The Total Money makeover - Book Summary - Dave Ramsey

 About:

Do you want to get out of debt? Do you want a comfortable life for your family? If so, this book is for you. Here you will learn 7 baby steps to pay off your debts, how to prepare for emergencies, and how to manage your own home, your daily life and your children's college expenses, About this. You will also learn to spend and invest your money in the right place.

Who can learn from this summary?

• Employees
• Earning Family earning members
• Head The head of the family
• People living from pay-check to pay-check

About the author:

Dave Ramsay is an author, radio host, TV host, and an entrepreneur. "The Dave Ramsay Show" is a long-running radio show that is heard on more than 500 stations. There Dave gives financial advice to his millions of subscribers every week. He is also the founder of a company called "Ramsay Solutions". This company offers financial education, classes and seminars to many people and organizations.

                  Now we Start Book Summary:

Introduction

Dave Ramsay has helped many people with his radio show which has been aired for more than 20 years. Their listeners are ordinary people in America who are struggling with debt. Just like you and me, those people are also thinking about how to give a better lifestyle to their family.

Dave Ramsay's 7 Baby Steps will help us with our Basic Money problem. You will learn them one by one. You will also learn about the stories of people who have changed their lives with this challenge.

This 7 baby steps is clear and easy. These are based on the principle that only small steps will come in handy in the long run. You do not have to make big changes in your life. These steps will take you every day, every month, and every year towards financial security. If everyone else has done it, you can do it!

The Total Money Makeover Challenge

The author of this book, Dave Ramsay, talks about the moment when he found out that he was badly trapped. They had lost all their savings and could barely make ends meet by the end of the month.

Dave did everything his way and they lost.

He now had to stand up and face the biggest challenge, which was to face himself.

He learned that his method lacked a very big aspect which was to manage himself.

The problem with getting rich is not how to get rich. Most of us already know how to do this. The hardest thing is to really do it. This is not an asana, if there was an asana, all the people in this world would have become rich by now.

You need to stand and look at yourself in the mirror. Do you see that man there? That is your problem. If you can manage that man, then your success is certain. The Total Money Makeover Challenge is actually for you. You are the problem and you are the solution. You are the only one who can save yourself.

Denial: I'm not in such a bad condition right now: (Denial: I’m not that out of shape)

First of all, understanding that you have a problem, and understanding the obstacles that come your way is the only way to solve your problem.

Sarah and her husband made about $ 75,000 a year. He had normal debts like home loan, car loan etc. and he had a loan of just $ 5,000 on his credit card. They thought everything was going well but they were actually denying some things.

Whenever they looked in the mirror, they never saw two fat people. Sarah and her husband kept denying this and kept on living. Then came the day when he decided that his family needed a bigger house, so he bought it. They thought they were financially secure, but they weren't.

One day Sarah's boss told her that her company was reducing the number of employees to reduce its expenses. Because of this, Sarah lost her job, and as soon as she saw it, she lost साल 45,000 of her साल 75,000 in total family income for the year. Sarah and her husband were frightened, and they saw themselves in the mirror for the first time. They saw that they were now financially obese, and now they could not deny it.

The fact of the matter is that if you become physically fat, you can see it in the mirror, but financial obesity is not so easily seen. It can be easily hidden but at the same time it will give you anxiety for the rest of your life.

Despite all this, the good news for Sarah and her husband is that their financial crisis was about to take them on the right path. Now they could not ignore the facts. He understood well that he needed change now.

He made a plan and followed it step by step. Two years later, Sarah and her husband, with the exception of their home, were freed from all debts, as well as saving $ 12,000 for the emergency.

Misconception about debt: Debt is not a tool (Debt Myths: Debt is NOT a tool)

Something that makes you very happy, yet delaying it or having the will power to avoid it, is a sign of maturity. It is human nature to want to achieve everything and to achieve it at the same time, but you must come to restrain yourself.

When a lie is repeated over and over again with power over and over again, we begin to believe it. If an ad on TV says that buying that car will make you cool, and if this thing is repeated for a long time then you start believing it after a while.

It has long been believed that loans are a part of our lives. You cannot buy a house or a car without a loan. These things have gone somewhere with Power for a long time, and we have also relied on it.

We will now investigate some of the misconceptions about Lone that we have heard all our lives.

Lie 1: Lone is a tool that can bring us happiness in life.

Truth 1: A loan is a tool that can ruin your life with a guarantee. It does not bring any happiness, while it does the opposite. Wealthy people don't borrow as much as we think.

Borrowing money will give you temporary happiness but the risks associated with it will ruin your life going forward.

Lie 2: Giving a loan to your friends or family helps them.

Fact 2: Giving a loan just ruins the relationship.

When John lent दोस्त 50 to his friend, it also affected their relationship. His friend started avoiding him and he used to feel very strange whenever they met. Dave Ramsay asked John if your friendship costs just $ 50, to which he replied no he is much more than that. Dave asked John to call his friend and tell him that he had forgiven his debt. This made their relationship even better than before.

Lie 3: Taking a car loan at 0% interest is a good deal.

Truth 3: Every new car loses up to 60% of its value in the first 4 years. Does this still sound like a good deal to you? Buying a brand new car is also not sensible. Most people with money drive cars that are up to 2 years old.

People with money know that they would not want to buy a की 20,000 car that will cost $ 12,000 less over the next 4 years.

Lie 4: Whenever you have to rent a car, check in at a hotel or buy something online, you will need a credit card.

True 4: Wrong! You can do all this with a debit card.

Buying things with the money you really have is part of a total money makeover. You should stop buying things with the money you don't actually have (technically, those things won't be yours until you pay them in full).

Lie 5: You need to give credit cards to your children to make them financially responsible.

Fact 5: By doing so, you are teaching your children the exact opposite, which is financial non-responsibility. When you give credit cards to children, you are teaching them that they can buy whatever they want with the money they do not have. You are leading them in the same trap in which you yourself were trapped. Many college graduates get into a lot of debt before they get a job! Can you think.

Two more interruptions: Ignorance and Keeping up with Joneses:

Baby Step 1: Save 1,000 Quickly:

We have already talked about obstacles in your path such as denial, money and debt myths. Now we come to the part where we talk about the middle ground.

Walter and Stephanie were talking about how they were moving forward in life, unaware of how they should manage their money. They always had some financial problem in front of them and they could never get ahead on any one budget. Then one day Walter and Stephanie found out about "The Dave Ramsay Show" and they became fans of that show. They first worked out a budget together. He then started saving money for emergencies and to repay his loans.

It was very difficult to save for emergency and pay off your debt but they did it. He was glad he saved so much money, because one day Walter lost his job. If they didn't have the money for the emergency, or they still had the burden of the loan on them, they wouldn't have time to calm down and think about the next step.

We are born illiterate, and this is our fourth hurdle. We have no idea how to drive, how to read and write and so on. We learn all these things as we get older. Just as it is important to learn to read and write, it is also important to manage your finances. This thing is not taught in school. We are taught in school how to make money, but once we make it, we have no idea how to manage it.

The fifth stop is "Keeping up with the Joneses". Understand what it means in words that we always want to impress others. We need to buy things that make people think we have money, even if we don't need it at all. We think it is important to buy this gadget or that jewelry to impress our friends. We have to maintain a standard in front of them. But these are all lies. Millionaires don't have that many things. They don't buy things they don't need. Many of them even use phones up to 10 years old!

Dave Ramsay bought a Jaguar car when he was a millionaire, but then he lost money and lost money. The logical thing would be that they would sell their car, but they did not. He had to maintain his image by keeping a Jaguar, but in fact he did not even have the money for its maintenance. Dave even persuaded his friend to sign the loan paper with him, all just so they could keep the Jaguar.

But as time went on, Jaguar's condition worsened, as Dave did not have the money to fix it. His friends were also tired of paying the loan money for him, so he kindly asked them to sell him now. But Dave refused to sell again, and eventually his friend refused to pay the loan. The bank then forced Dave to sell the car, and in the end he had to sell his car.

You need to take small steps to become rich. If you want to lose weight and build muscles, you don't have to run 5 kilometers without eating and drinking in one day. Doing so will make you dizzy and fall. The same thing applies with money.

Saving $ 1,000 can work for you on a bad day. $ 1,000 is just the beginning of your emergency fund, and over time you'll have to turn it into a large amount.

Financial ignorance or being financially ignorant can ruin your life. Maintaining an image of being rich can be just as daunting for you when you don't have the money to eat. Save First 1,000 now and start trying to increase it which will help you in the bad days ahead.

Baby Step 2: The Debt Snowball:
                      And
Baby Step 3: Complete the Emergency Fund:

The worst thing you can do is to get a loan.

The average American has an annual income of $ 50,000. They repay loans up to about $ 2,000 a month. If they could save that money for themselves instead of giving it to the loan collector, an average American could own $ 5.5 million in 28 years. And that's just an average income!

The biggest problem for people who are not financially smart is that even if they do not have a loan, and even if they have an extra $ 2,000, they will spend it on things they do not need.

Let’s understand date snowball now!

First make a list of your every loan. Start with the smallest ones and then move on to the older ones. We will come back to everything except your home loan. Then make a plan on how you can repay the entire loan.

Why should we repay a small loan first? Because even a small victory is a victory. They guarantee you to stay on the right path.

After making a list of all the big loans, start repaying small amounts out of all the loans. But you have to repay the small loans now.

After doing all this, start working on your second loan. If your first loan was $ 50, you may have already figured out a way to get $ 50. Now you can repay it all at once by adding this $ 50 to your second loan. Breathe now, take a break, but not for long. Now start working on your third, fourth and fifth loans in the same way.

This is the magic of snowball debt. The further it goes, the more you will repay the loan.

Josh and Amy were an average American couple with a loan of 9 169,000. They spent money on other things. Josh also bought a BMW and Amy bought clothes and other items which further increased her loan. Then came the day when Josh lost his job and $ 4,000 of his monthly income disappeared.

They understood that they needed to take action soon or else they would spend all their emergency funds. So he sold his rental house and BMW to pay his medical bills and student loans.

Josh and Amy sold a lot of their household goods, and started eating food they didn't like before. He knew that if he lived in such a condition for a few days, he would pay off all his debts and start living a better life than the rest and he did it! Josh and Amy became debt-free, now all that was left was their home loan.

It will take you about 3-6 months to complete your emergency fund. This is not a bean for everyone, but on average this is what has been observed. We started our emergency fund with 1,000, but to fully replenish it, you'll need to put up to इसमें 5,000- $ 25,000 in case of an emergency.

Economic crisis, disease, accidents, unemployment, and fluctuations are a part of our lives. That is why you need to meet your emergency fund. Doing so will give you security, peace of mind, and a guarantee that you will never have to reach out to anyone for money again.

Baby Step 4: Maximize Retirement Investing

Mark runs several times a week and he also takes care of his food and drink. They are physically fit. Josh, on the other hand, runs almost every day and follows a strict diet in eating and drinking. Still, Josh is 24 kg overweight. What is the difference between the two? Mark had started it earlier.

Mark doesn’t do half the things that Josh does, but still Mark is physically better. Why Because Mark is just maintaining what he has already achieved.

The same is true with money. The hard work of the beginning will seem difficult, but once you get what you wanted, then life will become much easier, because in the future you just have to maintain the lifestyle that you have earned with your hard work. That’s why you need to be financially fit.

You have to save 15% of your income for your retirement. Whatever happens, you have to do it.

Retirement does not mean that you have accumulated a lot of money now that you can retire, it means that you can enjoy working even if you do not need to earn money.

Old Jim explains that he grew up in a poor house, where all the expenses were taken care of by his grandmother. Grandma taught Jim that he should save money from the beginning. Jim's income was not high but he still saved 10% every month for his retirement and had more than a million dollars in savings when he turned 58. Jim now has a simple workshop that he built himself, and he enjoys spending time in it. Now he often goes on a month-long vacation with his wife.

Baby Step 5: College Funding

We have been focusing a lot on our previous steps so that you may feel that you no longer have money left for your children's school-college. But this is not true.

It is good to go to college but it cannot guarantee that you will succeed and become rich. From college you can only acquire knowledge. You can combine this knowledge with character, vision, hard work, and other baby steps we've already told you about to keep your kids on the right track.

Going to college is a matter of desire, not the need of life. It is a luxury, not a necessity. It is important to send your children to college but not as important as your emergency fund and retirement fund. It is not wise to take a loan because of college.

Some rules apply for college. First of all, most degrees don't matter where you earn them, it doesn't matter which college you're graduating from. So instead of choosing an expensive college, choose a slightly less expensive college.

The first rule of the college is that you pay in cash. The second rule is that you have as much cash or a scholarship as you need. Only and only then can you send your children to college.

One of the most common myths is that you need a student loan to get a degree. This is not true.

An average student graduates with a student loan of up to $ 15,000 because he or she is living in an apartment instead of a boarding house or hostel.

He could save up to $ 5,000 if he stayed in a hostel and ate college food instead of eating out of campus. The student loan is not actually for studies, it is for off-campus expenses (such as eating out of the apartment or off-campus). No loan is required for studies.

Let's now discuss how to save for college.

Your child will have up to $ 126,000 if you invest up to $ 2,000 from birth to 18 years. That's enough for their college expenses. It was just $ 166.67 for the whole month, and it will put you far ahead of others in times of inflation. Let's calculate.

As we said, the average cost for a year of college is around $ 15,000- $ 25,000. Now multiply it by 4 keeping in mind the 4% inflation rate. This will bring your total cost to $ 60,000- $ 100,000.

We'll take the average, which would be $ 80,000 and that's it, we don't need maths anymore. If you invest $ 2,000 every year for 18 years, $ 80,000 is enough to cover your child's entire college expenses.

Baby Step 6: Pay off your home mortgage (Baby Step 6: Pay Off the Home Mortgage)

Now that you are debt-free, the only thing left is your home loan and we promised we would talk about it. Let us take these examples.

Mike bought a home for 250,000. He made a downpayment of $ 25,000. Now he had to pay another $ 225,000 at 7% interest rate. Let's look at the amount.

If Mike wants to pay for up to 30 years, he has to pay $ 1,349 every month, making a total amount of $ 485,636. If they want to pay up to 15 years, it will be महीने 1,899 per month with a total of $ 341,762.

What is the difference between the two? By paying just $ 550 extra every month, they can save up to $ 143,874. Can't you really do it? Absolutely can!

This taught me that I should spend more money every month on the loan. No matter how small the extra money may seem, it will come in handy in the long run.

Baby Step 7: Build Wealth Like Crazy

You are now in the top 2%. You are now debt-free, you have paid for your home, no car payments left, you have saved money for your children's college and your retirement, and you have an emergency fund. Great!

Do you remember why you started this Total Money Makeover? To become rich. Right?

But one thing you must understand is that money and property are not the answer to all your troubles. Money itself can sometimes be a problem. So after 40 years of earning and saving you have saved 20 million, so what will you do about it now?

Now you have become Mr. Universe of money, Arnold Schwarzedollar. Now what is the next step? Money is used for 3 things: to have fun, to invest and to give. You should use it this way.

First of all, have fun!

There is nothing wrong with buying a brand-new कार 100,000 new car, not buying a-30,000 brand-new watch. This is not wrong. You have earned that money yourself and you can enjoy it. The problem is with people who buy such expensive things when they can't afford it.

Second, invest!

Investing is also somewhat fun. What would you do with so much money? Invest it. By investing you will be able to keep track of where your money is going, and whether you are winning or losing.

Third, give to others!

Giving money to the poor is written in all the religions of the world. Giving to others makes you feel good. It feels good to have fun, but after a while it will be fun. It is also good to invest, but after a while you will lose interest in it. What is one thing that will make you feel good every time you do it? That's it!

Conclusion

Making money and managing it is not easy. As we speak, to live a life like no one else is living tomorrow, you have to work as hard today as no one else is doing. It takes time, effort, and energy. Total Money Makeover is a huge commitment, but once you follow it well, you will be guaranteed a lifetime of financial security.

Let’s remember Dave Ramsay’s 7 Baby Steps again.

Baby Step 1: Save 1,000 1,000 for your emergency fund.

Baby Step 2: Pay off all your debts with the Debt Snowball Method.

Baby Step 3: Save your emergency fund for 3-6 months.

Baby Step 4: Save 15% of your salary for your retirement.

Baby Step 5: For your children's education, start saving from the day they are born.

Baby Step 6: Pay off your home loan quickly by paying a large amount every month.

Baby Step 7: Share your blessings with others.

Are you motivated? Are you excited Are you ready to be what you always wanted to be? So what's the point of being late now? Follow these baby steps and live life like no one else is living!