The title sucks! That was my very first thought when Dave Ramsey’s book crossed my radar a while back. For someone living in this century the name of Dave Ramsey’s book is roughly as exciting as watching paint dry. So, why talk about it here or now? What possible relevance can a book which seemed old and musty when it first rolled off the presses in 2003 have in the middle of an economic crisis in 2009?
Well, unpleasant and radical truths are still the truth,even if they are cast in an old fashioned and an oh-so-last-century manner.
The bottom line is that I think Dave Ramsey is on to something very real. I started this book as a skeptic. I have read economic theorists like Keynes and von Mises, Hayek and even Sowell’s commentaries. I have even read Howard Ruff and Robert Allen, not to mention more than a few economic textbooks. Why read any book that seems so antiquarian, when my focus in on the thought and the theories that might illuminate the next hundred years?
I am not sure, but it seemed different somehow and I know that oftentimes answers are found in differences and not in sameness. So I read it. Closely. I took nearly 10 pages of handwritten notes, and I ended up thinking that this book could be used as a model for re-vamping our financial system and the values of many of our people.
The essence of Ramsey’s point is that easy borrowing can and statistically does destroy many people financially. Many of us are seduced by credit cards and the very easy way that we can seem to have it all, and have it all now. We can get a gold card. We can borrow $50,000 across various credit lines, no matter what our real income. A year ago we could get that low or no-doc mortgage. All, we had to do is show a strong credit score and we could buy that quarter or half million dollar house without a penny down.
Thanks to the ability of the Federal Government to manipulate our currency the government could have it all too. Add the budget debt to the off budget entitlements and how many Trillions (I never use that word without capitalizing it.) of dollars was our deficit before the current crisis? If someone wants to figure that out for me, I would love to know but I haven’t the time to research it at the moment. Still, this number is a HUGE number and we are set to double it in the next few years.
Ramsey says forget the complicated economics, money is simple.
Money in minus money out gives you a color. If it is red you are racking up debt, and if it is black you are adding to your net worth. Whether we are talking about a family or a company or a government, this is still true. We can manipulate the game for a while and we can feel smart doing so, but it will snap back and it will cause a lot of pain. Maybe that is the simple but profound explanation for this recession.
Consider this on very personal basis. If you had no consumer debt, if your home was paid off, if you had 6 months worth of savings in the bank and if your job was very stable; just how worried would you about this financial crises? In this context you could almost live on what a friend of mine calls paper route money. But, if you have $40,000 in credit card debt, two car payments and a $3,500 monthly house payment, you have some very serious trouble. Any small set back can and will cause a financial crisis. When that happens, the guy who lived frugally will likely be buying your home out of foreclosure for pennys on the dollar.
Anyway… go buy the book, do it now. Read it. I challenge you. Read it aloud to your spouse. Read it to the nearest Government representative you can nail down. And get Ramsey’s core principle down cold. Challenge yourself to earn it and then buy it. Whatever that “it” happens to be in your case.
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