“The Total Money Makeover” Takeaways – Mark Dano – Medium
Famous personal finance guru Dave Ramsey shares many of his fundamental recommendations in his best selling book, The Total Money Makeover. Below are a few of my favorite takeaways.
Save up to at least $10,000 in an Emergency Fund.
When things are flush, it never seems like you’ll be bust again. When things are going well for us, we rarely believe that our situation can ever deteriorate. Life is more cyclical than we can ever predict. It is full of both positive and negative surprises. This is why building an emergency savings fund is critically important. One day, emergency will strike and you will be grateful that you did. When an HVAC unit needs replaced, what will you do? When you have a health crisis, how will you pay the bills? What happens if you get laid off? All of these emergencies aren’t desired, but they happen to people every single day. Be responsible and be prepared.
Ramsey believes we need to avoid debt at all costs. Stop using credit cards. Pay off your car note. Pay off your student loans. Pay off your home mortgage as fast as you can. Living debt free is living a more free life.
Don’t buy shit with money you don’t have to impress people you don’t care about.
The easiest way to maintain financial independence is to live more simply. Live with less. Just like the Essentialism lifestyle preaches, “Less but better.” Enjoy hobbies that don’t cost money. Don’t worry about brand names. Don’t buy a house or car you really can’t afford.
Contribute employer match in 401(k) and then max out Roth IRA.
Compounding interest proves that the key to preparing for retirement is as simple as investing as early as possible. Contribute to your 401(k) up to the employer match and then stop. Max out your legal annual Roth IRA contribution. If you consistently do these things until retirement, you will never have to worry about money in your twilight years.