Budget Saver Tip #33: Start A Money Makeover

I recently read this book after a dear friend told me about it, and I was pleased to realize that my husband and I already do most of the things Dave Ramsey advises in his Total Money Makeover Plan. It also gave me a greater appreciation for the fact that we had no student debt right out of grad school, as frankly, I was stunned to learn how much student debt the vast majority of Americans accrue.

One of Dave Ramsey's biggest pushes is to help people get out of debt. I guess if you've never been without debt it's hard to conceive what it feels like to be debt-free (except a mortgage), but from my husband's and my point of view, how do people function under such heavy debt burdens? Where's the peace of mind, the reassurance that if something terrible happened, you'd be okay financially. Of course, in our finances we still have progress to make and goals to reach, but I'm glad to re-realize that we're on the right track.

One thing I took particular note of in this book was his discussion on car loans. Back in this post I mentioned that it seemed that getting a car loan was just a normal way of life for the average American. Well, I was right. As Dave Ramsey says: "When it comes to money, normal is broke. You want to be weird, and weird people don’t have car payments." (I guess that's why we've seen people look floored when they've learned we bought our van in full. In this, I don't mind being weird!) 

According to Ramsey:

"Recent statistics show that one-third of car buyers sign up for a six-year loan at an average interest rate of 9.6%. Among these buyers, the average price of the car is just over $26,000. This means that one-third of the cars you see on the road are dragging a $475 payment behind them.

"The car dealer won’t tell you that your awesome new car loses about 25% of its value the instant you drive it off the lot. After four years, your car has lost about 70% of its value!

"What does that mean? After six years, you’ve paid almost $33,000 for a $26,000 car, which is now worth maybe $6,000. Not a good deal." (Source)

Ugh. Americans definitely need to wake up and get wise to the numbers! (If you're wondering how not to do the above, see Dave Ramsey's car plan here, and what we did last year here.)

And by the way, if you're one of those who likes to lease your cars, that's an even worse mistake--in fact, Dave Ramsey calls that "car fleecing:"

"Statistically, leasing is the most expensive way to drive a car. But, according to CNW Marketing Research, nearly one in five people lease their cars. The National Auto Dealers Association says car companies make more money off leasing you a car than if you bought a car with cash. Don’t fall victim to the 'fleece.'" (emphasis added) (Source)

There is so much more great information in this book and so much sound advice that I highly recommend it for anyone who wants to know how to get out of debt and/or how to get more on top of their finances. This is a "makeover" that has worked for many thousands of people, laid out in a step-by-step process that makes it easy to understand, if not to do. As Dave so often says, "If you will live like no one else," [budgeting, sacrificing, and being responsible with your money], "one day you will live like no one else," [be financially free and independent].