Welcome to my book club! My dreams of having a real-life financial book club have faded dramatically as many of my friends have come to have grown-up things like jobs, kids, and overseas moves. So you get me instead, and I’m hoping this will be a monthly occurrence. To kick things off, it seems right to start with Dave Ramsey’s The Total Money Makeover, which was the first actual hard-copy personal finance book I read after spending a couple of years following various finance blogs online.
I was a skeptic — celebrity finance gurus (or anything “gurus”) like Suze Orman and Dave Ramsey tend to raise my BS meter to the moon. My impression was that they provide one-size-fits-all advice that’s only applicable to a small segment of the population, while they make themselves a boatload of money preying on people’s fear — charging obscene sums for their workshops, courses, books, and celebrity appearances. Not my cup of chamomile, if you know what I mean.
But even coming from that place of skepticism, I loved this book. It was written for a very different audience from me — an audience that seems to be primarily Christian, southern, white, pickup-truck owners. Ramsey’s writing style gets a little annoying (or, perhaps, my reading style gets a little snobby), but his message is a good one, and one that I’ve held near and dear in my own journey to financial independence since reading this book. As a non-Christian, I was particularly surprised that his “biblical” approach to money management was not at all off-putting — it takes center stage in the book, but not in a way that felt preachy or offensive to non-believers. I appreciate that it’s a great way for an important message to reach a broad audience, and for those of us who don’t care about it, we can ignore it and still appreciate the non-denominational meat of his advice.
In particular, Ramsey advocates “Seven Baby Steps” to money freedom:
1. Save $1,000 for an emergency fund.
2. Pay off all non-mortgage debt.
3. Save 3-6 months of living expenses for a more robust emergency fund.
4. Invest 15% of household income into retirement savings.
5. Save for your kids’ college.
6. Pay off your mortgage.
7. Build wealth and give — become “insanely generous,” he says.
Not all of these apply to me — I am not saving for college at this point (I don’t have kids) and I believe in maxing out all potential retirement account savings rather than stopping at 15%, but his system is still a good one. He is a fierce advocate for paying off debt above all else and recommends the “debt snowball” approach of paying off your smallest balance first to build momentum towards larger debts. Although I’ve successfully avoided having a lot of consumer debt in my life, this approach makes sense to me as a way to gamify what can otherwise be a tedious and difficult process.
Ramsey’s last point about insane generosity is what I appreciate the most, though, for what’s the point of being rich if not to be able to share it? So many financial advice-givers ignore that piece of the equation. Being rich is not about becoming a scrooge, and as we pinch pennies along the road to financial freedom, it can be easy to forget the value of GIVING. Don’t — even when we have a lot of money, we only become rich by the experiences, relationships, and joy we share with others.
My next book: The Elements of Investing, by Burton G. Malkiel and Charles D. Ellis. I haven’t read this one before and am looking forward to it!
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