Debt Snowball

Debt Snowball in Action

I have been selling some things on eBay recently and was able to use the extra money I made to pay off my JC Penney account today. To make it a little sweeter I took a pair of scissors with so after I had written out my check and the lady at the register finished processing the check I cut-up the credit card in front of everyone at the counter. I did this with a BIG smile on my face and said 'I have been ready to do this for months and it sure feels good'.

With Penney's down the next card to go is Best Buy which with added what I was paying normally on Penney's to Best Buy's payment will take 2 months to clear it off the books. I do have some more things to list on eBay so if they sell it could be less than 2 months to knock Best Buy off the books.

"The Total Money Makeover" Review

"The Total Money Makeover" by Dave Ramsey

If you will live like no one else,
later you can LIVE like no one else.

Build up your money muscles with America's favorite finance coach.

Okay, folks, do you want to turn those fat and flabby expenses into well-toned budget? Do you want to transform your sad and skinny little bank account into a bulked-up cash machine? Then get with the program, people. There's one sure way to whip your finances into shape, and that's with "The Total Money Makeover!"

This is from the back of the dust jacket of the book and if are thinking it reads more like a self help book than a book on finances well I would agree. The total money makeover reads more like a self help book than your typical book on finance. But that is one of the appeals of this book. You don't get so bogged down in technical jargon like you do in some financial books that you just want throw the book out the window.

The book is filled with stories of other peoples success. How they learned how to get control of their finances and tame the debt beast. The first few chapters cover Debt Myths and Money Myths along with the issue of why we should not try and keep up with the Joneses.

Next Dave covers what he calls his seven step to getting out of debt and financial peace.

1. $1,000 to start an emergency fund - first step is to save $1,000 in an emergency fund because rainy days will come

2. Debt Snowball - Pay off all Debt using the Debt Snowball - pay off the smallest debt first, pay minimum on all accounts expect what you own least amount to and pay as much to that account as possible until paid off - then apply what you have spent on that account to next smallest account

3. 3 to 6 months of expenses in emergency savings - after paying off all debts built emergency savings

4. Invest 15% of household income into Roth IRAs and pre-Tax retirement fund

5. College funding for children

6. Pay off your house early

7. Build wealth and give


If you are looking for a technical guide on how to invest money this is not the book for you. If you are looking for a motivating book on how to get out of debt and stay out of debt in today's World this is the book you want to pick up and read. Dave Ramsey also has a radio show and is well respected in the financial world. He has helped millions of people secede with getting out of debt. I wish I had been turned on to this book 3 years ago when I started working on my debt situation because I think I would be out of debt by know. I changed the way I was paying off my debts when I started reading this book and have shaved off several months on my debt being cleared. So if you are living in Debt pick up this book and give Dave a try.

My Seven Baby Steps Journey to Finacial Peace

The Seven Baby Steps

As I have noted is several previous posts I have been reading Dave Ramsey's 'Total Money Makeover'. In this book and on his web site he lists what he call's seven baby steps to financial peace. I will on occasion post updates on my personal progress and journey to along this path. The up's and down's and personal feelings as to whether this is a valuable plan to follow or not in my opinion along the way to freedom from the debt monster.

Baby Step 1. $1,000 to start an emergency fund - This fund is for emergency that life throws our way, such as the water pump goes out on the car or the dryer goes out. This is not to be used for vacations or wants. When I started on Dave Ramsey's program I had already been working hard for months to get out of debt and was over paying on several credit cards but I did not have an emergency fund so I dropped back to making just minimum payments on all credit cards so I could put $1,000 into an emergency fund which took a little over a month. Then went back to paying extra on the credit cards.

Baby Step 2. Paying off all Debt using the Debt Snowball - List all debts in order from smallest to highest. Pay the minimum amount due on all but the smallest and pay the maximum you can on that one. Once it is payed off apply that to the next smallest amount and so on until all debt is payed off. Provided no major emergency's come up I will be out of debt by the end of 2010. It is at that point I will be ready to start step 3.

Baby Step 3. 3 to 6 months of expenses in savings - You need to have 3 to 6 months in savings in case of emergency. Again a trip to Cancun is not an emergency or in my case a 4 star hotel at Comic Con is not an emergency. I will be ready so to start this step and I look forward to the peace it will bring to my life.

I will cover Steps 4 - 7 later when I'm ready to hit those steps but if you want more information on these steps know then please head on over to Dave Ramsey's Web Site for more information.

Credit and Debt

The following is from Dave Ramsey's "The Total Money Make Over" workbook. Chapter 3: Debt is not a tool: Debt Myths

1. In 1910, the Sears catalog stated, "Buying on credit is folly." Nearly a hundred years later, Sears now makes more money on the interest paid on its credit-card accounts than it does on the sale of merchandise.
2. The founder of JC Penney department stores was a man nicknamed James "Cash" Penney because he personally detested the use of debt or making time payments. Today, Penney's makes millions each year on their customers who use plastic.
3. Henry Ford thought debt was a lazy man's method of purchasing items. As a result of Ford's belief, the Ford Motor Company did not offer financing plans until ten years after General Motors offered them. Today, however, Ford Motor Credit is one of the most profitable divisions of Ford Motor's operations.
4. Proverbs 22:7 says, "The rich rules over the poor, and the borrower is servant to the lender."
5. If you want to know how to get and stay skinny, talk to skinny people. If you want to know how wealthy people get and stay wealthy, talk to wealthy people.

Barring any unexpected emergency I will be completely out of debt by following Dave Ramsey's plan by the end of 2010. This after having flounder for years with trying to get out of debt on my own. It has just taken a plan and focused hard work. http://www.daveramsey.com/

Total Money Makeover

"Total Money Make Over" by Dave Ramsey

I started working on a plan several years ago to get myself out of debt. Things have been going pretty well over the last 3 years and I'm starting to see the light at the end of the tunnel. Recently a friend told me about Dave Ramsey and his book "The Total Money Make Over". This past Christmas I was give a gift card to Borders and decided to purchase Dave's book with my gift card. I have read a little more than half of the book and I wish someone had told me about this book 3 years ago when I first started working on getting out of debt because there is no doubt in my mind if I had started on Dave plan 3 years ago I would be out of debt at this point. However I have made some changes in my debt management plan and I'm already seeing some progress in my get out of debt plan.

The following are a few notes I have take from the book as I have gone along so far;

• Walgreens, Cisco, Microsoft and Harley-Davidson are run debt-free
• Sears now makes more money on credit than on teh sale of merchandise
• Debt is the symptom of over spending and undersaving
• Studies show that the zip codes that spend 4x's what anyone else does on lottery tickets are those in lower - income parts of town.
• "A budget is people telling their money where to go instead of wondering where it went" John Maxwell
• Cash enables you to say no to yourself
• Ignorance is not lack of intelligence; it is lack of know how
• Continuing to do the same thing over and over again and expecting a different result is the definition of insanity
• "You can get anywhere if you simply go one step at a time"