At this point in the Dave Ramsey 7-step plan, it’s time to take care of the final debt repayment—the home mortgage. If you have any children, now is the step where you can start saving up a college fund for your child so they can avoid student loans. The debt snowball means you start paying off your debts from smallest to largest.
Now you can start focusing on building wealth, and enjoy the pleasure of giving and helping others. The biggest debt is often the mortgage, and that’s what you should aim to pay off ASAP. Which, Ramsey says, it means you’re one little step away from financial disaster. As comparison to a 30-year mortgage at 8%, a 15-year mortgage will save you nearly the whole loan amount over the life of the loan. Another common myth is that it is easy to get a 30-year mortgage with the promise of repaying it in 15 years. There are several roadblocks that might keep you from repaying your mortgage.
You Must Limit Your Debt
Ramsey recommends listing all debts from smallest to largest and paying them off in that order, regardless of interest rates. The second step involves paying off all debt using the debt snowball method. This initial savings buffer is meant to provide a financial cushion for unexpected expenses, preventing the need for borrowing money or relying on credit cards in emergencies.
The total money makeover is one of the most recognizable personal-finance frameworks of the past two decades. And some wealthy individuals used debt as leverage to get even richer.Or they take up debt simply because it can make financial sense. The third step is to grow your emergency fund to cover all your living expenses for a period of at least 3 to 6 months. The author is especially caustic towards credit card debt, which gives us the illusion of wealth but only creates future problems. Ramsey recommends paying your debts, avoiding new debt, paying with cash only, saving for emergencies, and investing. Do Follow me on Linkedin and Quora for more informative posts on personal finance, investments, money management, debt management, and much more.
Credit cards, which seem like free money, provide users with enormous consumer spending. Your financial stability might be crumbling around you without your knowledge. Hence, taking action now, before it’s far too late, is one approach to prevent these unforeseen problems. Unexpected financial losses, such as job loss or physical sickness, can rapidly put us in a bind. Hence, financial stability is frequently more illusionary than we realise. He is best known for hosting ‘The Dave Ramsey Show’, a radio program on which he gives financial advice to callers from all around the United States.
- The book is not a technical manual or investment textbook—it’s a behavioral guide.
- Once debt is gone, Ramsey advises saving enough to cover 3–6 months of expenses.
- So, when you read this book, be prepared to gain a whole new outlook on the purpose of money, and break free from comparing yourself to others.
- While helpful for some, others feel the rigidity doesn’t account for individual circumstances such as high-interest student loans or low-income constraints.
Follow the 7 Baby Steps
The book is written primarily for beginners or those in serious financial distress. Overall, these strengths make the book effective for beginners, families, and people who feel stuck financially. Behavior-Focused StrategyRather than centering on interest rates or returns, the book targets spending habits, discipline, and emotional triggers—areas many financial programs ignore.
“Broke Millennial” – Book review
You might be wondering, “Do I really need another financial book? In this post, we’ll explore what the book is about, share its key takeaways, show why it’s worth reading, and reflect on what Christians can learn from it. Its rigidity and simplicity may not appeal to every reader, but for millions searching for clarity and hope, the book has become a life-changing resource. The emphasis on living below one’s means, delaying gratification, and focusing on long-term outcomes makes the plan practical across income levels.
#1. Save 1k For Your Emergency Fund
As a result, it is frequently preferable to just obtain a shorter mortgage. And almost no one ever pays the additional payments required to pay off a debt so quickly. For instance, you may be advised to borrow money against your house to take advantage of cheap interest rates and invest that money in the stock market. It is common for mortgages to take decades to pay off. This plan assumes that you will not increase your monthly contribution during the next eighteen years, regardless your income rising year after year as a result of your salary increase. But nevertheless, in our Indian context, we can consider investing in an index fund from the birth of your child till they reach the age of eighteen.
‘The Millionaire Next Door’ – Book review: How Ordinary People Can Build Extraordinary Wealth
The ultimate purpose of financial freedom isn’t to hoard wealth—but to give it away. As a Christian, reading The Total Money Makeover isn’t just about learning to budget—it’s about living out your faith in your finances. If you’re tired of the stress that comes with money mismanagement, this book will help you create a clear, biblical path toward peace and abundance.
Step 5 – Plan for your kid to go to college debt-free
Later in the process, Ramsey advocates for building a fully-funded emergency fund of 3 to 6 months’ worth of living expenses. Ramsey’s most famous strategy is the \”Debt Snowball\” method for paying off debt. Without a budget, it’s easy to overspend and lose track of where your money is going. The book is straightforward and easy to follow, making it accessible for anyone who is looking to make a change in their financial habits. Because true financial peace isn’t just about numbers—it’s about freedom. It doesn’t matter how much debt you have, how little you earn, or how many times you’ve failed financially.
Moreover, I have my own fundamental beliefs that may differ from that of the authors, creators, and sellers of the products featured here. This updated and expanded edition has helped millions regain control over their money—and it can help you too. But what if you could turn your finances around with a simple, proven plan? Whether the system is perfect or not, it undeniably offers structure in a world where financial confusion is common. Its greatest strength is its emphasis on habit change and emotional awareness, areas often overlooked in traditional finance books.
- Real-Life MotivationThe book is filled with stories of average people paying off extraordinary levels of debt.
- If you’re ready for a no-excuses, straightforward guide to taking control of your money, The Total Money Makeover is worth the read.
- It can be difficult to pick and choose which financial aspects are more important than others.
- Credit cards can also provide lots of perks outside of boosting credit scores.
But nevertheless, you may improve your financial status by following these steps outlined above, which will set you on the road to debt-free and financially secure living. By taking these seven easy steps, you can reclaim your financial stability and start to plan for a secure, fulfilled retirement. Once all debts (except the mortgage) are paid off, the next priority is to save three to six months of living expenses in a fully funded emergency fund. The book lays out seven practical “Baby Steps” that gradually guide readers toward financial independence, helping them eliminate debt, build savings, and create long-term wealth.
You must begin by developing a step-by-step strategy that outlines your path to financial wellness. In fact, 75% of those on the Forbes 400 list believe that becoming and remaining debt-free is the greatest way to generate wealth. Despite the fact that debt appears to be ever-present, it is not the way to financial pleasure; rather, it leads directly to financial hardship. Debt has become so embedded in our culture that it’s difficult to picture life without it. Based on the recommendations of renowned financial guru Dave Ramsey, this book gives a simple and total money makeover review easy method for achieving financial security.
The book emphasizes that concentrating effort increases speed and motivation. This book review highlights five major insights, examining what works well, what may not work for every reader, and whether the approach remains valuable today. So that you can enjoy a better life later on. Basically, it’s about avoiding flashy expenses and tackling your future problems today. Instead of changing everything at once, for example, you should tackle things one by one to concentrate your efforts and start getting some early wins. Whether you get The Richest Man in Babylon, I Will Teach You How To Be Rich, or The Total Money Makeover, the advice is the same, and it’s simple and basic.
The Total Money Makeover by Dave Ramsey is a highly regarded personal finance book that provides a step-by-step guide to achieving financial security and wealth. Many of the good points of this book lie in the financial stability and independence Ramsey’s steps help readers achieve. Paying off the home mortgage is easier too because you already paid off all your other debts in the previous steps.
