Jul 12 2008
“Total Money Makeover” by Dave Ramsey
Dave Ramsey is one of those guys who a person either loves or hates. He tends to inspire pretty dramatic feelings both ways. Luckily for him, the majority of America seems to love him.
The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey was the first book that I ever read by Ramsey, and it was such an inspiration to me, that I instantly joined the Ramsey Fan Camp. I was struggling with some pretty large debts at that point (at least large in comparison to my income!) and I was barely keeping my head above water. I was told to read The Total Money Makeover - that it would help me. They were right.
I wish I could say that because of this book, I made major life changes and became debt free, but instead I just got a little better at juggling. Eventually my husband and I were able to move and get into a better situation, to where we are now debt free. But the problem before was not Ramsey - it was me. Ramsey actually sums it up pretty well on page 4:
Winning at money is 80% behavior and 20% head knowledge. What we do isn’t the problem; doing it is. Most of us know what to do, but we just don’t do it. If I can control the guy in the mirror, I can be skinny and rich. We will let other books work on the skinny, and I will help you with the rich part. No, there are no secrets, and yes, this will be very hard. Hey, if it was easy, every moron walking would be wealthy.
If that kind of bluntness appeals to you, you’ll love this book.
The baby steps that Ramsey gives to get out of debt and stay there are the following (in order!):
1) Save up a baby emergency fund: $1,000.
2) Snowball your debts (a focused way of paying off your debts)
3) Finish your emergency fund: Save 3 - 6 months of expenses
4) Invest 15% of your income into a retirement fund
5) Save for your kid’s college fund (if you have children)
6) Pay off your mortgage on your home
7) Build wealth 
My problem previously had been saving the $1000 baby emergency fund. When your bank account is perilously close to zero, it’s hard to fathom having $1000 in your savings account, waiting for a rainy day. He talks about how to save the $1000 and gives some inspirational stories from people who did, so again, that was me, not him.
Okay, so onto my critiques (you knew it was coming!) As I said in Financial Peace, Ramsey is a Christian who quotes the Bible fairly regularly to make his point. If you’re not Christian, do keep that in mind. It isn’t overwhelming, but it is there.
Secondly, it has been said that Ramsey is too conservative when it comes to savings, but overly liberal when it comes to retirement numbers. I would have to agree with that. He says that you can afford to put your savings for retirement on hold until after you’ve paid off all your debts, plus saved a 3 - 6 month emergency fund, by being very generous when it comes to his estimates on a “normal” return on investments. I don’t agree that you ought to expect a 12% rate of return every year on your stocks. Yeah, it would be nice, but hardly likely. Ramsey’s great for advice on getting out of debt, but I would pick someone else to get investment advice from.
These shortcomings aside, this is a very inspirational book - it’s liberally dosed with stories from couples who have worked through debt and came out the other side debt-free and liberated. Reading stories of these “gazelle intense” couples makes you want to stand up and yell, “I can do this too!” I think this is the monetary equivalent of No Plot? No Problem by Chris Baty - Dave Ramsey makes you truly believe in yourself.
I give it 4.5 out of 5 stars. Yeah, he has his shortcomings, but overall, this is just a darn good book.
Hava
Photo Credit: Scol22
