2: Pay off all debts using the debt snowball. - It's pretty simple. STOP using your credit cards! After you've found the strength to do that, list down all of your debts except the house (mortgage and utilities) in order. Make a list from the SMALLEST to the BIGGEST balance. The point is that you need some quick wins in order to stay pumped up about getting out of debt! Paying off your smallest debts first will motivate you to dump your debt. Personal finance is 20% head knowledge and 80% behavior. So go for it! Start making yourself feel good and be free!
To learn more about this step click here.
Step 3: Save 3 to 6 months of expenses in savings. - Now it's time to build your FULL emergency fund. How much would it take for you to live 3 to 6 months if you lose your income? Calculate only the necessities. How ever much it is, is the amount you need to save. Think of it as your Life Insurance. Especially with the economy today, you would surely rather have this than that new toy you're eyeing. Hopefully you won't have to go through a hardship like this. But if you do... are you going to be ready for it?
Step 4: Invest 15% of household income into Roth IRAs and pre-tax retirement. - now you've passed the hard part. By this time, you should also have changed your way of thinking about money. You have no payments except for you home. It's time to think about WEALTH. Dave suggests investing 15% of your income to Roth IRA's and pre-tax retirement plans. You need to prepare for your future. Your kids degree or your paid off house will not feed you in the future. Of course it's part of the 7 Steps but there is a reason why this is #4. Who wants to be a burden? Yes, your kids LOVE you. But for me, I would rather have them concentrate on their own 7 Steps than worry about me. And yes, it is important to pay off your house. But if you don't have money saved for when you retire, you'll end up selling that house just to survive. I don't know much about investing, but click here to learn more.
Step 5: College funding for children. - Weather it's for you or your kid, this is the time to save up for college. Dave suggests the best way to save for college is with Education Savings Accounts (ESAs) and 529 plans. Remember, college is possible without loans! You just need to plan it. Educate yourself about this savings account and investment. Know where you put your money.
Step 6: Pay off your house early. - By this time, you've got no payments, you have a savings plan for your retirement and college fund for you or your kid. Now, it's time to pay off your house! Get motivated by knowing that being debt free is within your reach. Put all that extra money to paying of your mortgage. Find out how long it will take you to pay off you home here.
Step 7: Build wealth and GIVE! - Share your blessings! Leave an inheritance for the future generation and bless others with your excess. After saving for yourself and for your family, it's time to give back. I am telling you, there is nothing more rewarding than to be a blessing to others. Tithe is my numero uno priority every pay period. From my experience, God has NEVER disappointed me. He's always provided even in the most impossible situations. I was a single mom for a while and lost my job twice. But God is good. I understand that if you put God first, he will take care of your needs. I cannot stress enough how true this is. Sometimes it even comes back 100 folds! I am not kidding. I am not rich, but I have everything that I need and more. After everything that he has given me, giving him back the 10% seems so little. It's really a test of faith. Putting him first and trusting he will take care of you. Charity is another way of giving back. I am closest to God when I'm a blessing to others. Best feeling ever.
Seems difficult? At first it is. The steps are really called "7 Baby Steps". Understand that this is not just changing how you use and see your money. It's a total life style change. Know what is important to you. Set a goal and work hard to reach it. Big part of being successful on this is controlling your self. It's 80% behavior. I suggest reading this book. It will change you. Click here to know more about Dave Ramsey and this wonderful book.
Oh! And since it's TAX season... check this out for tips on how you can keep more of your money. This guy also has a radio show. And on his website, he offers classes that will definitely benefit you.
Read the book! Good luck!
Step 5: College funding for children. - Weather it's for you or your kid, this is the time to save up for college. Dave suggests the best way to save for college is with Education Savings Accounts (ESAs) and 529 plans. Remember, college is possible without loans! You just need to plan it. Educate yourself about this savings account and investment. Know where you put your money.
Step 6: Pay off your house early. - By this time, you've got no payments, you have a savings plan for your retirement and college fund for you or your kid. Now, it's time to pay off your house! Get motivated by knowing that being debt free is within your reach. Put all that extra money to paying of your mortgage. Find out how long it will take you to pay off you home here.
Step 7: Build wealth and GIVE! - Share your blessings! Leave an inheritance for the future generation and bless others with your excess. After saving for yourself and for your family, it's time to give back. I am telling you, there is nothing more rewarding than to be a blessing to others. Tithe is my numero uno priority every pay period. From my experience, God has NEVER disappointed me. He's always provided even in the most impossible situations. I was a single mom for a while and lost my job twice. But God is good. I understand that if you put God first, he will take care of your needs. I cannot stress enough how true this is. Sometimes it even comes back 100 folds! I am not kidding. I am not rich, but I have everything that I need and more. After everything that he has given me, giving him back the 10% seems so little. It's really a test of faith. Putting him first and trusting he will take care of you. Charity is another way of giving back. I am closest to God when I'm a blessing to others. Best feeling ever.
Seems difficult? At first it is. The steps are really called "7 Baby Steps". Understand that this is not just changing how you use and see your money. It's a total life style change. Know what is important to you. Set a goal and work hard to reach it. Big part of being successful on this is controlling your self. It's 80% behavior. I suggest reading this book. It will change you. Click here to know more about Dave Ramsey and this wonderful book.
Oh! And since it's TAX season... check this out for tips on how you can keep more of your money. This guy also has a radio show. And on his website, he offers classes that will definitely benefit you.
Read the book! Good luck!
