The Total Money Makeover

The Total Money Makeover written by Dave Ramsey, is a book for personal finance that offers a practical and motivating plan for achieving financial freedom. The book is based on Ramsey’s a personal “Baby Steps” method, which involves seven steps to financial stability. 

The steps include :

  1. building an emergency fund
  2. paying off debts using the debt snowball method
  3. saving for a fully-funded emergency fund
  4. investing in retirement
  5. saving for children’s college funds
  6. paying off the home mortgage
  7. building wealth and giving generously.

Ramsey emphasizes that the importance of living within financial freedom mean, avoiding debt, and taking control over on personal finances. The book includes many examples based on stories from people who have successfully gone through those steps with success. Written with practical advice on budgeting, saving, investing, and negotiating with creditors, making it a go-to resource for those seeking to improve their financial situation. If you are interested in similar kinds of content, you should also give read this summary book at our Summarybook site for free.

Detailed steps with summarized from The Total Money Makeover.

Step One: Build a $1,000 Emergency Fund

Intial step to getting your finances in order is to create a beginner’s emergency fund of at least $1,000. This will provide a cushion for unexpected expenses and help you avoid going further into debt.

Step Two: Pay Debts with the Debt Snowball

Once your emergency fund is in place, focus on paying off all non-mortgage debt using the debt snowball method. Start with the smallest balance and work your way up to larger debts. This approach provides a sense of momentum and accomplishment that can help keep you motivated.

Step Three: Build a 6-Month Emergency Fund

After all non-mortgage debts are paid off. Save 3 to 6 months of expenses for a fully funded emergency fund. This will ensure you have enough money to cover your expenses in case of unexpected events, such as job loss or illness.

Step Four: Invest in Retirement 

Allocate 15% of your monthly income to retirement savings. This will help you build a nest egg for your future and ensure you’re financially secure in retirement.

Step Five: Build a College Fund 

Save money for your children’s college education to help them avoid student loan debt. This step will also help you plan for your financial future. It provide peace of mind knowing that you’re prepared for your children’s education expenses.

Step Six: Pay Off the Mortgage

Once all non-mortgage debts are paid off and you’ve saved for emergencies. Focus on paying off your home mortgage early. This will save you thousands of dollars in interest over the life of the loan and provide greater financial freedom.

Step Seven: Build Wealth 

Finally, by investing in the stock market, real estate, or starting on your own business. This step will help you to achieve financial freedom and give you the means to make a positive impact on the world.

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