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Dave Ramsey

“We want it all, and we can borrow to get it all, before we can afford it all.” Dave Ramsey

“We buy things we don't need, with money we don't have, to impress people we don't like.” ― Dave Ramsey, The Total Money Makeover: A Proven Plan for Financial Fitness

David L. "Dave" Ramsey III (born September 3, 1960) is an American businessman, author, radio host, television personality and motivational speaker.

Ramsey was born in Tennessee. He graduated from the College of Business Administration at the University of Tennessee, Knoxville with a degree in Finance and Real Estate. At the age of 26, through his brokerage firm Ramsey Investments, Inc., he built a rental real estate portfolio worth more than $4 million and became one of Tennessee's youngest brokers to be admitted to the Graduate Realtors Institute. Ramsey's success soon came to an end. One of Ramsey's largest creditors was sold to a larger bank, which began to take a harder look at Ramsey's borrowing habits. The bank demanded he pay $1.2 million worth of short-term notes within 90 days, forcing him to file for bankruptcy relief. Sixty days later, another bank demanded nearly $800,000. After recovering financially, Ramsey began offering private counseling services. He began attending every workshop and seminar on consumer financial problems that he could find. He developed a simple set of lessons and materials based partially on his own experience and on works and teachings by Larry Burkett, Ron Blue and Art Williams. In 1992, after many requests from his clients, he wrote his first book, Financial Peace. After this he published More than Enough: The Ten Keys to Changing Your Financial Destiny (1999), The Total Money Makeover: A Proven Plan for Financial Fitness (2007) and Smart Money Smart Kids: Raising the Next Generation to Win with Money (2014), etc.

Drawing from his years of work with thousands of families and corporate employees, Ramsey presents the ten keys that guarantee family and financial peace, including: values, goals, patience, discipline and giving back to one's community.

This is a great book which outlines the principles behind prosperity, not just financial but in all aspects of life. A great introductory book to Dave Ramsey’s ideas. This book basically defines the difference between having lots of money, and being truly wealthy. He just uses good, old-fashioned common sense when it comes to finances and explains things in a down-to-earth, easy to understand and implemented way.

Sacrifice today for wealth tomorrow is the idea. There is no get-rich-quick scheme presented, just old-fashioned wisdom. Essentially, his advice is to turn back the hands of time and handle money the way our grandparent's generation, and the generations before theirs, did. Don't spend money that you don't have. Save for future expenditures.

One thing he does say, over and over again, is that it is not hard to follow his plan, but it's very difficult to actually pull it off. It's not complicated, but it takes determination and focus if you want to get out of debt and start controlling your money, instead of the other way around.

“Years ago, in a motivational seminar by the master, Zig Ziglar, I heard a story about how mediocrity sneaks up on you. The story goes that if you drop a frog into boiling water, he will sense the pain and immediately jump out. However, if you put a frog in room-temperature water, he will swim around happily, and as you gradually turn the water up to boiling, the frog will not sense the change. The frog is lured to his death by gradual change. We can lose our health, our fitness, and our wealth gradually, one day at a time. It might be a cliché, but that’s because it is true: The enemy of “the best” is not “the worst.” The enemy of “the best” is “just fine.”

“A typical millionaire lives in a middle-class home, drives a two-year-old, or older, paid-for car, and buys blue jeans at Wal-Mart.”

“It‘s human nature to want it, and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity.”

“A budget is people telling their money where to go instead of wondering where it went.”

Dave Ramsey and his daughter, Rachel Cruze, set out to write a book to practically give parents the tools to teach their children how not to be bound to money and society’s standards of what our finances should be like. In Smart Money, Smart Kids, you learn the best age spans for introducing working for money, saving and giving. How money is tied to work, and letting children learn that money can work for them. They give you ideas on how to teach about savings (which for kids, is different than for adults, with how their minds work) when to introduce giving and tithing to your children and how to set it up practically so they can understand. You get shown through the teen years and how to breach the concepts of paying for college without student loans, saving for things like a car and even having your teen have their own emergency fund (what parent wants to keep replacing broken cell phones or lost items of your child? Let them have their own fund to do it themselves, they’ll learn responsibility much faster that way). The over arching theme in this book is contentment and responsibility.

“Debt basically enables people to live a lie.”

“Money is finite. There is not an infinite supply. That’s something a lot of people have trouble remembering these days. In a time when crazy mortgages, car loans, student loans and credit cards make you believe anyone can purchase anything at any time with no consequences, it’s easy to forget that money has limits.”

Dave Ramsey's 7 Baby Steps to Financial Peace

Baby Step 1 - Save $1,000 to Start an Emergency Fund

An emergency fund is for those unexpected events in life you can't plan for. Whether there's a plumbing issue and everything but the kitchen sink is draining away, or whether your brakes are squealing at every stop sign, you can be ready!

In this first step, the goal is to save $1,000 as fast as you can. Go through your storage boxes and sell some stuff. Work an extra job. Do whatever it takes to start saving money. Once you have it, open a checking account that is separate from your regular account and put the cash in there. When your car battery dies or whena baseball meets a window in your house, you won't have to go into debt to fix it. You don't want to dig a deeper hole while you're trying to work your way out.

Baby Step 2 - Pay Off All Debt but the House

List all debts, except the house, in order. The smallest balance should be your number one priority. Don't worry about interest rates unless two debts have similar payoffs. If that's the case, then list the higher interest rate debt first.

This step will make a huge difference to your everyday life. You'll use the debt snowball to knock out your debts one-by-one, from the smallest to the largest. Pay off the first one. Then add what you were paying on it to the next debt and start attacking it. When you start knocking off the easier debts, you'll see results and stay motivated to dump your debt. As each debt is paid off, your cash flow will increase and the bigger debts will be gone, sooner than you think. Before you know it, you'll be debt-free!

Baby Step 3 - 3 to 6 Months of Expenses in Savings

This step is all about building a full emergency fund. It's time to kick debt for good, with 3–6 months' worth of emergency savings. Sit down and calculate how much you need to live on for 3–6 months (for most, that's between $10,000 and $15,000), and start saving to protect yourself against life's bigger surprises. You'll never be in debt again—no matter what comes your way.

Baby Step 4 - Invest 15% of Household Income Into Retirement

Now it's time to get serious about retirement. With no payments and a full emergency fund, put 15% toward the retirement of your dreams. Find the fit that is right for you. The money you were using to attack debt can now help build your future.

Baby Step 5 - College Funding for Children

By Step 5, you've paid off all debts but the house, and you've started your retirement savings. Now it's time to save for your kids' college expenses. College tuitions and housing expenses continue to rise. Don't let college sneak up on you. Saving now will put you ahead of the game when your kids graduate from high school.

Baby Step 6 - Pay Off Home Early

There's only one more debt standing in the way of freedom from all debt—paying off the mortgage. Baby Step 6 is the big one! Can you imagine life with no house payment?

Any extra money you can put toward the mortgage will result in tens of thousands of dollars of interest saved and months (or even years) of not having a payment hanging over your head. If you currently have an adjustable rate mortgage, interest only, or even a 30-year mortgage, consider refinancing to a 15-year fixed-rate mortgage and pay off your home faster. It takes the average family five to seven years to pay their home off early. This journey to debt freedom is a marathon. Stay focused and intense, and keep a steady pace.

Baby Step 7 - Build Wealth and Give

This is the last step and, by far, the most fun. It's time to live and give like no one else! Build wealth, become insanely generous, and leave an inheritance for future generations. You know what people with no debt and no payments can do? Anything they want! And it's all because you had discipline for a few years. Now that's leaving a legacy.