Continuing the new series on some of the incredible books we've been reading, may I submit today's brand of awesome: The Total Money Makeover by Dave Ramsey. THIS is the book that super charged our thinking and behavior about money and YES, inspired us to get debt-free over the course of 5 months after reading it (debt-free except for my car lease within ONE month of reading it too!).
I first heard about Dave Ramsey through North Carolina photographer, Nancy Ray. Nancy keeps a fabulous blog and one day wrote about how her and her husband managed to pay off their home mortgage in just 2 and 1/2 years. The idea seemed incredible radical to me at the time, when I was living in LA and a shack on the side of the road in a terrifying neighborhood was going for about $300K.
See, Gus and I are lucky in that we are both naturally more savers than spenders and were taught by both sets of parents to save money. What we didn't start learning well until we read Total Money Makeover was HOW to save and how to get creative about that spending.
Reading this book was one of the biggest steps we've taken this year to live our lives with intention. It's an incredibly fast read full of inspiring stories of people who followed Dave's 7 baby steps to financial fitness and how they radically turned their lives around. Below you'll find just a few of the insights we gleaned from the book.
And while reading, please note, we're not here to say there's only one way to save money or that Dave or this book are the perfect/be all, end all. In fact, we don't only do our financial planning under Dave's guidelines. However, I can tell you that it was what lit a fire under us to take our financial destiny into our own hands and start building a pretty exciting future ahead.
- We got rid of our $1K a month credit card bills by paying attention to them; We stopped just throwing it on the card if we didn't have the money in our debit that week, and so when the end of the month came- we found we were able to put that $1K+ into our savings instead of Bank of America's coffers.
- We thought we were awesome because we paid our CC balance off every month, but when we did a budget, we realized we were still living paycheck to paycheck and that's why we couldn't save anything.
- By doing what we feared most (really looking at our spending and creating a paper budget), we realize how much of our finances were dictated by our behavior and literally how we felt about money.
- After doing a budget, we saved several hundreds of dollars a month by simple rules like lunch out once a week at work instead of everyday.
- After feeling like we could never get ahead, we used our paper budget to identify how we wanted (and didn't want) to spend our money and were able to save $6K in advance of the move in less than 5 months.
- We used our rainy day money to pay off Gus's thousands of dollars in student loan debt in only one month. Now we're completely debt free and have almost completely replenished in savings what we spent to get the debt and the crippling interest off our back. A few months of not having part of that rainy day money in our pocket was worth it to know we were on the right track to financial freedom and empowered both Gus and I to keep planning our epic cross-country move and taking big steps to change our lives.
- The principles of saving and prioritizing our spending made us way more creative about how we spend and save money. For example, before Dave's book, we might have just shipped my car to NC with 7 remaining lease payments on it. Instead, Dave inspired us to be creative about money and we did our homework and got Carmax to buy back the car in LA before we left for a minimal negative equity payment (less than a lease payment). And that's how we left CA completely debt-free including my car lease.
- Dave's book gave us the ideas and strategies we'd been craving to be good at saving money. It's now a topic we enjoy discussing and working together in our marriage. It has enriched that partnership and helped us create big, fun goals like getting a 2nd car and a house someday. What seemed totally unattainable when I first read about Dave Ramsey, now seems totally in our control and power. And that's pretty flipping awesome.
So definitely check this one out if you're looking to light a fire under yourself financially. We also really enjoyed Financial Peace where Dave talks more about family and how to build a healthy relationship with money and financial behaviors.
I'd also love to hear if there are other great financial books or blogs you read or have read. Please leave your thoughts in the comments- they are much appreciated!