Total Money Makeover by Dave Ramsey (Audio Book) - Disk1

I just checked out the audio-book Total Money Makeover by Dave Ramsey from the local library. I have never heard Dave Ramsey on the radio but have heard of him from friends and relatives. As a matter of fact I understand my wee grandson likes to blurt out something along the lines of “I am Debt Free” every so often.

As I have been listening to the audio-book and am impressed so far. Of course on the first CD he has not really got into the system yet. He is preparing the listener for the system by telling us how ‘fat and unhealthy’ we are financially and that the world has trained us to be credit stupid. Is he too simplistic? I may have an opinion on that later. But I do believe he is correct that most of us in America are no different than a tantrum-throwing 2-year-old who hollers “I want, I want” - the only difference is there are no parents out there to tell us NO! Instead there are credit companies who happily lend us money.

So far he starts out by debunking a number of credit myths. Here are some of them:

Myth: Lending money to family and friends is a blessing.
Truth: Lending money to family changes the relationship. You now have a master/servant relationship and until the money is paid back there will not be the same.

Myth: By cosigning a loan, I am helping a friend or relative.
Truth: Be ready to repay the loan. The bank wants a cosigner for a reason - they don’t expect the friend or relative to pay.

Myth: Aren’t there positive uses of a credit card? Like rebates and airline miles?
Truth: There is NO positive side to credit card use. You will spend more if you use credit cards cause it hurts to pay cash. So even by paying the bills in full, you are not beating the system! And most families end up not paying in full.

A study by Dun & Bradstreet showed that the credit-card user spends 12 to 18 percent more when using credit instead of cash. It hurts when you spend cash, and therefore you spend less. The big question is, what do millionaires do? They don’t get rich with free hats, brownie points, air miles, and the use of someone else’s money. What do broke people do? They use credit cards.

Myth: Debt is a tool and should be used to help create prosperity.
Truth: Debt isn’t used by wealthy people nearly as much as we are led to believe. (That is how they became wealthy.) If you’re in debt, then you’re a slave, in the sense that you do not have the freedom to use your money as you see fit.

Myth: Debt consolidation saves interest, and you have one smaller payment.
Truth: Debt consolidation is dangerous because you treat only the symptom. You think you’ve done something about the debt problem but the debt is still there, as are the habits that caused it - you just extended it! Many times the payment is lower because the term to pay back the loan is longer - not because the interest is lower.

Myth: Make sure your teenager gets a credit card so he or she will learn to be responsible with money.
Truth: Getting a credit card for your teenager is an excellent way to teach him or her to be financially irresponsible. That’s why teens are now the number-one target of credit card companies.

I will let you know what I learn as I proceed through disk 2.