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5.0 out of 5 stars The Seven Baby Steps To Financial Freedom, February 12, 2012
This review is from: The Total Money Makeover: A Proven Plan for Financial Fitness (Hardcover)
This book reveals an effective plan to eliminate the debt. If you are heavily in debt then you must read this book. The plan explained in this book is not easy as it requires discipline, hard work and sacrifice but this plan works with almost 100% guarantee.

According to the author, you should follow simple and uncomplicated philosophy about money. Every body know how to lose weight. It is a plain theory Exercise more and eat less. The same lies for reducing debt and becoming wealthy. Earn more and spend less. Personal finance is 80% behavior. You should develop some good money habits and money will start flowing in your bank balance. This book is a Proven plan to financial fitness that the author and his team have developed over two decades.

By following the seven steps in order as explained in the book one can become debt free and can become wealthy slowly.

Step 1 : Save 1000 Cash As A Starter Emergency Fund

Emergency fund is the amount of money that you keep apart in the saving account. This money should be used only in the emergency situations like car damage, medical expenses and job loss. When you have this money sitting in the saving account you will feel more relaxed and confident about the future.

Ideally the amount of money in the emergency fund should equal to the three times of the total monthly expenses. Author advises to start this fund with $1000. You should not skip this step.

Step 2 : Start The Snow Ball

Once you have saved money for emergency fund. You should start the snow-ball process. Make a list of all your debts and start paying the lowest debt first, once you have paid that debt, start the same process and pay off the next lowest debt. Save every dollar and get out of debt.

Step 3 : Finish The Emergency Fund

Once you have eliminated all your debt, now it's the time for some serious savings. Dave Ramsey explains that the starting emergency fund of $1000 is not enough and you must add some more money in that fund. You should accumulate three to six months of living expenses, for many people the ideal amount would be $5000. Once you have paid all your debts, the money that you save each month should go to emergency fund till it is equal to at least $5000. If you were paying $500 per month for the debt, now send that money in the Emergency fund account.

To know more you should buy and read this book. I recommend this book to those people who are in debt and don't know how to get out of debt. This book will not only help you to get out of debt but will also make you wealthy.
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