The Total Money Makeover By Dave Ramsey

In Dave Ramsey’s book titled The Total Money Makeover, he outlines seven baby steps to achieve financial freedom. They are as follows: first, build an emergency fund. Second, Pay off all debt except for your mortgage. Third, save enough to cover 3 to 6 months of living expenses. Fourth, invest for retirement. Firth, save for your children’s college fund. Sixth, pay off mortgage early. Finally the seventh step, build wealth and give. I am going to discuss the five steps that I thought were the most important. Dave’s first step is to save up one thousand dollars and to do it fast. This money is your emergency fund; you do not touch it. This is not a Christmas or vacation fund, this money is only for actual emergencies like the name would suggest.

We have been taught this in the pamphlet All Is Safely Gathered In, which can be found on providentliving.org. It says that we need to build a reserve just as Dave Ramsey suggests, and that it is to be used for emergencies only. In my personal life I can see how having this fund will be very valuable in trying to get out of debt. We have tried to tackle our debt many times, but without fail it hasn’t worked because of some emergency or another. I can see why the church advises us to designate a fund strictly to emergencies. Dave’s second step is to pay off all of your debt. His method for this is called the debt snowball effect. You list every debt you have in order from smallest to largest, leaving out your mortgage. And you pay off the smallest debt first, once that is paid you take what you were paying towards that debt, and apply it to the next debt, and so on. This is exactly what the church advises us to do in the One for the Money Guide to Family Finance written by Elder Marvin J. Aston, in the debt elimination calendar. I believe that is probably one of the fastest ways to get out of debt

Dave suggests saving 15% of your income, and putting it in a mutual fund to acquire compound interest. This step is extremely important, if we don’t invest in our future; we wont have anything at all when we need it the most. In One For the Money step 11 discusses the importance of saving for retirement, and of utilizing a wise investment program. Self-reliance is heavily emphasized in our church, it is so important to be able to stand on our own two feet. Saving for retirement isn’t something that I have put much thought in. I’ve had the attitude that I am still young and have plenty of time to take of that later; reading this book has really helped to change my mindset about money, and investing for my