The Total Money Makeover - A Proven Plan for Financial Fitness

The Total Money Makeover is written by famous radio show host and author of many bestselling financial books, Dave Ramsey.By recognizing and identifying some basic rules written in this book, you can eliminate your debts and improve your financial life.What Will You Learn From This Book?This book reveals an effective plan to eliminate the debt. If you are heavily in debt then you must read this book. The plan explained in this book is not easy as it requires discipline, hard work and sacrifice but this plan works with almost 100% guarantee.You should follow simple and uncomplicated philosophy about money. Every body know how to lose weight. It is a plain theory - exercise more and eat less. The same lies for reducing debt and becoming wealthy. Earn more and spend less.Personal finance is 80% behavior. You should develop some good money habits and money will start flowing in your bank balance. This book is a proven plan to financial fitness that the author and his team have de
veloped over two decades. Let's start the book.The Total Money Makeover Explains The Seven Baby Steps To Financial Freedom.By following these seven steps in order as explained in the book one can become debt free and can become wealthy slowly.Step 1: Save €1000 Cash As A Starter Emergency FundEmergency fund is the amount of money that you keep apart in the saving account. This money should be used only in the emergency situations like car damage, medical expenses and job loss.When you have this money sitting in the saving account you will feel more relaxed and confident about the future.Ideally the amount of money in the emergency fund should equal to the three times of the total monthly expenses. Author advises to start this fund with $1000. You should not skip this step.Step 2: Start The Snow BallOnce you have saved money for emergency fund. You should start the snow-ball process. Make a list of all your debts and start paying the lowest debt first, once you have paid tha
t debt, start the same process and pay off the next lowest debt. Save every dollar and get out of debt.Step 3: Finish The Emergency FundOnce you have eliminated all your debt, now it's the time for some serious savings. Dave Ramsey explains that the starting emergency fund of $1000 is not enough and you must add some more money in that fund. You should accumulate three to six months of living expenses, for many people the ideal amount would be $5000.Once you have paid all your debts, the money that you save each month should go to emergency fund till it is equal to at least $5000. If you were paying $500 per month for the debt, now send that money in the Emergency fund account.Step 4: Invest 15% Of Your Income In Retirement AccountIf you have completed the first 3 steps and have paid off debts and saved for emergencies, now each month the money you save should go to your retirement account. You should save at least 15% of your monthly income and invest that money for the lon
g term.Step 5: Save For The CollegeIn this step the author encourages you to think about the college education funds of your children. You should start investing in your early age for college funds. The earlier you start investing, the less you should invest each month. He recommends to seek scholarships also.You should concentrate more on your retirement account and invest a little amount of money each month for children's education. In any case your children can take education loans and can work part-time to pay for college education, thus they can learn to live frugally without spending your hard-earned money on expensive clothes and other stuffs.Step 6: Pay Off Your Mortgage EarlyNow once you have adopted good money habits by following the above written 5 steps, money will start flowing in your bank balance and you will be able to pay-off your mortgage early.Many experts argue that money spent on paying off mortgage can earn you a much better returns if you invest that m
oney in other investments but Ramsey says that you should pay-off your mortgage as early as possible to avoid mortgage interests.Step 7: Build WealthIf you have followed all the first 6 steps, you surely have an sufficient Emergency fund, you have eliminated debts, you are investing 15% in retirement account, you are saving for college education and you have paid off your mortgage.So now you can start enjoying your life and with the money that flow each month in your bank account, you can buy income generating assets.By following these small steps, you will have developed some good money habits and now you are on the track to meet your financial freedom.Final Thoughts On This BookDave Ramsey suggests that to follow these seven steps, to save money and get out of debt you should make a budget. At first making a budget seems a tough job but it is quit easy and you can download a copy of ideal budget plan from our blog.The main goal of making budget is to find out the areas whe
re you are spending more money and then reducing those expenses. I recommend this book to those people who are in debt and don't know how to get out of debt. This book will not only help you to get out of debt but will also make you wealthy.About the Author

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