How can you outmaneuver the enemy, destroy debt, and build wealth?
How can you outmaneuver the enemy, destroy debt, and build wealth?
Dave Ramsey had a net-worth of over $1 million when he was 26 years old. He had built up his wealth by investing in real-estate and the stock market. Since going bankrupt in the mid 80’s he has certainly learned his lesson as he has worked back up. He currently is host to the radio show “Life, Love, and the Pursuit of Piles of Cash†and is an author.
Here are the basic steps he has for people to become clear of debt and start building up their wealth. A precursor to the steps is figuring out your budget to determine the amount you can afford.
- Get at least $1,000 cash (a “baby” emergency fund) in the bank as soon as possible.
- Pay off all debt ASAP (except the house) using what he calls the “debt snowball method.” (seen at bottom of post)
- Build your emergency fund up to three to six months of living expenses.
- Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.
- Save for your kids’ college fund(s).
- Pay off your personal home early.
- Build wealth and give! Invest in mutual funds and real estate.
Dave Ramsey has something he calls ‘Gazelle Intensity’ where the basic idea is to ‘outmaneuver the enemy and run for your life.’ You can discover more about David Ramsey and his methods by reading his books or by catching his nationally syndicated radio show.
Debt Snowball method
- List all debts in ascending order from smallest balance to largest.
- Commit to pay the minimum payment on every debt.
- Determine how much extra can be applied towards the smallest debt.
- Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off.
- Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt.
- Repeat until all debts are paid in full.
I have read his Total money makeover book. You won’t learn much. It is basically this post’s information repeated over and over and over.
March 13th, 2006 | #
[...] Aridni shares from a Dave Ramsey book about some basic steps to guide us through the process of reducing debt. [...]
March 27th, 2006 | #
This book has changed many lives including myself. I would have to disagree with Marcus as to how much you will learn from the book. The basic principles are repeated throughout the book, but the book goes much further than just repeating the basics over and over and over. He debunks MANY money myths, as well as discusses what you should avoid AND why. From insurance, to investing, to helping people deal with creditors, this book helps people understand the problem in themselves.
The plan is flawless and it gives so many people a hope that they have never experienced before. Nice write up about this book. Everyone should read this book!!
Marcus, if you didn’t learn anything from this book, I have to ask if you actually read it?
May 31st, 2008 | #
The book is excellent. And if it does repeat anything, that is a great idea. You have to hear something 15 times before you get it in your brain. Especially for brainwashed debt believers. Try FPU. It has changed many lives and mine as well. Simple to understand but very hard to do. Discipline. Hard to do that.
September 12th, 2008 | #
Thanks for the reminder that we can never hear a good tip too many times, Robin. Money is a difficult area to want to take risks or make changes.
Brad, thanks for your positive reviews, too. We’ve heard so many mixed ideas. I think you sum it up well–the book helps us find the problems in ourselves. Sometimes we’re not all as open as we should be to improvements.
September 15th, 2008 | #