Dissecting Dave Ramsey’s “Total Money Makeover” - Build Wealth [Part 7 of 7]

Posted by panzer on July 19, 2008. Filed under [personal finance]
Tags: [book review, Dave Ramsey, financial freedom dream, financial freedom in Singapore, financial freedom principles, financial literacy in singapore, paying off debt, personal finance, personal finance in Singapore, Timothy Ferriss, Total Money Makeover]

You have come to the final instalment in the series reviewing the 7 baby steps in Dave Ramsey’s “Total Money Makeover“. Let’s review the 7 baby steps in his book:

1. Save $1,000 cash as starter Emergency Fund
2. Start the Debt Snowball
3. Finish the Emergency Fund
4. Invest 15% of your Income in Retirement
5. Save for College
6. Pay off the Home Mortgage
7. Build Wealth

Building Wealth Towards Financial Freedom

If you have reached this step after doing steps 1 to 7, you find yourself in the enviable position of building up wealth from this point on. Your wealth is represented by the personal net worth of all your assets less your liabilities. Reaching this stage means you have no liabilities and all savings can be channelled into investments into your own retirement fund.

This is truly when you are working for yourself. I am a believer in the concept of financial freedom or financial independence not because I want to more and more to be happy but because with an investible capital that is sufficient to support my lifestyle, I can choose to do whatever I want in life without worrying about the time-money trade-off when you need to work for a living.

The “Four Hour Workweek” by Timothy Ferriss has refueled my interest towards seeing how I can find my muse or money making idea and implement it to run on autopilot to sustain the desired lifestyle. Lifestyle design sounds more and more attractive over time.

Putting Total Money Makeover into Practice

Dave Ramsey’s approach towards total money makeover applies for those who are overtaken by debt and do not see the solution out of problems. Dave’s approach is common-sensical and in order to implement it successfully, you must have your eyes opened to one’s dire situation and to take concrete action to solve it. It isn’t easy to get out of debt and Dave’s stories from ordinary Americans demonstrates that success in measured in years of financial discipline, living way within your means and trying to raise income through having a second job or selling your stuff.

Some of his methods sound extreme because the situation warrants it. To be made bankrupt is not a laughing manner as you can read from IPTO’s information about rights and responsibilities of an insolvent person.  You cannot travel freely and are obliged to inform the other party when you intend to obtain credit of more than $500 that you are an undischarged insolvent or risk 3 years jail and/or $10,000 fine.

For those of you who are on  your way towards building wealth, congratulations are in order. This is the true start to one’s journey towards financial freedom because you can now concentrate on building up investible net worth so that you will be out of the rat-race. My own dream of getting out of the rat-race is to make full use of my public library card and consume as much non-fiction as I can. I want to learn new things about the world and avoid brain-rot. I also want to experience the pleasures of reading fiction especially science-fiction and fantasy genres because of the magical worlds created by the authors allows me to travel to magical realms and worlds and to explore alternate realities all within my mind.

Where are you at in your own journey towards financial freedom and in practising the 7 baby steps in “Total Money Makeover”?

Tell me about it by leaving a comment!

Be well and prosper.

Related articles by Zemanta

• The bearable lightness of being (without a housing loan)
• How I Paid Off $35,000 in Debt, and How You Can Too
• Money Managing Matters: Three Dos, Don’ts