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The first few chapters focus on debt denial, spending behavior, money and debt beliefs/myths, ignorance, and the false need for approval from others. At the end of chapter 5, you have been shown that by being in debt, you are a slave to that debt and that being an average (in-debt) American means that you are broke. It’s true. I am broke and a slave to my debt. I am forced to continue to work because I need the money to pay my debt commitments. My money is currently “promised” to others for as long as 30 years, if not longer. I will NOT live a slave to my debt, I WILL be debt free.
Chapter 6 starts on the details of the plan, Baby Step 1. There are two things that should be completed before starting on the first baby step – create a budget (not just an initial, but each month) and be current with all of your creditors. I have done neither of these things; but they are both goals that I knew I needed to do before starting on my emergency fund. I knew this before I read the book, and I am glad to read that Dave agrees.
Dave also addresses the question about saving a small emergency fund before paying debt. He points out that most of America uses credit cards to catch all of life’s “emergencies” including anticipated things like Christmas, which is not an emergency but is often treated as one. However, the cycle of dependence on credit cards has to be broken and a well-planned budget for anticipated things and an emergency fund for true emergencies can end the credit card dependency cycle. He continues to say that he use to teach/counsel people to first start on the debt snowball, but he found that an emergency would cause people to stop their Total Money Makeover completely because they felt guilty that they had to stop debt-reducing to survive. To quote the book, “If you use debt after swearing off it, you lose the momentum to keep going. It is like eating seven pounds of ice cream on Friday after losing two pounds that week. You feel sick, like a failure.” So that is why we have an emergency fund; it is a psychological motivator – the key to success with this plan. No more borrowing, break the debt cycle!
After you have a budget and you are current with all of your creditors; it is time to save that emergency fund. You may have to squeeze your budget, work extra hours, sell something, whatever degree of intensity it takes to complete this step quickly, less than a month if possible. No one said it would be easy. The sooner you have completed this step, the sooner you can focus on the debt snowball.
I could go on and review the rest of the book for you, but since I’m still on Baby Step 1, I’m not going to do that. If you are starting this plan too, I highly recommend this book. Dave also has authored other books that may be of interest. Keep in mind that you may not need to purchase the book(s), as your public library may have them available like mine does.
In closing, I challenge you to take this quest too. Don’t just “walk” beside me on my path. Take your own path. You don’t have to follow Dave’s plan, there are other similar plans out there, such as John Cummuta’s “Debt to Wealth”. Regardless of what I choose to do, I suggest you conduct your own research and do what is best for your needs, even combine the best of multiple plans if that is what works best for you. The more you read on the subject, the more knowledgeable and better prepared you will become to conquer your own debt. The time is now! Refuse to be a slave to your debt!