Day 21

My second book review!

For the regular readers it won’t be a surprise because it was on the bottom of the blogpost every time with the reading stats.

Here it is:

The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness

I will split this book review up in two posts.

Get ready for part 1 of 2.

First off all I just want to start off by saying. Damn! This guy can talk and talk and talk. For Europeans this is a typical American book. What I mean by that for the American audience:

He could have written this book in 50 pages but he just keeps repeating the same stuff over and over again and made it 254 pages (without the addendum and stuff). So it’s not really on an academic level 😉

But hey it’s not necessarily a bad thing. He keeps repeating and repeating so that you don’t have to repeat it yourself and I do know every step by heart now. And this book is for everyone so even your 5 year old child can read this except maybe for the really financial stuff.

I might sound a little condescending but that’s not the message I want to convey. This is really valuable information and I do recommend you read this book.

Last book review I did the process by chapter but this time I’ll do it baby step by baby step. That’s what Dave calls each step in the Total Money Makeover process.

I also watched some of Dave’s youtube videos because I wanted more! He’s really energetic and reminds me a lot of Steve Balmer. The dancing ex-ceo of Microsoft.


So mister Ramsey has a whole system in place to get you out of debt and into financial peace (as he calls it).

He himself has gone broke twice in the past and he was sick and tired of getting sick and tired so he decided to outrun debt forever.

The metaphor he uses is:
You have to be a gazelle! Debt is the leopard. You have to RUUUUUUUN! And make sure you get away.

This is what he calls: “Gazelle intensity”.

Baby step prerequisites

‘You will have to be current with all your creditors.’

Make sure are current on your all the payments you have monthly. Things like rent or mortgage, health insurance, phone, car, credit card, Netflix, Spotify, whatever. Those should be paid before getting started with baby step 1!

One of the other important things is that you are not allowed to borrow money any more!

Dave says this a lot: “Give every dollar a name.”

What he means by that is that every dollar, or euro in my case, has been designated to a specific task. You will decide before you get money from your paycheck or invoice what each dollar will cover.

I am behind on quite a few things at the moment so this is where I start.

Baby step 1

‘Save $1,000 Cash as a Starter Emergency Fund’

When everything is up to par it’s time to establish an emergency fund.

I like the order Dave’s suggesting. He also explains why this is step 1.

When he started teaching this system this wasn’t the first step and he noticed that people would start paying off debt immediately but when they had an unexpected expense like a car breaking down, washing machine stops working or anything else. They would borrow money to get this fixed and they would be demotivated and quit the system.

Because this fallback mechanism is in place this will make sure you can take a few hits instead of getting KO-ed by the first hit.

Whenever you have saved $ 1.000 you can move on to baby step 2. Whenever an emergency arises and you have to use part of your emergency fund you have to go back to baby step one and fill it up to $ 1.000 again.

Dave also goes on about the “Gazelle intensity”. Work as hard as you can as many hours as you can. If you have to work multiple jobs to do it, just do it. Go full-on work mode and get shit done.

I respect his thoughts on this and I totally disagree. Yes you should have this intensity but no you should not work like a mindless person. Work smarter not harder. Or do both but he’s talking about paper routes, flip burgers, deliver pizza’s and so on. All kind of jobs that pay minimum wage.

Why not use your head and land a freelance remote job you can do from home and earn € 100,00 an hour for. Yes it may take some more time than the interview process at the burger place nearby. Bu you can do this relentless as well. Go find clients and projects. Yes it might take a month or two. But you will make more money in the first month than 6 months at any minimum wage job.

Then he talks about selling stuff. Sell everything you have and live like no one else so later on you can live like no one else.

I can’t sell anything because it’s technically already from the IRS and I don’t have anything of value at the moment anyway. They seized all my stuff but that’s for another time.

It is a fair point to check your current expenses and cut down on them. If your car is the biggest expense after the costs for living than maybe you get rid of it and find a better alternative.

Also cut up all your credit cards and only do cash and debit cards!

I do totally support the credit card destruction. It should be a ritual so that afterwards you feel that relief that you are free from getting deeper into credit card debt.

Baby step 2

‘Start the Debt Snowball’

I love the thought process behind this baby step. This step is not about math but about psychology.

Make a list of all your debts and order them smallest to biggest. Don’t look at the interest rates or possible penalties.

Wipe them out one by one and create momentum. Even though the first few might be really small amount that don’t matter in the grand scheme of things it will create the sense of accomplishment. It will give you a boost to continue.

I will make a hitlist of all my debts, when I reach this step, and cross them off one by one. Exactly like they do in the movies with the hierarchy of the mob they’re trying to put behind bars.

I can’t wait to get to this step 😀

Baby step 3

‘Finish the Emergency Fund’

Debt free baby!

Alright so now that we’re debt free except for the mortgage (this will get covered in baby step 6). We will make sure that the emergency fund is enough to live off for 3 to 6 months.

By now you know what your monthly expenses are. Multiply them by 6 and voila you have your total emergency fund number.

You decide how many months you want to have a safety net for. I recommend you just do 6. It might take a bit longer but you will feel really secure before moving on to the next baby step.

The same goes for this emergency fund. Once you use the fund you have to fill it back up again!

To be continued!

Now lets switch to my financial situation.

Day 21 balance:

Expected expenses today:
Around 10 for food etc

Expenses yesterday:
€ 16,35 (grocery shopping)
€ 0,00

Expected income today:

Income yesterday:
€ 0,00

€ 15,45

Current balance personal account:
€ 38,43 – € 16,35 = € 22,08

Current balance business account:
– € 24,35

– € 2,27

– IRS: € 46.534,16
– Business: € 22.016,58
– Personal: € 8.587,58

Total Debt:
€ 77.138,32

Balance day 21:
– € 77.140,59

€ 5.170,00


Currently reading this financial book:

The Millionaire Next Door: The Surprising Secrets of America’s Wealthy

Page 27 of 245
11% read

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