Friday, December 4, 2009

Total Money Makeover

I heard about Total Money Makeover by Dave Ramsey from Not Quite Betty Crocker. She mentioned reading it and then paid off all of her debt in 12 weeks. Alright, that got my attention.

So I checked the book out from the library (bonus points for not increasing debt by paying for the book, right?) and sat down to read a few chapters last night. I ended up reading almost the entire thing, I stopped when I got to the part about being so wealthy you don't have to worry anymore, lets tackle that topic when we get there.

So Dave breaks down his plan into baby steps to conquer your debt and to become entirely debt free. He has a lot of comparisons in his book to dieting and losing weight. All the weight won't come off right away, you won't be able to run a marathon without training, you have to start somewhere. I did some mental math as I was trying to fall asleep and figured it would be about 6 years and our condo would be paid off. That would be a huge accomplishment. No mortgage, no car or credit card payments, just wealth accumulation. The only caveat would be that we are still in a one bedroom condo. I can't be there in 6 years, I just can't.

Dave's first baby step is to immediately get a $1,000 emergency fund. The next step is to start your Debt Snowball, which tackles ALL of your debt but your house. He calls for you to empty your bank account if you already have more than $1,000 to but anything above and beyond towards starting the snowball. This would mean that our Downpayment fund would be gone. GONE. We would have a great start on the debt, (over a third there!) but would set us back from moving.

I love his approach and think it makes a logistical argument on how to get started, but maybe not for us right now. If getting out of debt is like starting a diet, starting this right now would be like starting a crash diet the night before Thanksgiving. I think Dave would say "Stick it out in the condo to become debt free before upgrading the house", he advocates suffering now to live it up later. I can't Dave, I just can't. So I think we're going to go all out to save for this house, while not accruing any MORE debt, and start this whole deal once we have some room to breathe. In the process we'll have a couple loans that will expire and will free up money anyways!

Are we just setting ourselves up for disaster?


  1. Thanks for the tip about - I'll check it out! I can see where you are coming from on the "save or get rid of debt" issue. I would def keep saving for your move. I think you've got to be happy in your home, debt or no debt.

  2. I recommend also checking the books "money map" and debt free, they are written from a religious christian perspective but our dead on when it comes with how to handle finaces.

  3. Hey Kim (found your blog on decor8 and wanted to come say hi!). I also read the Total Money Make-Over last year. It helped me pay off my credit cards and take a more attentive approach to where my money goes. Even if you don't follow his advice step by step, I'm sure you'll still get some great tips from it. It's always good to have that $1k in emergency money...and pay down your credit cards before buying things you don't need, etc. I think as long as you two have a plan, you'll do just fine.

    I remember reading it and thinking "Crap, I don't want to suffer and save now...I'm young and I want to spend my money now while I can still wear a miniskirt!" That always frees me up for a stop to a local coffee shop or a small splurge. :)

  4. try reading "Pay It Down! From Debt to Wealth on $10 a Day" by jean chatzky. the $10 part varies according to your debt, but she has really great tips on paying things down. i've seen a significant decrease of one of my debts.