Total Money Makeover book review part 2 of 2.
The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness
If you haven’t read part one of The Total Money Makeover Book Review yet go do it now!
For the ones that did read it. Lets pick up where we left off yesterday with a small recap.
This is where we are now:
- Current with all creditors
- Emergency fund of $ 1.000
- All debt paid off except for the mortgage
- Expanded emergency fund to have enough to live off for 3 to 6 months
Let continue!
Baby step 4
‘Invest 15 Percent of Your Income in Retirement’
The title actually says it all. In the book there are a lot of examples and calculations and stories on how others did this.
Bottomline is:
Invest 15 percent of your income into mutual funds. Look at mutual funds that preferably have been successful for over 10 years and invest in that.
But to get to know more about this it is advised to read Dave’s other book:
Financial Peace Revisited: New Chapters on Marriage, Singles, Kids and Families
At least in The Netherlands mutual funds don’t exist so when I get to this step I will have to do my own due diligence on what’s best for me.
Baby step 5
‘Save for College’
Before you save for college Dave wants to be sure that you know why you want this for your kids.
He states that college is overrated and that there are other ways of succeeding in life. I agree with this although I think it’s not really about the skills you learn at school but the people you meet and the person you become.
The other ways he talks about are for example:
Join the military or the National Guard or get a scholarship and get free education.
This really doesn’t apply to my country. I don’t think scholarships even exist and college is way different here. I’ve never been to a frat party before.
I didn’t read the this and the previous chapter that well because well it really doesn’t apply to me.
Baby step 6
‘Pay Off Your Home Mortgage’
I don’t have a mortgage and I never will…
So yet again I didn’t care for this chapter that much but there are a few good takeaways even for me!
Mortgage tax deductions are no bargain.
Pay cash for your house and if you can’t pay as much up front as you can so you won’t go over a 15 year mortgage. Never ever do a 30 year mortgage. But it’s better to save money for years and stay in your current house and buy a house once you have the money.
Remember what was said in one of the first baby steps. We are not allowed to borrow money any longer.
My plan is to buy my house in cash. This is not because of this book (sorry Dave!). This is how I’ve always envisioned it. This suitcase full of money. Walk up to the realtor (or whoever you give the money to) and just nod and say “It’s all there” 😀
The dream seems to slowly come true because the option of getting a mortgage is not even on the table for me since I have a BKR registration. This is a Dutch system that shows your credit worthiness. When they check my credit this will tell them don’t give this guy a mortgage under any circumstance!
Baby step 7
‘Build Wealth’
You’re a freaking rockstar cuz you’ve paid everything off! Utterly and completely debt-free!!
Now you are ready to build massive wealth.
We will focus on these three parts.
FUN, INVEST and GIVE
FUN
Now you can finally have some fun. Since you started this journey you did not have 1 fun day because you were grinding like crazy right? Yeah you probably guessed it already. I believe that we should have fun during the entire process.
If you read a lot of the success stories you will see that it took people 7 years or longer. I’m not going to stop having fun for 7 years holmes! (Although I’ll be Financially Free in two years.)
And luckily T Harv Eker agrees with me. He says to use 10% of your money each month and blow it on stuff. You need to reward yourself as well. You will not follow along with this whole process if it’s utter agony.
As every great philosopher that ever lived said: “The journey is more important than the destination”. And the journey is long so have fun along the way!
INVEST
This is necessary to go from debt-free to financial freedom.
I have little experience with investing so I’m not gonna give you guys tips on this. When you are at this step (well done!) and go read, watch, listen to investment content!
GIVE
Giving is one of the best experiences you can have and I believe that is true. I love to give gifts to my nephews and see them light up. It’s pure bliss.
Also love getting that perfect gift for someone and feeling their joy of getting it. Sometimes it takes a while before they can actually appreciate it 😉
Plus! All the books on Universal laws say that when you give without expecting anything in return you will receive in return. You get extra karma points 😀
Final step
‘Live like no one else’
You are now FINANCIALLY FREEEEE!
You’re now allowed to make “big” expenses and live the life you want to live while still considering the purchases of course.
And you still have to be sensible about it. But if you have a million dollars saved up by now it’s okay to do the trip you’ve always wanted to do. Or buy that car that depreciates like crazy. It doesn’t matter. Live a little!
Conclusion
Like Ron Burgundy says about his own book.
“It’s one hell of a book!”
There’s a lot of truth in this book and if you follow the steps you will eventually get to financial freedom.
If you ask me if this is the best way to get there then my answer will be NO.
But hey what do I know I’m mister theory at this point. Ask me again in two years – 22 days 😀
Lots of content is only for the American market and can be skipped for non-Americans.
One thing I haven’t mentioned yet is that the book is littered with success stories. At first it’s really fun to read but after you’ve read 5 of them it starts to get old. So at some point I did skip most of the success stories.
It is quite repetitive as I said in the first part of this book review but I totally and completely recommend you read this book.
But it’s your life so do whatever the f you want.
Day 22 balance:
Expected expenses today:
Public transport to ITNext Summit € 22,00 and something for food and drinks
Expenses yesterday:
Personal:
€ 0,00
Business
€ 0,00
Expected income today:
None
Income yesterday:
€ 0,00
Wallet:
€ 15,45
Current balance personal account:
€ 22,08
Current balance business account:
– € 24,35
Total:
– € 2,27
– IRS: € 46.534,16
– Business: € 22.016,58
– Personal: € 8.587,58
Total Debt:
€ 77.138,32
Balance day 22:
– € 77.140,59
€ 5.170,00
Cheers,
David
Currently reading this financial book:
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
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