Saturday, June 27, 2009

Book Review: The Total Money Makeover

In my last post I talked about the need for a good financial plan, and I mentioned financial plans that just seemed lacking. At the time of that post I had found a great book with a simple, yet powerful plan. That book is, "The Total Money Makeover" by Dave Ramsey. (Amazon or Dave's site.)

There are two great things about this book. The first is that it outlines a simple plan to become debt free and to build wealth. Seven simple steps are outlined:
1) Build a $1000 emergency fund
2) Pay off all debts (except the house) from smallest to largest
3) Build a 3-6 month emergency fund
4) Save 15% of your income for retirement
5) Save for, or fund, college for children
6) Pay off the house early
7) Build wealth and give

These are simple steps; nothing new and nothing surprising. What I like about this is the way the steps are put together and are very focused. While Dave outlines these steps, he also addresses common money myths such as the advantages to keeping a large mortgage and explains why these myths are so bad.

The second thing I like about this book is that when you read it, you can't help but be filled with confidence and motivation to complete the process. Dave talks about his own story. He became rich using debt. Then he lost it all and had to file bankruptcy. After the bankruptcy, he built up all of his wealth again using these principles. Dave also has in this book lots of stories from others that have followed this plan, and are now loving life because of it.

After reading this book, I highly recommend it to anyone.