Total Money Make Over and 3rd World Countries

I've been reading the book The The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness by Dave Ramsey recently.  It sure has been an eye opener in a variety of areas.
I did suspect many of the "myths" but, then I got to thinking.




I came up with an idea that  IMF acting like a credit card or line of credit to 3rd world countries is hampering their ability to build wealth.

As Dave puts it... as long as you are owing money to someone else, living beyond your means, doing the "90 days same as cash" etc you'll never get ahead.   You see he proffers and I think he is right..... if you carry a balance... just a little over every month you will eventually be owing a chunk of interest... that interest is no going to your pocket but, theirs.  Thus slowly you erode your opportunity for wealth.

So if the 3rd world countries would pay as they go..... kept to their budget they'd build wealth.  So instead of getting money from the IMF (in our case it would be the local lending institute) it actually saved up for projects it would come out ahead.   Think if they are borrowing 25 billion  at 5% for some dam project.  You might think the amount is small and the interest spread out over 30 years would be low.  However, they could save the interest payments if they took just a couple of years to save up the 25 billion.  In most cases the total amount of payments will be about double the amount borrowed.  So depending a little up front sacrifice will bring long term advantages.
For this example on this 25 billion dollar loan there would be payments of about 1.34 billion monthly over the 30 years.  So in reality they would need to wait about 2 or 3 years and would have the total they need for the project.  Granted the payments are based on the fact they have a certain amount of upfront money in say the neighborhood of 5 billion.  so they likely need about 30 billion total for the project.  So three years would do it to save if the 1.34 billion payment amount were used.




Think of that 3 years of waiting to basically save 20-30 billion.  They would by waiting have two projects in less time then it would have been to pay off the first one by taking the loan.

I discussed the concept of a stink fund in a prior post - Pay Yourself First - some thoughts on personal finance

If countries would us this method they could have some real GDP growth, as they potentially would have double the money in the long haul.

So there is my 2¢ worth of thoughts.
Applying the total money makeover could do wonders not only for average household in the USA, but, those in other countries and for the governments of those countries.




Buaidh - NO - Bas