Tuesday, April 11, 2017

Financial Peace Revisted by Dave Ramsey (Book Review/Notes)

One of the books I was looking forward to reading that Dave Ramsey wrote was Financial Peace Revisited.

There were some helpful parts, but - for the most part - I didn't feel that this book had as many suggestions and guidance as other books he has written.

Nonetheless, these are some things I found informative and that I wanted to remember:

Have 3-6 months of expenses in liquid savings just for emergencies.

Extreme amounts of money or extreme lack of it magnifies character.
- Larry Burkett

If you start to save at age 25 with the idea that you will withdraw your money at age 65, you will for 40 years. Let's say that you put $1,000 in a savings account one time at age 25 and you never deposited or withdrew anything from that account until age 65.

At 6% per year you would have just over $10,000 at age 65. If you doubled the interest rate, you'd have over $93,000 at 12%at age 65.

At age 20, you save for 45 years until age 65, saving only $65 per month at 12% average annual return. In 40 years, you would accumulate $1,394,555.

The key suggestions are:
- Avoid "Stuffitis" - or the worship of stuff.
- Plant Seeds - give money away to worthy causes.
- Live Substantially Below Your Income.
- Sacrifice now so you can have peace later.
- The borrower is the servant to the leader.
- Check your credit report at least once every two years.
- You must save money.
- Take time to prioritize your life daily.
- Keep your spiritual life healthy

The ultimate measure of a man is not where he stands
in moments of comfort and convenience,
but where he stands at times of challenge and controversy.

Major Components of a Healthy Financial Plan:

- Written cash flow plan
- Will and/or estate plan
- Debt reduction plan
- Tax reduction plan
- Emergency funding
- Retirement funding
- College funding
- Charitable giving
- Teach my children
- Life Insurance
- Health Insurance
- Disability Insurance
- Auto Insurance
- Homeowner's Insurance

The rich rule over the poor and
the borrower is servant to the lender.
- Proverbs 22:7

Consumer Equity Worksheet
(Value - Debt = Equity)

Real Estate
Cash on Hand
Checking Account
Savings Account
Money Market Account
Mutual Funds
Retirement Plan
Stocks or Bonds
Cash Value (Insurance)
Household Items
Unsecured Debt (Negative)
Credit Card Debt (Negative)

Income Sources:

Interest Income
Dividend Income
Social Security
Disability Income
Cash Gifts
Trust Fund

Set aside money for lump sump payments:

Real Estate Taxes
Homeowner's Insurance
Home repairs
Replace furniture
Medical Bills
Health Insurance
Life Insurance
Disability Insurance
Car Insurance
Car Repair/License Plates
Replace Car
IRS (Self-Employed)
Gifts (including Christmas)

Monthly Cash Flow. At some point in the future, see if Dave Ramsey's website has a copy that can be downloaded and modified.

Recommended Percentages in a budget:

Charitable Gifts 10-15%
Saving   5-10%
Housing 25-35%
Utilities 5-10%
Food 5-10%
Transportation 10-15%
Clothing 2-7%
Medical/Health 5-10%
Personal 5-10%
Recreation 5-10%
Debts 5-10%

No comments: