Financial Peace Revisited (by Dave Ramsey)
Edition published 2003 by Viking Penguin
RMI5810 Personal Financial Planning
Professor James Carson
Why financial peace? I read about references to Dave Ramsey during the discussions of The Millionaire Next Door in the classroom blackboard discussion groups for our Personal Financial Planning(RMI 5810c) course, since I had to do a book review as part of the course I researched books authored by Dave Ramsey on Amazon, prior to this I had never heard about Dave Ramsey. Of his many books “Financial Peace” had a nice ring to it, you know sort of like Zen and the art of money management, mentioning peace and finance in the same line sounds very spiritual, and you would think that money andthe soul do not mix. But then again, maybe.
In the preface we learn that Dave Ramsey had a financial crisis back in the mid –eighties. “Been there done that” and this book is a revision of one printed in September 1995 with the addition of comments from his wife.
The Beginning… a good place to start – Dave explains how he lost all of his Real Estate business, the strain on his marriage andhow he lost everything but his home and the clothes on his back.
Enough of anything is too much – we have forgotten how to delay pleasure, the families of late 1960’s and 1960’s began to borrow in order to purchase homes, automobiles and other items, credit cards became popular around this time also. Our entire nation is in financial stress at the individual, city, state, and national level. Isthere hope? There is a way…
The Basics (a foundation) – we are ignorant of what money is and how to handle it; generally people marry broke and get deeper into debt about five years into marriage. “The love of money is the root of all evil” (Timothy 6:10). The following principles will lead into financial peace.
Understand the Spiritual Aspects of Money – Money problems are symptoms of apersonal shortfall. We contracted “stuffitis” an insatiable desire for only the good (expensive) stuff. We do not save, we spend more than we have and have no money discipline. Peace Puppies are introduced; they are basic principles to be applied to your financial life with discipline.
1. Avoid “Stuffitis” – The worship of “stuff”
2. Plant Seeds – Give money away to worthy causesLet the Buyer Beware – Caveat Emptor – Companies spend billions of dollars and hours to sell us. We must develop a power over purchase. Sales on credit, nothing down, no monthly payments for ninety days, no finance charges for six months, the technique of selling has a consumer powerless.
3. Develop your own “Power over Purchase”
Career Choice – If you are good at something,you become more intense, and you get more creative. You accomplish more so you get paid more. This causes to enjoy your work more, so you get better at it.
4. Find where you are naturally gifted – Enjoy your work and work hard
Lifestyles of the Rich – Avoid the lifestyles of the rich if you are not rich. Limit your style of living to far bellow your income...
5.Live substantially bellow your income
6. Sacrifice now so you can have peace later
7. You can always spend more than you can make
Dumping Debt – Change your paradigm debt is a product. The rich rule over the poor and the borrower is servant to the lender. Ramsey introduces and explains the debt snowball method to get out of debt, very interesting, I will try it. You pay off your smallestbalance first and use the extra money to add to the next payment until you pay off all of your debt. In order to get out of debt quit borrowing more money, consolidation loans do not work.
8. The borrower is servant to the lender
Cucumbers, Collectors and Credit Reports – Ramsey gives us insight into how to correct credit report errors and how to handle debt collectors.