Review of The Total Money Makeover by Dave Ramsey

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The 3rd book on our list of the top 10 books that I credit with my Financial Freedom and Freedom Day. Today's book is the Total Money Makeover by Dave Ramsey. (https://amzn.to/3X7f0hV)

Some key concepts of the book are:

1. Seven Baby Steps Plan: Ramsey's plan comprises seven sequential steps designed to help individuals get out of debt, save money, and build wealth.

2. Baby Step 1 - Save $1,000 for Your Starter Emergency Fund: Ramsey encourages everyone to save a small emergency fund as a safety net for unexpected expenses.

3. Baby Step 2 - Pay Off All Debt (Except the House) Using the Debt Snowball: List your debts smallest to largest, then focus on the smallest one while making minimum payments on the others. Once it's paid off, roll what you were paying on that debt to the next smallest, and so forth.

4. Baby Step 3 - Save 3–6 Months of Expenses in a Fully Funded Emergency Fund: Once out of debt, save a larger emergency fund to cover 3-6 months of living expenses.

5. Baby Step 4 - Invest 15% of Your Household Income in Retirement: Start investing 15% of your income into retirement accounts like a 401(k) or an IRA.

6. Baby Step 5 - Save for Your Children’s College Fund: If you have kids, this is the time to start saving for their college education.

7. Baby Step 6 - Pay Off Your Home Early: With no other debts, extra income should go toward paying off your mortgage early.

8. Baby Step 7 - Build Wealth and Give Generously: Once you've achieved financial stability, continue building wealth and start giving back.

9. Budgeting: It's important to create a zero-based budget each month, which means your income minus your outgo equals zero. This gives you control over where every dollar goes.

10. Avoid Debt: Ramsey stresses the importance of avoiding new debt, advocating for using cash instead of credit. This includes saving to pay for vehicles and other large purchases in full.

11. Understanding Insurance: Ramsey advocates for understanding and investing in the right types of insurance to protect your financial stability.
Myth-busting Common Financial Advice: Ramsey dispels common
financial advice like getting a credit card for emergencies or investing in whole life insurance.

12. Contentment and Giving: The ultimate goal is to reach a place of financial peace where you're free from the stress of debt and can live and give generously.

"The Total Money Makeover" provides a structured plan for financial independence. The book is designed to be a long-term guide, as it often takes several years to work through the seven steps. It emphasizes personal responsibility and the importance of planning and budgeting.