The Total Money Makeover: Difference between revisions
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📈 '''9 – Maximize Retirement Investing: Be Financially Healthy for Life.''' One friend in his forties stays lean by lifting a few times a week and eating sanely, while another in his thirties trains obsessively yet remains forty pounds overweight—the contrast frames retirement saving as a consistency game, not a sprint. Baby Step Four sets a simple rule: invest 15 percent of before‑tax income for retirement and don’t count any employer match as part of that percentage. Sequence matters: take any 401(k) or 403(b) match first, then fully fund Roth IRAs—up to $5,000 per person in this edition—and, if needed, add 401(k)/403(b)/457/TSP or SEPP contributions to reach 15 percent. A worked example shows the math: on $81,000 of household income, a 3 percent match on a $45,000 salary adds $1,350; two Roth IRAs total $10,000; bumping the 401(k) to 5 percent brings the annual invested amount to about $12,250, meeting the 15 percent goal. For allocation, the plan splits contributions across four mutual‑fund types—growth, growth and income (an S&P index qualifies), international, and aggressive growth—favoring funds with five‑ to ten‑year track records. A Roth illustration underscores compounding: investing $3,000 a year from age 35 to 65 at a 12 percent average yields roughly $873,000 tax‑free, with only $90,000 contributed. For withdrawal, the text sketches an 8 percent “dream number” if returns average 12 percent and inflation runs 4 percent, so the nest egg grows even while funding income. Psychologically, treating 15 percent as a mandatory bill builds an identity of steady investors and keeps emotions out of the timing; economically, using tax‑advantaged accounts, employer matches, and diversified equity funds lets compound growth and tax deferral do the heavy lifting. The result is a durable habit that funds dignity and options later on. ''It is never too late to start.''
🎓 '''10 – College Funding: Make Sure the Kids Are Fit Too.''' Craig (age 55) and Karen (age 52) of Seymour worried their daughter would graduate deep in debt, so they mapped a cheaper path: two years at a nearby community college—she drove 20 miles each way—then a transfer to a four‑year school after earning three scholarships; she would finish with no student loans. Set the purpose before the purchase: college is valuable, but a diploma alone does not guarantee jobs, wealth, or maturity. Parents panic because “everyone” borrows, yet FinAid.org reports that about 70 percent of students take loans for school expenses, proof that normal is broke. Follow rules that match reality: pay cash, favor in‑state or community college when needed, and skip expensive pedigrees you can’t afford. Use the right vehicles: an ESA (Education Savings Account) lets you invest up to $2,000 per child per year (household income below $220,000), which at a 12% average could grow to about $126,000 tax‑free by age eighteen—far more than prepaid tuition estimates. If limits apply or goals are larger, add a 529 plan, avoiding “life phase” and rigid fixed‑portfolio options that hand control to a plan manager. Make the numbers concrete with a monthly target: project costs in today’s dollars, assume 12% returns and 4% inflation, and save the difference—early, automatic, and consistent. In practice, cash‑flowing classes, living at home, and working during semesters beat borrowing for lifestyle. The thread through all of this is restraint and planning: prioritize retirement first, then fund college so kids graduate with options instead of payments. Behaviorally, swapping status for strategy breaks herding pressure and gives families a repeatable system that can outpace tuition inflation. ''Stay away from loans; make plans to avoid borrowing.''
🏠 '''11 – Pay Off the Home Mortgage: Be Ultrafit.''' Carla (age 38) and Joe (age 43) Schubeck began in 2002 with a home‑equity loan, credit‑card balances, a $30,000 mortgage, and no emergency fund; they held a garage sale that cleared over $500, worked extra jobs—including a second part‑time cleaning gig—and in September 2005 made the last house payment. Baby Step Six is the marathon finish: with 15% going to retirement and college funded, every dollar above living costs attacks principal. Ignore two big myths. First, the tax deduction is no bargain: paying $10,000 in mortgage interest to “save” $3,000 in taxes is still a $7,000 loss. Second, borrowing against the house to invest looks smart until you adjust for taxes, risk, and real‑life shocks; debt multiplies downside when markets or jobs wobble. Shorter terms matter: on a $225,000 loan at 7%, the 30‑year costs $1,349 a month and $485,636 in interest, while the 15‑year runs $1,899 and $341,762—$550 more each month but about $143,874 less in interest. Don’t count on willpower: the FDIC notes that 97.3% of people don’t systematically pay extra, so use a 15‑year fixed or pre‑program extra principal. Skip ARMs and balloons that shift risk to you; use a simple break‑even test before refinancing and insist on a zero‑point (“par”) quote. The practical goal is freedom, not clever math—no payments at all. Psychologically, removing the last giant bill cements a new identity and reduces fragility; economically, killing interest unlocks cash flow that compounds in later steps. ''Attack that home mortgage with gazelle intensity.''
🏋️ '''12 – Build Wealth Like Crazy: Arnold Schwarzedollar, Mr. Universe of Money.''' On the radio a caller named Michael asked about buying a Harley‑Davidson; after a few questions he revealed he had earned about $650,000 last year, averaged roughly $550,000 over five years, and held around $20 million in investments—on that base, a $20,000 toy was fine. Baby Step Seven is about using your financial “muscle” with intention: have fun within margins, keep investing, and give generously. Keep investing simple—mature investors ride market waves with quality funds and time in the market, not clever trades—and let your money, not your mood, drive decisions. Aim for the “Pinnacle Point,” when your nest egg can throw off about 8% a year so investment income more than covers living costs. Manage your own money: assemble wise counselors, but never abdicate control, and be wary of products that add complexity without value. Giving scales here: a friend buys seventy‑five new bikes each Christmas for kids in a local housing project; another pastor’s congregation quietly distributed $50,000 in $100 bills across their city; “Secret Santa” Larry Stewart of Kansas City handed out $100 bills around the holidays for years—about $25,000 annually—and ultimately gave more than $1.3 million. Stories like Keith and Karen McGinty’s—paying off a $50,000 mortgage and adopting while living on a teacher’s salary—show how wealth fuels purpose, not pride. The heart of this step is disciplined abundance: permission to enjoy, persistence in investing, and a bias toward generosity. Psychologically, fun rewards the journey, investing sustains momentum, and giving reshapes identity from consumer to contributor; economically, compounding and paid‑for assets create a stable engine for impact. ''To have FUN, INVEST, and GIVE.''
✨ '''13 – Live Like No One Else.''' After diets, workouts, and miles of budgeting, the final test is prosperity itself: wealth can become a “walled city” if you start trusting money for peace and identity. Treat affluence as a tool, not a god; as Randy Alcorn warns in Money, Possessions, and Eternity, “affluenza” tempts the comfortable to chase meaning in stuff and end up empty. Hold a better definition: not the love of money but the love of money’s power corrupts, and—as Dallas Willard put it—character shows in how you choose to use riches, not in being used by them. Model this at home: expect work, saving, giving, and spending wisdom from kids so wealth becomes a responsibility, not an excuse. Wealth magnifies who you are; cultivate generosity so having more makes you more kind, not more anxious. Keep your heart aimed at service—church outreach, quiet gifts, ordinary neighborliness—so money flows through you rather than pooling around you. The destination is hope: a life makeover, not just a money makeover, where you finish with dignity, influence, and a family tree bent toward freedom. In plain terms, leave the classroom and do the work; these age‑old principles are simple, demanding, and open to anyone who will commit. Behaviorally, anchoring wealth to purpose guards against materialism; economically, staying debt‑free and invested keeps options open so you can act when needs and opportunities appear. ''It is time for you to become a gazelle.''
== Background & reception ==
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