The Total Money Makeover Part 1

Had the first test of the semester. Didn't hear too many grunts or moans so hopefully that is a good sign. Will have the tests graded for Thursday if I get my act together.

Homework: Didn't mention it in class but we will start chapter 4 in class on Thursday. Read Chapter 4 and be prepared to discuss.


During the test I started to re-read The Total Money Makeover by Dave Ramsey. I've read it before and was inspired to battle my own debt. I thought I'd read the book again to glean more information. The total money makeover is a system used to build wealth.

Here is a link to a good overview of the book.

http://www.thesimpledollar.com/2006/12/09/review-the-total-money-makeover/

Here are my own notes so far.

Debt is not a tool. If you tell a lie often enough, loudly enough, and long enough, the myth will become accepted as fact. "Debt is a tool" is one of those lies.

Here are several points Dave Ramsey makes in the first few chapters in his book.

• Don't cosign. This will ruin your credit and start the person you are cosigning for on the debt trap path.
• Don't lend money to friends. If you have the money, give it.
• Don't use debt. Pay cash.
• Cash advance, payday loans, rent to own etc. are predatory to low income people
• 90 days same as cash is not same as cash. Two reasons- If you pay with cash you can usually get a discount. Also, many people don't pay off within 90 days and end up paying interest on full amount.
• Buy used reliable cars. Car payments are not a way of life.
• Leasing a car is the most expensive way to operate a vehicle.
• A new car loses 60% of it's value in the first four years
• You don't need a credit card to build credit. You can buy everything with cash anyways. For a house, 15 year mortgage with a large down payment. Credit can be arranged with a large down payment.
• You don't need a credit card to rent a car or a hotel room. Debit cards will do the same.
• Debit cards are not riskier then credit cards. They have the exact same protection.
• Sixty percent of people don't pay off credit cards monthly. Also, credit card users spend 12% to 18% more than if you pay with cash.
• Do not get a teenager a credit card. 80% of graduating college seniors have credit card debt. 19% of bankruptcy filings were are from college students.
• Debt consolidation is dangerous because you treat only the symptom. 78% of the time debt grows after a debt consolidation.
• If you borrow against your home you are stuck in your home. Especially if housing market turns south.
• The worlds economy would not collapse without debt. In fact the economy would prosper as individuals build wealth.

Quotes:
Great spirits have always found violent opposition from mediocre minds.
-By Albert Einstein

In every job that must be done there is an element of fun. Find the fun and snap! The job is a game.
- Mary Poppins