Friday, July 13, 2007

The Total Money Makeover (Chapter 5)

In the final chapter dealing with attitudes, Ramsey discusses Two More Hurdles.

Hurdle #1 is Ignorance. Dave is not saying that people are stupid. What he tries to get across is that not many of us are financially gifted. On page 78 he puts it this way: "No one is born financially smart."

After saying that, Ramsey spends the next couple of pages reinforcing the idea that we live in a consumer-mad society and we are taught wrong simply by those we are around. We all make financial mistakes, but some never even realize they are mistakes!

After discussing the problem, Ramsey gives this solution on pages 79-80:

Overcoming ignorance is easy. First, with no shame, admit that you are not a financial expert because you were never taught. Second, finish this book. Third, go on a lifetime quest to learn more about money. You don't need to apply to Harvard to get an MBA with a specialization in finance; you don't have to watch the financial channel instead of a great movie. You do need to read something about money at least once a year. You should occasionally attend a seminar about money. Your actions should show that you care about money by learning something about it.

The second hurdle in this chapter is Keeping Up with the Joneses. Why is this a hurdle? Ramsey says it is because "the Joneses cant' do math." In other words, why are we trying to compete with our neighbors when they are miles deep in debt?

Ramsey spends several pages talking about this problem...and it is a problem. We think that certain "things" are status symbols. That's bologna: but most of us still eat it! We need to see those things for what they are: things.

Finally in this chapter, Dave tells his own story of dealing with keeping up with the Joneses. I don't want to retell the story, because I would just end up quoting about 4 pages of the book. You really should read the story. It helps me remember that Ramsey was a guy who had many of the same problems I did (and sometimes still do), but he was able to "climb the mountain" (to use his phrase).

Starting with the next chapter, Ramsey will move from our attitudes to the actions we need to take to have our Total Money Makeover. Get ready for "the baby steps."