Book Review: Financial Peace

Financial Peace (revisited)
By: Dave Ramsey

Overwhelmed by debt?
Does it seem like you are throwing your money into a bottomless pit of debt?
Do you feel like you are never going to get ahead?

It was these feelings that motivated me to check out Dave Ramsey's Financial Peace (revisited). Initially I had never heard of Dave Ramsey before and was in doubt of whether or not his message would do me any good. Within the first few pages of the book, I found myself becoming inspired. Dave Ramsey recounts his tale from being a young successful real estate entrepreneur with a net worth of 4 million who had all it to losing everything but his home. Dave details the struggle that he and his wife went through to get back on their feet and the desire to help others in the same situation.

Financial Peace (revisited) is the second edition of Dave Ramsey's successful book Financial Peace. In the 2nd edition he covers the basic to becoming debt free. This includes creating the foundation to becoming debt free, learning to avoid money traps, saving money and more. Dave also included chapters specifically targeting singles, kids, marriage, and families.

In this book he discussed the concept of the "debt snowball". This method basically entails paying the smaller debt first and then compounding the payments until each bill is paid. Ramsey stressed the importance of "baby steps" in which he lists several steps to get you started. As an added bonus, the book contains budget, debt snowball, and other financial forms to aid in your journey towards financial freedom.

In my small library of financial books, this particular one is the first that I bought. When I first read the book I couldn't afford to buy it so I checked it out of the library. Once I had the money, I bought it and consider it to be one of the best investments I've ever made. If you are questioning how to get out of your financial situation, this is definitely the book to get you started.

They did it!

In case I never mentioned, I love listening to the Dave Ramsey show. Though I rarely get a chance to listen to live show, I can still check it out on Dave’s website. I found this particular story to be very inspiring. This couple had an income of $35000 a year and still became debt free. Check out the call by clicking on the link below.

Dave Ramsey- Caleb and April

It goes to show you that it can be done even if you aren’t making $100,000 a year. If you are anything like me, I make a whole lot less than that a year. I get inspired when I hear about people who make similar to what I do a year pull off what seems to be impossible. If they can have the will power and determination to become debt free, why can’t you or I?

Today is the day! Part 2

Which bill do I start with?
I have read many ideas on how to go about this. I heard that you should go for the one that has the highest interest rate. For me, I preferred the Dave Ramsey’s “Debt Snow Ball” method. List your debts from lowest to highest and start tackling the lowest debt.

For example: Loan $500
Medical Bills $1100
Credit Card $6000
Car $12,000

You would pay off the $500 loan as quickly as possible while paying the minimal payment on your other bills. Once the loan is paid off take the payment that you would use on the loan and add it to the payment on the medical bills. You would do the same for each time you pay off a debt until you have paid off everything. Seems simple doesn't? You would be surprised at just how much of a motivator it is when you pay off your first debt.

There is one important point I forgot to mention. I have learned this hard way so I definitely want to share this. Even though you are working towards paying off your debts, don’t forget to factor in savings into your budget. I like it call it my “Murphy” fund. Even if it is as little as $10 to $25 per pay period it is best to put something away in case of an emergency.

Over the next few days I plan on covering some of my favorite financial books. If you have any that you enjoy, please leave a comment. I’m always looking for new books to help me on my debt free journey.