Product: The Total Money Makeover by Dave Ramsey
Price: $11.86 on Amazon
This post will focus on The Total Money Makeover Review and is broken down into three different parts and ends with whether this book is worth buying.
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This is a self-help book written by Dave Ramsey, a man well-known in the financial money world mostly for his popular radio show. Dave has been through huge financial transformations throughout his life which gives him a certain amount of credibility.
He has accumulated over $4 million in wealth by age 27 and then lost it all to poor money managing behaviors. He has now built himself back up to have a net worth of $55 million dollars through very improved money managing habits.
This book focuses more on changing specific financial behaviors instead of relying on technical personal finance.
The primarily plan of this book and Dave Ramsey’s philosophy is the following:
The main goal is basically to save $1,000 as a safety net, pay off all of your debts, create a six-month safety net and then begin to start saving to purchase stuff while never using a loan.
Dave is someone who has a strong voice that comes across in the book as well as in his show.
He talks in a way throughout the book that could come across as a little abrasive. But for the most part focuses on providing powerful examples of individuals who have adopted his plan and had success with it.
If you want to know if this book is worth buying quickly, then scroll down to the Buy or Not Buy section.
First Part: Challenges
The first part of the book can be split up into the following 6 topics:
The Total Money Makeover Challenge
Keeping Up With The Joneses
Within each of these topics Dave talks about barriers that each person needs to overcome and myths that people need to learn aren’t true.
Through the first chapter and second chapters, Dave explains to people why there is such a need for them to make a change.
The first barrier is Denial and this is where people need to realize they have a problem that needs to be changed and this can be complicated.
Taking the time to really look at yourself and accepting that you need to make a change is critical to bringing about a transformation in your life.
This chapter gets the reader prepared to make a big change in their life. Dave does this by giving powerful examples of people who were blind sided by their poor money managing lifestyle.
Getting ready for this change will force the reader to be prepared for a total lifestyle transformation that starts right now. But the long term goals for making this kind of change will likely take many years of committed work to achieve.
Then comes the Debt Myths chapter that talks about how there are specific myths out there that are simply not true.
Each of these myths has led to many people being pushed off the financially intelligent path and have made poor money decisions because of this.
There are many myths that Dave debunks throughout this chapter and some of these myths are critically important to stop believing in order to get yourself out of debt.
This chapter does talk about debunking the need to have a credit card and how using it will likely cause you much more problems.
The Money Myths chapter explains why there are no quick and easy money making paths to getting wealthy. It will take hard, consistent work to achieve your goals and to change your life.
This chapter continues to debunk mostly accepted myths about financial decisions people make.
The list of topics that this chapter talks about include details about the following:
- Not Paying With Cash
- Buying a Trailer
- Not Creating a Budget
He explains in detail why doing each of these things is likely going to cause problems down the road.
Ignorance becomes the central topic during chapter 5 and this is where Dave explains that it takes time to become good with money and constant practice.
Keeping Up With The Joneses is where most people try to do what they’re neighbors are doing. He explains how a reasonable standard of living could be a big excuse why people rack up extra expenses and live above their means.
Trying to maintain a certain image could be very costly if it is an unrealistic expense that you are having to take on.
Second Part: Rebuild Financial Foundation
The second part of the book focuses on helpful tips and information to start building towards wealth by creating an effective budget.
The parts of this section of the book can broken down into the following:
Building a Budget
Dave proclaims that Building a Budget is essential for financial success. Create the written budget, follow it and this will set you by preparing you for the realistic costs of all your expenses.
Become Current With All Creditors
Become Current With All Creditors entails not owing money on any of your main expenses. Begin with paying off the necessity expenses first and then work your way up from there.
Build Up A $1,000 Cash Emergency Fund
The main portion of this chapter focuses on Building Up A $1,000 Cash Emergency Fund and that it is vital for getting your finances in order.
Dave implores people to do this step because there will be unexpected expenses and events that will happen throughout your life because that is the nature of life.
Establishing this emergency fund is hugely important and Dave even emphasizes that taking out another side job just to save this amount is worth doing.
Once that $1,000 emergency fund is in place, you will be much more prepared for achieving wealth and paying off your debts.
Get All Debts Paid Off
Get All Debts Paid Off is when people pay off all the minor and major expenses completely, except the home mortgage expense.
Dave explains how once you pay off all your debts, then you can really start to save money and build wealth.
Dave describes that the best technique to pay off your debt is to use the Snowball approach, which he describes in detail.
The main idea behind this approach is to list all debts from smallest to largest and focus on paying off completely the smallest debt.
From there you pay off the second smallest debt and once that is paid off, you start on the next smallest debt. You continue doing this until all the small and big debts are paid off.
Creating A Substantial Emergency Fund
Creating A Substantial Emergency fund, which covers 3 to 6 months worth of expenses, is the next step in becoming financially in control of your life.
Dave advocates establishing for an emergency fund worth 6 months of expenses if you are in certain situations which are more high risk.
These high risk situations include people who have the following:
- Commission Based Jobs
- Are Sole Income Earner in Household
- Have Unstable Job
Taking the time to determine what kind of income situation you have could help determine whether you need to go for the 3 month or 6 month emergency fund.
Third Part: Accumulating Wealth
This final part is determined to start saving money for the big expenses and to rid yourself of the final big debt, which is the home mortgage payment.
Once you are at this stage, you can focus on the following areas:
Saving for Retirement
Dave explains that Saving for Retirement is mainly achieved through investing up to 15% of your income. Use a combination of a 401k and a Roth IRA in order to invest the most you can each year.
Dave gives some important calculations about why investing through a Roth IRA is so essential.
College Education Fund
Creating a College Education Fund can be important for putting money towards a fund that gives your children a chance to become educated.
It is important to understand what your college funding is going towards.
Dave explains that getting a college degree can be very significant for a lot of different things in life. But this degree and the process to get are not necessarily going to guarantee that you get a job once you are thrown into the real world.
Paying Off The Home Mortgage
Paying Off The Home Mortgage is the final hurdle and is attained through throwing all your income into this task, besides the income going into the college fund, retirement plans or other expenses.
This step will take time and is achievable if the reader has followed all the steps up until this point and has essentially trained themselves for this step and is ready for it.
The final chapters of the book are focused on continuing to invest well and remembering to live within your means even as you build significant wealth.
If you have properly trained yourself up to this point, then you are ready to continue building your wealth and investing for the future.
Should you Buy The Total Money Makeover or Not?
There are certain questions that you need to answer before you buy this book or not.
- Are you religious and a practicing Christian?
- Are you someone who likes success stories and finds them more convincing than detailed directions?
- Have you read other self-help books before and liked them?
- Do you want someone to give you clear directions on how to change your life?
- Have you listened to Dave Ramsey’s financially focused radio show before?
If you read these questions and answered YES to most of them, then you are probably going to enjoy this book.
If you answered NO to most of the questions, then you are probably not going to like this book.
There is a decent amount of Bible verses that Dave quotes throughout the book and if this makes you uncomfortable, then this book could have some challenges. If it is not an issue, read on.
There are TONS of examples throughout the book that are designed to help convince you that this will work.
If you are someone who likes more detailed directions instead of success stories, then this book could become very repetitive. If you enjoy success stories, then there are plenty of them for you in this book.
This is a self-help book and you have to be willing to make a big change in your life if you are going to take on the Total Money Makeover challenge.
This is a challenge that some people are probably not ready to take on.
But if you are ready for a big challenge that could completely change your financial situation, then this book could be right for you.
Are you at a place in your life where you need someone to tell you how to live?
If not, then this book is potentially not for you. If you are ready for a big change and need someone to help you make this change, then this book could be just right for you.
If you have never listened to Dave Ramsey’s radio show, then you could be surprised at how much Dave really seems to be telling you how to live your life.
If you have not listened to Dave’s show, then you might be turned off by how much he seems to be telling you what to do.
My Two Cents
I hope that this review was comprehensive enough without giving away too many details about the book.
This book is geared toward changing people from the foundations and rebuilding them. I believe that this could be effective for some people but for others this book is a little too big of a challenge.
I think this book has a lot to offer and could teach just about anybody helpful information to better their financial lives and habits.
But I don’t actually think this book is the most effective way to make a change for most people.
Dave Ramsey has helped a lot of people and this book has a lot of useful information in bedded within it.
But I think that most people probably don’t need a huge change from the ground up but instead need to focus on changing one bad habit at a time.
There are other strategies that you can use to make slight alterations to your life that could lead to you gradually taking control of your financial life.
I would recommend this book to some people but not everyone.
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