January 31, 2011

Organic Mama Book Review - Dave Ramsey's Total Money Makeover

This Christmas, probably the best present Robert and I received was from his Uncle Sam. Don't laugh - it's a book about money. Specifically, Dave Ramsey's book, The Total Money Makeover. I'd heard of Dave Ramsey before but hadn't ever listened to him. I'd heard he was pretty hard core about his financial guidelines but reading the book, we realized we already follow most of his plan.

What words come to mind when you think about your money? Are you - Excited, confident or secure? Or do you feel fearful, anxious, defensive or angry? I'm not going to lie. Though we pay cash for everything - no credit cards, there have definitely been times that I didn't really want to know the balance in my account. Unfortunately, we can't escape money in our present culture.We need it to live. So, what if instead of feeling afraid or unsure of ourselves when we think about how our actual net worth, we could know exactly where we are and where we're going? If that's what you're looking for, this book is for you. We loved it.

If you can't afford to buy it - guess what? It's available at the Phoenix Public Library - and I'd venture to guess it's in the local library of whatever town you call home. But, in the meantime, here are some of the highlights of the book.

In "The Total Money Makeover", Ramsey reminds his readers that if they are willing to "Live Like No One Else, Later They Will Live Like No One Else". Meaning - if you're willing to be a little (or a lot!) frugal now, you'll find you have so much more to spend later down the road whether it's for vacations or homes or for your kids' college education. Dave explains that, as with excess weight, most of the problems people have have with money aren't due to lack of knowledge but force of (bad) habit.

I love that Mr. Ramsey is honest about where he gets his ideas. He makes no claim to having created some kind of new system. In fact, he credits our depression-era grandparents for his plan, which includes the following novel ideas (for our society).

1. Save an emergency fund. If you have one of these, you won't be tempted to spend on a credit card when crisis hits.
2. Don't use credit cards. If you can't afford to buy it with cash, you probably don't need it. And, if you have an emergency fund, you don't need them in emergency.
3. Pay off the debt you incurred rather than choosing bankruptcy or foreclosure. In the long run, he encourages you that it IS possible to pay off the debt and be free from that burden.
4. Contribute to your own retirement. It's no secret that Social Security won't fully fund all the living expenses of old age.
5. Pay off your house and invest the money you're now free to use each month!

If these ideas sound crazy or out of reach in our culture, be encouraged. Not only are they possible, these are the ways our grand or great-grandparents survived what they called the Great Depression. They didn't survive it by spending money they didn't have to create an artificial "consumer confidence" index. They grew their own food, used and reused the same things over and over (original recycling), mended their clothes (and sheets) instead of tossing them and bartered or traded for things they needed. My grandparents definitely lived this way and I picked up a lot of their frugal habits from my parents, who also used them. Though, Robert did draw the line when he discovered I was saving old bread bags. Maybe a little extreme...hahaha!

The truth is, so many people in our culture are slaves to their credit card bills, to inflated mortgages and insecure natures that require them to try to keep up with the Jones'. Robert and I have never wanted to be stuck in that rut. As Dave says, the Jones' may not have enough to live like they're living either. Where Robert and I have fallen down on the job is in the area of savings. Since reading the book, we've decided to take on extra work that will allow us to have the margin we need to create more emergency and retirement savings.

While these are some of the basic ideas of this book, it's worth buying or borrowing. Taking the time to read this and commit to the plan Dave outlines will give you the time to shift your mind into a new way of looking at money.

Since this is such an important topic to us, we'll be exploring different ways to save money and use it wisely over the next few months.

Have any of you read this book? What have your experiences with saving money or getting out of debt been?

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