The Total Money Makeover
I’m really behind on putting up these posts, so I’m just going to do a brief overview of what we’ve read the last couple of weeks. Basically, debt is dumb. ALL DEBT, ALL THE TIME! Having a mortgage is pretty much the only debt Ramsey ever says is good. He points out how much income you can free up by not having monthly debt payments, and how much less you would need to live from.
Chapter Four has been about the “Secrets of the Rich”. One of the myths was about gold and how people invest in gold because of a fear of the economy collapsing. I know that we have considered doing this, but Ramsey says that over the last 50 years gold has increased in value by 4.4 percent and that you can earn higher interest in a good mutual fund. I do not know if that is true now because of the recession or depression or whatever this turns out to be, however one needs to think in long-term.
Ramsey also discusses groups that say you can work a few hours a week and get rich quickly. Yep, been there done that. There isn’t an easy program to make millions. He says that if you want to have money, you will have to work for it. It will be hard! It will not happen overnight!
Another myth was about life insurance. Ramsey talked about the difference between term life and whole life. He says that buying whole life insurance is a horrible investment. An example was shown of a man who bought a whole life policy of $125,000 for $100 a month. This same man could have bought a term life policy of the same amount for $7 a month. Ramsey says that you can invest your money a lot better than with a whole life policy, which we are supposed to get to investments by the end of the book.
Some of the other myths were about the lotto, buying mobile homes, and prepaying funeral or kids’ college expenses. All are bad ideas according to Ramsey. He said that the lotto preys off the poor. Mobile homes lose value at an astonishing rate. And prepaying for anything puts money in someone elses pocket that you should have working for you.
I think that pretty much gets us caught up besides the More Than Enough book, but we haven’t read as much of that one lately. There is an amazing amount of information in these books. I can’t wait until we get to the part where we learn what we should be doing. We also went over our budget recently and when I thought that cutting up our credit cards was drastic, well I haven’t seen anything yet :). It’s about to get crazy here. Stay tuned for our crazy, extreme total money makeover.