The Total Money Makeover summary

In our modern world, we are constantly encouraged to go out and buy stuff – a house, a car, a huge TV, you name it. And how exactly are we supposed to pay for all these things that we simply must have? With credit, of course.

Debt today is so ingrained in our lifestyle that it’s hard to imagine living without it. You probably have a decent amount of debt yourself, whether in the form of student loans, a mortgage, credit card debt or car payments.

So far, we’ve established one way not to establish financial security: trying to spend our way to success using credit. So what can we do?

You’ll need to start by creating a step-by-step plan that charts the route to financial fitness. Although you know you need to change the way you approach your finances, you must also realize that you can’t change everything at once. Instead, you should do yourself the favor of proceeding slowly, one small step at a time.

Once you have your emergency starter fund set up, you’re on your way to turning your finances around. Now it’s time to get your debts sorted out.

Step two of the Total Money Makeover is to create a debt snowball.

Everyone has big worries about the financial situation they’ll face after retirement. We ask ourselves: Will we have enough money to live comfortably in our golden years?

In order to overcome such fears, we turn to step four of the Total Money Makeover:

Nearly every parent dreams of sending their child to college, and many parents are prepared to let themselves and their children go into debt to fund this dream.

But as we’ve already discussed, debt is to be avoided at all costs. Funding college with debt should not be considered a tenable option.

So how long have you been paying off your mortgage? Often, they take decades to finally pay off.

Step six of the Total Money Makeover is about paying it off as soon as possible. For most people, this is the final hurdle on their path to financial fitness, and paying it off will leave them absolutely debt-free.

At this point, you’re right on the brink of financial fitness. You’re on the last leg of your journey, with just one final step to go.

Once you are debt-free and have begun to save for your future, it’s time to start building up your wealth.