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The Living Without Series

This is a series of posts that I wrote back in 2006 on living with less stuff. Check them out: liv011Living #2liv031liv04

Coal Creek Farm on Facebook

The Chicken Doctor

April

The Architect

Clay

Ramsey Review

I’m reading the Dave Ramsey book, The Total Money Makeover.  Here’s my review thus far.  It’s a 223 page book not including the financial forms in the back.  I skipped most of the first 5 chapters or 92 pages because they consist of a lot of cheerleading and basic knowledge.  I’m not saying that you wouldn’t enjoy them or you shouldn’t read them, but I didn’t find them useful for myself.  Basically, he gets people to realize they have a problem if they are in debt of any sort, except your home.  Then he goes over a few “Money Myths” like; getting rich quickly by investing in stupid stocks and how bad of an idea whole life insurance is.  He also talks about bankruptcy and keeping up with the Joneses.  
I did read all the testimonies from families that are interspersed throughout the book.  They come from every walk of life and have a successful story to share.  Each story concludes with the families names, ages and occupations.  I was fascinated that many of the folks were one income families or blue collar and they still pulled themselves out of debt.
Dave’s big sayings are repeated over and over in the book, “Live like no one else so you can live like no one else!”  and ” Use gazelle intensity!”  He uses a lot of metaphors to explain simple solutions that I find irritating, but if you can’t wrap your mind around a problem his story book simplicity will be helpful.  Especially, and he mentioned this, if you grew up in a family that never spoke of financial matters and then you went off to college to fill your head with all kinds of wonderful knowledge and then you were sent out into the world with a degree, but you never took a course about personal finance or had to learn to budget.  One of my roommates in college was this person.  She didn’t know how to balance her check book or pay bills.  More than once the check she wrote to me for rent would bounce, yet her monthly income was more than mine!
So far I think Dave’s book is helpful.  It’s motivational.  He sets you on a path he calls baby steps.  The first baby step is to save $1000 for an emergency fund.  If you already have this or more saved then he suggested taking all your savings except for the $1000 and paying off debt.
Baby step 2 is the Debt Snowball.  Dave suggests lining up your debts smallest to largest (not by how much intrest is being charged) and then paying off the smallest first.  Pay the minimul on all the rest, apply all extra money to that smallest debt until it’s paid.  Then take the amount you were paying on the smallest debt and apply it and any extra to the next smallest debt therefore, building your snowball.
Does any of this seem like, “Duh!” to you?  Good, then you’re not one of the millions of Americans in debt.
I’m reading baby step 3 right now.  It’s about finishing the emergency fund.  Building the initial $1000 up to a standard that would cover your expenses for three to six months, note I said expenses not income, there is a difference.  This is something Clay and I have never been able to obtain.  The second we have extra money we rush out and buy whatever it is we are longing to have.  We’re not big spenders, but we are horrible savers.  We are going to rectify this with GAZELLE INTENSITY! (eye roll)  Seriously, this is one of our lofty goals. 
To sum up my review I think Dave Ramsey is a great kick in the pants for folks that are desperate, hanging by a thread, need some basic financial knowledge or need the type of motivation an excellent sales man can provide.  The thing is Dave isn’t selling you anything that will hurt you.  You can check his book out at the library and skip the whole Financial Peace University thing or you can get the general idea and if you need the extra support then go find an FPU class and get started!
If you’re still not motivated then rent the movie Maxed Out.  It will make you weep or wake you up. 
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