The Bohannon Family

The Total Money Makeover

I’m really behind on putting up these posts, so I’m just going to do a brief overview of what we’ve read the last couple of weeks.  Basically, debt is dumb.  ALL DEBT, ALL THE TIME!  Having a mortgage is pretty much the only debt Ramsey ever says is good.  He points out how much income you can free up by not having monthly debt payments, and how much less you would need to live from. 

Chapter Four has been about the “Secrets of the Rich”.  One of the myths was about gold and how people invest in gold because of a fear of the economy collapsing.  I know that we have considered doing this, but Ramsey says that over the last 50 years gold has increased in value by 4.4 percent and that you can earn higher interest in a good mutual fund.  I do not know if that is true now because of the recession or depression or whatever this turns out to be, however one needs to think in long-term. 

Ramsey also discusses groups that say you can work a few hours a week and get rich quickly.  Yep, been there done that.  There isn’t an easy program to make millions.  He says that if you want to have money, you will have to work for it.  It will be hard!  It will not happen overnight! 

Another myth was about life insurance.  Ramsey talked about the difference between term life and whole life.  He says that buying whole life insurance is a horrible investment.  An example was shown of a man who bought a whole life policy of $125,000 for $100 a month.  This same man could have bought a term life policy of the same amount for $7 a month.  Ramsey says that you can invest your money a lot better than with a whole life policy, which we are supposed to get to investments by the end of the book.

Some of the other myths were about the lotto, buying mobile homes, and prepaying funeral or kids’ college expenses.  All are bad ideas according to Ramsey.  He said that the lotto preys off the poor.  Mobile homes lose value at an astonishing rate.  And prepaying for anything puts money in someone elses pocket that you should have working for you.

I think that pretty much gets us caught up besides the More Than Enough book, but we haven’t read as much of that one lately.  There is an amazing amount of information in these books.  I can’t wait until we get to the part where we learn what we should be doing.  We also went over our budget recently and when I thought that cutting up our credit cards was drastic, well I haven’t seen anything yet .  It’s about to get crazy here.  Stay tuned for our crazy, extreme total money makeover.

The Total Money Makeover

We’re still working through the debt myths.  We skipped a few, because they were about co-signing, leasing cars and such.  The one we got the most out of was about car payments.  Ramsey states that having a car payment is “one of the dumbest things people do to destroy their chances of building wealth”.  He says that the average car payment is $464 over sixty-four months.  Then he explains that most people will get a new car as soon as their earlier car is paid for and continue this process for their entire life.  Ramsey wrote that if you were to invest that car payment in an average mutual fund from the age of 25 until 65 that you would have $5,458,854.45!  Yes, that was over FIVE MILLION DOLLARS!!!  Live like no one else, so that later you CAN live like no one else!

The other myth that was informative to us was about getting a credit card to build your credit.  Ramsey thinks that the only debt you will ever need is a mortgage and he says that you can get a loan for a house if you have lived right.  If you have paid your landlord on time, had a job in the same career for two years, have a good down payment, and your payment will not total more than 25% of your take home pay then you will be able to finance a house.

I wish we had read these books when we were first starting out.  I am so thankful that my children will have this knowledge and will be able to make decisions based on what is right, not what everyone else does.  I am also thankful that we are still fairly young and can change our patterns.

More Than Enough

We skipped a bit of this chapter as well since Ramsey was talking about single moms and blended families.  The part we did read was about marketing.  He discussed how the desire for “stuff” has ruined relationships.  He showed how we spend so much time watching TV, playing video games, or whatever instead of helping our family, church members or neighbors.  I know we’ve said we don’t have time for being with people at times, but we do have time for these time wasters.  Now, we are so lonely and desperate for company that is not the case.  I hope we will always keep people a priority and reject the trappings of this world.