I just finished reading Dave Ramsey's book, Financial Peace. Ah...my life feels so much more secure already...like wrapping myself in a big warm blanket made out of sewn together $100 bills and then flopping down for a nice nap on my straw tick mattress...but it's not straw, it's $10 bills which are more comfortable than straw. But what isn't, really.
I actually did enjoy the book. And I have to admit, I'm trying out his (and my mom's) "envelope method" of budgeting. So far I've done really well except for those times when I've just pulled out my debit or credit card to make the money in the envelope last longer....which is totally working...I still have $20 in my envelope for this pay period which ends on the 25th!
The last chapter had some good "baby steps" as he calls them for achieving financial peace. So that you don't have to actually read the book yourself, here's what he says:
1. Get $1000 in savings. Until you do that, pay the minimum that you can on everything else.
2. Get mad at debt and kill it with the debt snowball. If you want to know what that is, ask me :)
3. When your house payment is the only debt left, work further on an emergency savings fund. That is 3-6 months worth of your expenses. Keep this money untouched but available...don't invest it.
4. Max out your 401k and other investments as much as possible; check all your insurances to make sure you are getting the best deal.
5. Start a college fund for your kids (whatever...my kids are paying their own way just like I did)
6. Scrape your extra funds together to pay off your house early.
7. Now nothing is left but to build your investments to wealth and give it away.
Notice that the last step wasn't "move into a bigger house and start all over again..." It was to give money away. That's one thing I like about his book. He strongly promotes generosity and especially paying a tithing. Interesting, eh?
3 comments:
Interesting. I have heard of the envelope method but haven't tried it. I always spend cash if I have it in my purse so I actually avoid carrying it. :)
PS - Hi Melissa!
I really like Dave Ramsey. I haven't read Financial Peace but I've read his Total Money Makeover and I really liked that. It sounds like he says alot of similiar things. I think we've actually discussed Dave Ramsey before. Anyway, I'm glad you liked his boook.
loved this.
just read an article on forbes.com that talked about how we have overspent our entire lives - and we are shopped out. so true! except why can't i stop buying things from etsy and amazon!
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