Discussion for 5/17/2009

“Total Money Makeover”

Session I

I. The Challenge

a. The History

i. Dave Ramsey was a young millionaire in his 20’s,

having some $4 Mil. In real estate. Decisions
caused him to go broke shortly thereafter. He lost
everything over 3 years.

1. Mentions being sick and tired..

2. I felt like a gerbil in a wheel. Run, run, run!

3. I owe, I owe, it’s off to work we go.

4. He lived slave to fear

5. Financial conversations with him wife ended

with him walking away in anger.

a. Major stress on the marriage

relationship.

ii. A broken tragedy, he decided to make a change.

1. Change comes easy when we are desperate

enough!

2. He describes the fear and other negative

emotions that come with being broke. Bills
were encountered with dread and fear.

iii. His quest to learn how money works, how to

control it, how to handle it…. Lead him to the
mirror!  the Total Money Makeover challenge!
b. The Challenge is dealing with ourselves, and the big D
word  DISCIPLINE!

i. Winning is 80% behavior and 20% head

knowledge

1. Learn new words like “No!”

ii. Our income amount is not the problem. We are

the problem.

1. “Buy things we can’t afford, with money we

don’t have to impress people we don’t like.”

iii. So discipline is the great challenge.

1. What does the Bible say?

2. Proverbs 1:7 The fear of the Lord is the

beginning of knowledge, but fools despise
wisdom and discipline.

3. Proverbs 10:17 He who heeds discipline

shows the way to life, but whoever ignores
correction leads others astray

4. Proverbs 13:18 He who ignores discipline

comes to poverty and shame, but whoever
heeds correction is honored.

5. Psalm 112:5 A good man sheweth favour, and

lendeth: he will guide his affairs with
discretion.

6. Proverbs 3:21 My son, let not them depart

from thine eyes: keep sound wisdom and
discretion:

iv. Discretion = Hebrew “mezzimah”. Also means

purpose.
v. Not a get rich quick plan. Not complicated, but it is
difficult.

vi. TMM motto, “If you will live like no one else, later
you can live like no one else.”

1. This plan comes with major price to pay, but

you have to count the cost and be willing to
pay it to achieve the final goal!!

2. Goal is to get out of debt, regain control, and

build wealth

II. The first obstacle to the challenge  Denial

a. “We are not doing that bad”

b. Story of Sara and John with $75,000 of household

income… Page 12.

c. Don’t let a tragedy force you to realize that you are

financially out of shape.

d. Financial mediocrity will sneak up on you.

i. Zig Ziglar tells of the frog in the kettle.

ii. The enemy of the best is not the worst, it is just

fine.

III. Conclusion

a. Page 16. Back to John and Sara.

b. As we walk through this book, keep in mind that not

every aspect is going to work for your family.

c. Important to have a plan… “Write the vision, make it

plain, And run with it….” Have purpose for your money.
John Maxwell said, “Tell your money where to go so you
will not wonder where it went.”
d. Also ladies, keep in mind. Show much grace to your
husband, because dealing with finances is dealing with
his identity.

Discussion for 5/24/2009

“Total Money Makeover”

Session II

I. Debt Myths

a. “Debt is not a Tool”

i. Some Debt is a symptom of immaturity and lack of

discipline

ii. “I want it and I want it now!”

iii. We have bought the lie from a culture that it is

normal and debt is something we will have to live
with all of our lives.

b. MYTH: Debt is a tool used to create Prosperity

TRUTH: Debt adds considerable risk, most often doesn’t
bring prosperity, and isn’t used by wealthy people
nearly as much as we are led to believe

i. Proverbs 22:7

1. “The rich rules over the poor, and the

borrower is servant to the lender.
ii. 75% of the Forbes 400 richest people say that the
best way to build wealth is to become and stay
debt-free.

1. Wal-Greens, Cisco, Microsoft and Harley

Davidson are all run debt-free.

2. They didn’t obtain the status from Discover

Cashback Bonus

3. They all did, however live on less than they

make and only spend when they had cash…
No payments

iii. History shows that debt was not always a way of

life

1. 1910 Sears catalog stated, “Buying on credit

is folly.”

2. J.C. Penney founder was James “Cash”

Penney, who hated debt.

3. Henry Ford said that debt was a lazy man’s

method to purchase.

a. Ford Motor Credit was established 10

years after GM’s financing began.

iv. Submyth: If I loan money to friends or relatives. I

am helping them.
Truth: If I loan money to friend or relative, the
relationship will be strained or destroyed. The
only relationship that would be enhanced is the
kind resulting from one party being the master
and the other the servant.
1. E.g. Joan who loaned a friend $50, friendship
was negatively affected. Borrower began
avoiding her.

a. Joan turned it into a gift and released

her friend

2. Many family cases of destroyed relationships

due to loaning money for down payment on
car, home, etc.

v. Submyth: By cosigning a loan, I am helping a

friend or relative. Truth: Be ready to repay
the loan; the bank wants a co-signer for a reason,
which is that they don’t expect the person to pay.

1. Lenders are in business to make money.

They are not going to loan to someone who is
probably not going to repay. Cosigner will pay.

2. If someone needs a cosigner, they are

expected to be trouble waiting to happen.

3. Proverbs 17:18
a. A man lacking in judgment strikes hands in
pledge and puts up security for his neighbor.

4. E.g. Joe, who owed $16,000 for a home he

cosigned for 15 years ago…

vi. Submyth: Cash Advance, Payday loans, Rent-to-

own, Title pawning, and tote-the-note car lots are
needed to help lower income people get ahead.
Truth: These rip-off examples of predatory lending
are designed to take advantage of lower-income
people and benefit only the owners of the lending
company
1. These types of lenders make themselves rich
on the backs of the poor

2. These lenders lend with more than 100%

interest.

3. Payday loans will give you $200 for a fee of

$25, i.e. 650% interest annually.

4. Tote-the-note car dealers sale the car with

the down payment equal to what they paid
for it and the 18-38% interest is money in the
pocket.

5. Rent-to-own transactions are over 1800%

interest on average.

vii. Submyth: 90 days same as cash equals using

other peoples money for free
Truth: ninety days is not the same as cash

1. First, if you flash cash to a manager with

sales quota, you might get a discount

2. Second, most don’t pay off the debt in the

allotted time. Nationally 88% of these turn to
debt.

a. When you miss the deadline, the 24-

38% interest gets back dated to date of
purchase.

viii. Submyth: Car Payments are a way of life; you’ll

always have one.
Truth: Staying away from car payments by driving
reliable used cars is what the average millionaire
does; that’s how they became a millionaire.
1. The average car payment is $464 for 64
months. If we save $464 per month and put
it in mutual funds, averaging 12% (70-year
average) from age 25-65, it would equate to
5.4 million dollars.

ix. Submyth: Leasing a car is what sophisticate

people do. You should lease things that go down in
value and take the tax advantage.
Truth: Consumer advocates, noted experts, and a
good calculator will confirm that a car lease is the
most expensive way to get a vehicle

1. You will cover the loss in value, the interest,

which is their profit and all the little
“excessive wear and tear” items, i.e. over the
allotted mileage, scratch on the paint, tear in
the carpet.

x. Submyth: You can get a good deal on a new car at

0% percent interest
Truth: a new car loses 60% of its value in the first
4 years: that is not 0%

1. Average millionaires purchase a slightly used,

reliable used car, i.e. demo, etc.

2. They will not stand for the loss in value.

3. If a car looses $17,000 in the first four years,

buying for the warranty makes for an
expensive warranty.

xi. Submyth: You should get a credit card to build

your credit. Truth: you won’t use credit cards
in the total money makeover, except for a
mortgage, and you will not need a card for that.
1. A 15-year fixed-rate mortgage will be given to
those who “lived right”, i.e. paid the landlord
on time for 2 years, held the same career
field for 2 years, have a good down payment,
have no other credit, good or bad, etc.

xii. Submyth: You need a credit card to rent a car,

check into a hotel, or buy online. Also credit cards
are safer on the consumer.
Truth: A debit card will do all these things and is
afforded the same protection against fraud.

xiii. Others from page 41-49.

c. Conclusion

i. Debt is not a tool to make you wealthy, it is a tax

on you with the intent to cost you while making
lenders, etc. wealthy.

Discussion for 5/31/2009

“Total Money Makeover”

Session III

I. Money Myths
a. Money Myths as opposed to Debt myths have to do with
a lie about a shortcut or a lie about safety

b. Risk Denial

i. Sometimes risk denial is a type of laziness, when

we don’t want to expend the energy to win.

ii. Other times, it can be like surrender because of

being so beat down, we just give in and make a
risky decision

1. “Hold your breath” or “cross your fingers”

2. Risk Denial will involve an illusion (e.g. false

sense of security) and end in disillusionment

c. Quick, Easy Money/ Short-cuts

i. This is the oldest lie in the human race

ii. Money is not easy and doesn’t come quickly, to

follow his plan, you will have to count the cost.

iii. One of Dave’s Pastor says, “Living right is not

complicated, but it may be difficult.”

iv.

d. Money Myths: Most are ground in the two lies we just

discussed.

i. Myth: Everything will be fine when I retire. I know

I’m not saving yet, but it will be ok
Truth: Ed McMahon is not coming

1. Your retirement is on your shoulders, don’t

depend on the government to take care of
you when retirement comes
2. Your retirement will not be ok unless you
make it ok.

ii. Myth: I don’t have time to work on a budget,

retirement plan, or estate plan.
Truth: You don’t have time NOT to.

1. Most of the focus is on the urgent in this

culture. We worry about money only after
their gone (similar to health).

2. No one thinks of a plan when they are not

aware that they need one.

a. How many of you were planning for

what happened to you in this bad
economy?

b. How many have heard all the ideas on

living, i.e. “save, even if it is a small
amount,” or “have a few months
expenses as an emergency fund,” or
“budget you life on your regular pay,
don’t count on overtime.”

3. Dr. Steven Covey says that one of the habits

of highly effective people is that they begin
with the end in mind. Wondering aimlessly
will bring much frustration.

4. John Maxwell says, “ A budget is telling your

money where to go instead of wondering
where it went.”

5. You have to make money behave, and a

written plan is the whip and chair for the
money tamer.
6. Earl Nightingale said that most people spend
more time picking out a suit of clothes than
planning their careers of even their
retirements.

7. Quality of life of your retirement depends on

our learning how to handle money today..

iii. Myth: Debt-management companies on TV, like

AmeriDebt, will save me.
Truth: You may get out of debt,
but only with your credit trashed.

1. These guys manage your debt with one low

monthly payment with lower interest. They
simply spread it out over a longer time frame.

2. When you use one of these companies to

manage debt, and then try to get a
Conventional, FHA, or VA loan, you will be
treated as if you filed a Chapter 13
Bankruptcy with your credit trashed.

3. Another problem is that habits don’t change,

when someone else manages your debt.

iv. Myth: I can buy a kit to clean up my credit, and all

my past misdeeds will be washed away.
Truth: Only inaccuracies can be
cleaned from credit reports, so this is a scam.

1. Bad credit drops out after 7 years unless you

file chapter 7 Bankruptcy. Live right and let it
clean itself up.

2. These guys are constantly under

investigation by FTC
3. They have even been known to advise one to
get a new SSN. Illegal

v. Myth: I’ll just file bankruptcy and start over; it

seems so easy. Truth: Bankruptcy is gut-
wrenching, life-changing event that causes lifelong
damage.

1. It is on the top 5 most life-changing events

list, along with divorce, severe illness,
disability, and loss of a loved-one.

2. Chapter 7 stays on your credit for 10 years,

Chapter 13 is more like a payment plan, and
stays for 7 years.

3. It can be avoided on most occasions, it will be

costly, but can be avoided.

vi. Myth: If I do a will, I might die.

Truth: you are going to die- so
do it with a will.

1. Some 70% of Americans die without a will.

2. The state will decide where your stuff goes.

HELLO!!

3. Proverbs 13:22 says, “A good man leaves as

inheritance to his children’s children.”

4. A will makes the management of the estate

very clear and easy.

e. Conclusion

i. Debunking myths is a good way for us all to find

out the truth behind many of the commercials that
we see on our TVs.
ii. There are other myths that I just skipped over,
check them out, i.e. get rich quick schemes, the
need for insurance, prepaying for funerals, and
college tuition, myth about collectors, etc.

iii. A very high percent of things in our lives that

seem to-good-to-be-true…..indeed ARE NOT TRUE.

iv. Get rich quick doesn’t happen very often, and

when we think that we will, we will find ourselves
disillusioned.

v. Reiterate: your future depends on your NOW.. sow

and you will reap. The motto, “Live like no one
else, so that later you will live like no one else.”
Discussion for 6/7/2009

“Total Money Makeover”

Session IV

I. 2 Additional Hurdles

a. In our first session, we spoke briefly about the obstacle

of Denial, i.e. I am not that undisciplined.

b. Before we begin the baby steps to Ramsey’s financial

goal, i.e. get out of debt, gain control, and build wealth,
we are going to deal with 2 more opposing factors.

c. Hurdle 1: Ignorance

d. Hurdle 2: Keeping up with the Joneses

II. Ignorance

a. Financial ignorance comes from being born not knowing

how to handle finances and never being taught.

b. Not the lack of intelligence, but lack of know-how.

c. Similar to one who has never seen a car, taking the

wheel and trying to drive. No matter how hard they try,
or how fast they go, a wreck is still the result, because
they don’t know how.

d. Overcoming ignorance in this area is as simple as

learning more about it.

i. From books,
ii. From those who are good with money

iii. From podcasts, etc.

e. He likens this to a healthy marriage, it doesn’t just

happen, but it takes work.

f. Ignorance when it comes to finances, “What you don’t

know, can destroy you.”

III. Keeping up with the Joneses.

a. This has to do with image and acceptance.

i. Acceptance from peers, family, and others.

b. Dr. Tom Stanley studies millionaires in his book The

Millionaire Next Door and found that they don’t live like
most think they do.

i. They pay for 2-yr old or older cars, buy jeans from
Wal-Mart, and live in a middle-class home.

ii. They found much more motivation in being

financially secure than they did in impressing
friends and family.

iii. The need for respect and admiration based on

what they owned was virtually non-existent.

c. Keeping up with the Joneses is most often than not,

built on an illusion based on what you can see or think
you see.

i. We see the image, e.g. a neighbor’s new car, and

then project that image onto our lives, yet we
don’t know that the payment for such a nice
vehicle takes away from their family’s savings,
causes financial disruption and compiles tension
between husband and wife.
ii. Story of Bob and Sara, page 82-83.

d. Challenge to be real, follow after truth

i. “When you have a big pile of stuff with no money

and lots of debt, you are a financial fake.”

ii. There is real temptation to live up to an image and

impressing others can be addictive.

iii. Bob and Sara said no to buying Christmas for the

whole family because they really could not afford
it.

iv. I want to say, “I will be here for you to encourage

you if you feel badly for deciding not to afford
something you really don’t need.”

v. Leaning toward discipline is a good way to take

care of keeping up with the Joneses.

vi. Story of Melanie and Jason, page 85-86.

IV. Getting past the Hurdles, What’s Next?

a. Once we get past the hurdles, we are postured at the

bottom of the mountain with a clear view to the top.
It’s a long and difficult climb to the top, but we can see
it.

i. Carrying the weight of the hurdles, the obstacles,

or the myths on our backs as we climb will make
the climb harder, so we must get past them so as
to not have to deal with them while we are
climbing.

V. Conclusion
a. Next week, we begin the climb, what he calls the baby
steps to the top. The top = getting out of debt, gaining
control, and building wealth.

Discussion for 6/14/2009

“Total Money Makeover”

Session V

I. Baby Steps

a. Anything can be accomplished one step at a time.

b. Find something to do and do it with vigor until it is

complete; then move to the next step.

c. If you try to accomplish everything at once, you will fail.

d. “Baby steps” is built on the power of focus.

i. If you put 3% in 401k, $50 extra on the house

payment, and $5 extra on the credit cards,
progress can be slow and efforts are diluted.

ii. Because many areas are attacked at the same

time, you fail to finish anything quickly.

iii. If you feel that nothing is getting done, you will

lose energy to finish the task.

iv. But when you can focus and attack each area
individually, you can check things off your list and
the sense of accomplishment will give you
strength and energy to attack the next step.

e. “Baby Steps” is a proven plan that has to be followed as

prescribed. Analogous to physical fitness, 350-lb man
cannot begin with a quick ten-mile run. He needs to
walk around the block.

i. Has to begin slowly and graduated.

f. Step-by-step and one at a time.

II. First the basics

a. BUDGET – written monthly budget

i. P.T. Barnum said, “Money is an excellent slave, and

a horrible master.”

ii. You wouldn’t build a house without a blueprint, so

why would you spend your lifetime income without
a plan.

iii. Jesus said, “Which of you, intending to build a

tower, does not sit down first and count the cost,
whether he has enough to finish it…” (Luke
14:28).

iv. Your written budget = your clearly written goals

v. Each person has to agree on it. Cannot do it if you

do not agree on the plan.

b. Get current with all the creditors and necessities

i. Necessities: food, shelter, utilities, clothing and

transportation.

III. Baby Step #1 – Save $1000 as a starter emergency fund

a. It is going to rain, you need a rainy day fund.

b. This is just the beginning, not the fully funded
emergency fund, that’s step 3.

c. This is not for things like vacation, Christmas, , normal

clothing needs, normal car repairs. These belong in
the budget.

d. This is for things like unexpected need for a

transmission, job downsize, layoff, or any other
unexpected event.

e. The $1000 emergency fund is the first item of extreme

focus in the Total Money Makeover.

f. For households that make less than $20k, $500 is the

emergency fund.

g. Emergency fund is Murphy-repellant.

i. Murphy has all the negative laws.

h. Emergency fund is also defense against using a credit

card in these unexpected events.

i. This is especially important when you are in step 2

and attacking the debt.

i. Hide the fund, but keep it liquid.

i. Needs to be where it cannot be spent on impulse,

like with the Pizza delivery, but not in places like
COD’s where there is penalties for withdrawal.
Discussion for 6/21/2009

“Total Money Makeover”

Session VI

I. Baby Step #2: Intro

a. The Enemy is debt

b. The goal is no payments (when it comes debt)

c. The most powerful wealth-building tool is your family

income.

d. Story of investing on page 110.

e. This is the step that requires the most intensity and

focus.

i. It is also the hardest of all the baby steps.

f. Albert Einstein said, “Great spirits have always found

violent opposition from mediocre minds.”

II. Step #2: Start the Debt Snowball

a. “It is not complicated, but it is difficult.”

b. Reminder: 80% behavior and 20% head knowledge

c. Involves listing all your debt from smallest to largest

except the home mortgage.

i. Eg. Credit cards, auto loan, medical bills, loans

from relatives, student loan, etc.

ii. Pay minimum payments on all other debts, and

focus your intensity on the lowest debt.

iii. Goal to get quick wins. It’s about behavior and not
math.

iv. Make a checklist and check items off.

d. One an item is paid off, that money along with the

minimum can be utilized to attack the next on the list
along with the lowest payment monies and anything
extra that you can come up with.

e. In this step, focused intensity is very important. You

must aim at the goal with all focus and energy to “get
out of debt.”

f. You have to know where you are going and know where
you are not going. Boundaries!

g. Proverbs 6:1 If you have signed surety, my son,…. V. 6

deliver thyself like the bird from the hand of the fowler
and the gazelle from the hand of the hunter.”

h. Likens the run from debt as a gazelle from a cheetah.

i. Cheetah, can go 0- 40 in 4 leaps, but the gazelle

will outmaneuver the cheetah to the tune of 18 of
19 times.
i. Once you make the decision to begin the debt snowball,
don’t barrow again. You may be tested in this.

j. If you run into trouble getting the snowball rolling, do

some radical things to get the ball rolling.

i. Like a timber harvester tossing in dynamite to

release a logjam in the river.

ii. Sell things, e.g. one lady sold 350 goldfish from
her pond for $1 each.

iii. Rid yourself of the heavy weight

k. What about 401k contributions during the debt

snowball?

i. Focus Intensity will get you back to the 401k

contributions in a matter of months.

l. What about an emergency?

i. Use the emergency fund, and then go back to step

one and rebuild the $1000 emergency fund.

m.What about second mortgages, business debt, or rental

property.

i. If second mortgages or business debt are lower

than 50% of your gross annual income, it goes in
step 2, if greater hold off until later.

ii. If rental property, stop purchasing property and

leave this debt until after the home mortgage and
then snowball the rental property debt.

III. Conclusion
a. This step is the most important step of the Money
Makeover.

b. It frees up your income, which is your greatest wealth-

building tool.

c. If you succeed at this step, it shows that your heart is in

the game.

d. This step can be quicker than you think to accomplish,

depending on your intensity.

Discussion for 7/5/2009

“Total Money Makeover”

Session VII

I. Finish the Emergency Fund

a. After gazelle intensity leads you to the finish line of

baby step II (approx. 18-20 mo.)

b. Step III comes with $1000 emergency fund and no debt

except the home.
c. Step III: Save an emergency fund that covers 3-6
months of family expenses.

d. “What would it take to live 3-6 months if you lost your

job?”

e. Money magazine says that 78% of us will experience a

major unexpected event within the next 10 years.

f. “A strong foundation in your financial house includes

the big savings acct., which will be used just for
emergencies.”

g. Debt accrued in a major emergency is never a good

thing.

h. Testimony pg. 134-35.

II. What is an emergency?

a. An event that impacts your family if you don’t cover it.

b. An emergency that you experience that you had no

idea was coming.

i. E.g. deductibles on insurances, health or car after

a major accident, unforeseen medical problem, job
loss.

c. Not college, beginning a business, trip to Cancun, etc.

d. Agree with your spouse before you tap into it, sleep on
it, pray about it…

III. How much?

a. How much you set aside for emergencies depends on

your situation,

i. i.e. If your family is operating on a single income,

if you are at risk health wise, if you work on
commission, if your job is not very secure, go with
the 6 months.

IV. Baby Step IV: Maximize Investing: Be financially healthy

for life.

a. Retirement: What it is not… It is not saving money to

quit the job you hate. That is not good for your life. If
you don’t like your career path, change it.

b. When I speak of retirement, I think of security and that

means choices.

c. Retirement means work is an option.

d. You need to get to the point where your money works

harder than you do.

e. USA Today reports that out of 100 people age 65, 97 of

them cannot write a check for $600.

f. Bankruptcies amongst those over 65 has increased

164% in the last 8 years.

g. Acting now means that you can retire with dignity.

V. Step IV: Invest 15% of your income.

a. At this point, you have no debt but the house payment

and 3-6 months of emergency fund.

b. Gazelle intensity on the first 3 steps have allowed you

to really consider a great nest egg for your future.

c. Invest 15% of your before tax income into retirement.

d. Don’t count on SSI for your retirement.

e. Invest deliberately and consistently and you will reach

your intended goals!!
Discussion for 7/12/2009

“Total Money Makeover”

Session VIII

I. College Funding: College – The Basics

a. College doesn’t guarantee success, wealth, or even a

job.
b. If we expect all this from college, “we have placed a
dangerous responsibility on a thin little sheepskin. We
have asked it to do things it cannot do.”

c. “In Emotional Intelligence, the author found that 15% of

success could be attributed to training and education.
85% was attributed to attitude, perseverance,
diligence, and vision.”

d. “If we admit out loud that education is for knowledge,

which is only part of the formula to success, then we
don’t have to lose our minds in pursuit of the Holy Grail
degree.”

e. “Don’t break the branches off the family tree getting

the kids into a place you/they can’t afford.”

f. “College is first on my list, but not before retirement,

not before the emergency fund, and certainly not as a
reason to go into debt.”

II. Dave’s Rules for College

a. Pay Cash

b. If you have cash or a scholarship, GO!

c. Student loans are a cancer, an unwelcome relative, who

comes to stay for a few days and then is still around
years later.

III. Baby Step 5: Save for College

a. At this point you have no debt but the home, a well-

developed emergency fund, a healthy budget,
discipline, 15% going to the retirement and setting
pretty.
b. Money Magazine and CBS Market Watch both show that
39% of Americans with kids don’t have a plan for their
college, due to failed planning life and discipline.

c. Prepaying for college is a bad idea even in the face of

tuition inflation of 7% annually.

d. Dave still favors the Educational Savings Account (ESA),

funded in a growth-stock mutual fund.

i. Grows tax-free

ii. These allow a max savings of $2000 per child

e. Compare ESA with Prepay

i. If you invest $2000 per year from birth to 18 =

$72,000 in prepay and $126,000 tax free in ESA.

f. Dave advises to begin with the ESA and then if you

want to save more, try a state 529 plan

i. Still allows flexibility for decision of which school.

ii. And the choice for 529 plan is the “flexible” plan.
Allows more control.

g. Get creative when you don’t have much time.

i. Eg. Cost efficient schools, Work-Study programs,

or Denise who applied for 1000 scholarships

Discussion for 7/19/2009

“Total Money Makeover”

Session IX
I. Finish Good

a. In a marathon totaling 26.2 miles, many runners begin

to lock up and face severe temptation to quit at the 18
mi. mark

b. At this point “good enough” begins to creep in.

Mediocrity rears it’s ugly head.

c. We have come to the place where we have 0 debt, a

nice padded emergency fund, 15% of our income going
to retirement, we are saving for education, and now the
target on our list is the home mortgage.

II. Baby Step VI: Pay off the home mortgage

a. Remember the goal NO PAYMENTS

b. Imagine again if you invested every month what you

pay in loans, etc.

c. So this is the step where we take all the money above

living, retirement, and college and make extra
payments on the house.

d. Gazelle-intensity implemented to pay off the house.

III. Myths: revisited

a. Myth: It is wise to keep the home mortgage to get the

tax deduction

Truth: Tax deductions are no bargain.

i. If you pay $10,000 in interest and are in the 30%

tax bracket, you’ll get $3000 back. $10,000 vs.
$3000 doesn’t work out.
b. Myth: It is wise to borrow all I can on my home because
of the great interest rates and invest the money.

Truth: You really don’t make anything when the smoke

clears

i. With the taxes and other fees, add in the risks,

then you don’t really come out ahead.

c. Myth: Make out a 30-year mortgage and promise

yourself to pay it like in 15 years, so if something goes
wrong, you have wiggle room

Truth: Something will go wrong.

i. 15-year mortgage is the only way that someone

will pay it off in 15 years.

d. Myth: It is wise to use lower rates offered by an ARM

mortgage or balloon mortgage if you know you’ll be
moving in a few years.

Truth: You will be moving when they foreclose.

i. High risk, especially in low rate times.

e. Myth: Them home equity loan is better to have than

emergency fund

Truth: The worst time to have debt is an emergency

i. Story of Ed and Sally who opened HEL to get back

after an emergency. They had to sell their home
to avoid foreclosure, because their once perfect
credit became marred.

f. Myth: You can’t pay cash for a home

Truth: Bet me.

i. This takes major strategy and discipline, e.g the
couple who saved $50,000 a year for 3 years and
paid for $150,000 home.

g. Conclusion

i. Alicia from Louisville and her husband with

$118,000 in debt and $70,000 income walked
through baby step 6 in 6 years. At 31 they were
free.
Discussion for 7/26/2009

“Total Money Makeover”

Session X

I. Baby Step 7: Build Wealth

a. Some hit this step at year 7 into their Total Money

Makeover

b. At this point you have no debt….PERIOD! you have a

fully functional budget, you have a comfortable
emergency fund ensuring that large would –be
problems only become minor inconveniences, you are
journeying along to retire with dignity, you are saving
for the kids college, and setting pretty in your paid-for
house.

c. This is the latter portion of the “live like no one else.”

d. This is the place where you have completely freed up

your greatest wealth-building tool…. The income.

e. This is the part of your life where you fully engage in

fun, giving, and investing.

i. What is “fun” for you?

ii. Giving allows you to continue to be a channel

through which God pours His blessing.

1. Having free income will really allow you to

sow much seed without letting your left hand
know what your right hand is doing and as a
result much harvest.

2. Can you imagine being able to give great

gifts with major impacts?

iii. Keep investing simple… Don’t try to add too much

complexity here.

iv. Ramsey calls this the pinnacle point, where the

pain of labor to get to the top pays off and you
begin to coast!

1. The point where your money makes more

than you do.

v. Pinnacle point is where you can live on 8% of your

nest egg.

vi. One of the greatest aspects of the ride down the

hill is GIVING!

1. Many millionaires say that this is the ultimate

fun!

a. One family/man gave $50,000 to the

Church to be given away in $100 bills.
They had more fun than the recipients!

II. Live like no one else!

a. First, face the truth that a rich man can still be a slave…
to his stuff.

i. Materialism

b. Keep God first and Him as the center of your life.

c. Wealth comes with great responsibility, therefore glorify

God with your wealth.
d. Living like no one else also means security in your
home and marriage.

i. What would your marriage be like in this step?

ii. What would your kids be like in this step?

1. Annual trip to somewhere great? Etc?

III. Conclusion

a. As we all depart from this study, let us remember, not

everything Dave Ramsey talks about is fit for our
homes, but the goal is to handle money with discretion
so as to not allow mismanagement of money to cause
problems in the marriage.

b. As you all continue down the road to financial freedom,

remember to walk as a team in the marriage.

c. The goal is ONE!! Intimacy and communication and

fighting off all battles that rage to separate. AMEN!