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 Need a
Makeover?
A Money Makeover, That Is
By Dave
Ramsey
It seems
like every day I get an e-mail or a call in to the radio
show telling me it is impossible to save any money, dump
debt or invest using the money you bring home each
month. WRONG! They problem is that most people don’t
know where their money is going every month. The money
came in and the money went out and only the names were
changed to protect the innocent. Changing how you handle
money isn’t easy – it’s hard to do. The problem isn’t
money, it’s the idiot I shave with.
My
latest book, “The Total Money Makeover” is full of
stories of people from all economic levels who are
changing their financial futures using their greatest
wealth building tool – their income. What do these
people do that the others don’t? They name their money
each month BEFORE they spend it. They BUDGET. Oooooooooh,
the dreaded B-word.
If
you’re going to be “The Millionaire Next Door” you have
to put your money to work for you, not put you
to work for your money. Every month you must spend every
dollar on paper before the month begins. If you’re
married, make sure your spouse is on the same page with
you.
Start by
adding up your monthly income. Then list all of your
monthly bills and subtract the total from your income.
Be sure to include a monthly payment of funds for your
non-monthly items such as car insurance, taxes and
Christmas (it happens at the same time every year - plan
ahead and pay cash). The amount left over after the
bills are paid is your disposable money to use for
eliminating that student loan you’ve had around so long
you think it’s a pet and that MasterCard bill that has
mastered you.
“But
Dave, there isn’t anything left over!” Well, then you
need to look at your bills. Are you making payments on a
car that’s $36,000 when your annual household income is
$30,000? Americans spend a ton of money each year on
their cars just to impress people they don’t know for 30
seconds at a stoplight. You have too much car. Sell the
car, sell the car, SELL THE CAR! Buy an old, used car
that gets you around until you’ve had time to get out of
debt and save money so you can PAY CASH for your next
$36,000 car.
After
you’ve sold the car, start selling other stuff. Sell so
much STUFF that the kids think they’re next. Don’t get
me wrong, I want you to have stuff -- stuff is great.
But I don’t want your stuff to have you. And if you
can’t pay for your stuff on the money you bring in, then
that’s exactly what’s happening. Use the money from
selling your stuff to pay your bills and start saving.
Gazelle Intensity
Learn to
think like a gazelle. Gazelles are gentle creatures
hunted by the fastest animal on earth – the cheetah.
With the cheetah being so fast, you would think the
gazelle would be extinct, but they’ve learned that the
cheetah is only the fastest animal on earth running in a
straight line. So when being chased, the gazelle bobs
and weaves and runs in circles until the cheetah gets
tired and gives up. Think like a gazelle. Do whatever it
takes to get to your goal. If you are a gazelle and the
marketer and credit card companies are cheetahs, bob and
weave and run -- do whatever it takes to get away. When
you get that new credit card application in the mail –
you know, the one that promises low introductory
interest rates and lots of bonuses – scream CHEETAH! and
destroy it as quickly as you can.
Envelope System
After
you’ve set up your monthly budget, get out your
envelopes. Label them for the expenses you pay monthly
with cash – entertainment, groceries, eating out, etc.
Put the amount of cash in individual envelopes that you
budgeted for each item for that month. When the money in
the eating out envelope is gone –STOP eating out. It’s
that simple. This is how you stay within your budget.
Don’t be
discouraged if your first budget isn’t perfect. It
typically takes a few months before your budget meets
your real spending. Make adjustments each month until
you get it right. You can’t get out of a hole by digging
out the bottom. You have to stop spending more than you
make. Then, before you know it, your debt will be gone,
your savings in place and money makeover complete. Then
you can call in to “The Dave Ramsey Show” and scream,
“I’M DEBT
FREE!”
Dave Ramsey offers life-changing financial advice as
host of a nationally syndicated radio program, “The Dave
Ramsey Show,” which is heard by nearly 4 million
listeners each week, on more than 375 radio stations
throughout the United States. The author of multiple
New York Times best-selling books, Ramsey added
television host to his title when “The Dave Ramsey Show”
on Fox Business Network debuted nationally Oct. 15,
2007. For more information, visit
www.daveramsey.com.
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