The media world of personal finance has three primary leaders, Jim Cramer, Suze Orman, and Dave Ramsey. This month, we will look at Dave Ramsey’s Total Money Makeover. At a young age, Dave Ramsey was a millionaire and lost it all because of debt. He was forced to sell some of his “stuff” that he loved most, like his Jaguar. After hitting bottom, Ramsey climbed out of his hole of debt to once again become a millionaire. The Total Money Makeover is the plan that you can use to climb out of debt like he did.
Who is the Total Money Makeover For?
Which of these people are closer to who you are?
- John – “It was a rough day at work. There were more layoffs today. I doubt I’ll have a job next year. Heck, I may not have a job next week. My wife is going back to school but won’t be done for another year. Her school is so expensive. Bills keep mounting up. I am one step away from missing a payment. How embarrassing! I would die if I had to move. Arrgh, this housing market. When will it ever recover? On top of of all of this, my car lease is about up so I need to get a new car. Being a grown up sucks.”
- Peter – You think to yourself, nothing is better than sitting on my back porch enjoying a cold one. You take your shoes off and walk across your grass barefoot. It feels so good. Why? The house is yours…completely paid off. You go out to your garage and get into your paid for BMW. You paid cash for this car. You are on the way to the store when your wife calls and says that the washer just broke. “That is okay honey,” you say. “I’ll stop by Sears and pick up a new one. I have the debit card on me. It should be delivered tomorrow.” This $800 expenditure does not phase you at all.
For most of my readers, you have a lot of John in you with a desire to be more like Peter. Dave Ramsey has spent years helping people, who are overburdened by debt, turn their lives around. If you have a desire to be more like Peter, then you should read Dave Ramsey’s Total Money Makeover.
What you will get out of the Total Money Makeover
In the Total Money Makeover, Dave Ramsey gives you a step-by-step plan on how to get out of debt and does a fair amount of mythbusting and teaching along the way. Ramsey’s signature line, Live Like No One Else Now So You Can Live Like No One Else Later carries the book from start to finish. Ramsey does this by mixing stories of his past with stories of the people he has helped over the years.
In the Total Money Makeover, Ramsey answers the following questions and more:
- Should I build an emergency fund or pay off debt first?
- How much should I have in an emergency fund?
- Should I file bankruptcy or engage in credit counseling?
- I started saving for retirement too late, what should I do?
- Should I save for retirement or or for my kid’s college?
- How should I invest my money?
The tone of the Total Money Makeover is “You can do this,” and You better do this.” Ramsey uses the body as a metaphor throughout the book for your financial health. You are financially fat when you are in debt. I listened to the book instead of reading it because Dave Ramsey recorded the book himself. He reminded me of a father figure that is tough but that is what you need in your life right now. If you are going to follow the plan step by step, then I strongly urge you to buy a paper copy so you can bookmark pages and underline important concepts.
I disagreed with Dave Ramsey when he talked about stock market and mutual funds returns. Throughout the Total Money Makeover, Ramsey talked about the 12% annualized rate of return in the stock market and those are the types of returns you can expect in the future. However, in talking to many different financial advisors, expect returns to be in the 8-9% range. In the book, Dave talks about expecting your withdrawal rate to be 8% in retirement. I recommend 4-5% withdrawal rate if you want to ensure you are not going to outlive your money.
Should I Read the Total Money Makeover by Dave Ramsey
Are you ready to get out of debt? If so, the Total Money Makeover by Dave Ramsey can change your life. You will have a step by step plan to get out of debt and become wealthy. Reading and rereading the book will energize you to start and keep you on your path.
This plan is not an overnight plan, instead it is a multi year plan. Ramsey talks about becoming debt free in 2-3 years with the exception of your house. Then you can pay off your mortgage in 7 years. Is this realistic? Absolutely with the Total Money Makeover.
Total Money Makeover Table of Contents
- The Total Money Makeover Challenge
- Debt Myths
- Money Myths
- Two More Hurdles
- Save $1,000 Fast
- The Debt Snowball
- Finish the Emergency Fund
- Maximize Retirement Investing
- College Funding
- Pay Off the Home Mortgage
- Pay Off Debt Like Crazy
- Live Like No One Else
If you have read the Total Money Makeover by Dave Ramsey, let me know your thoughts in the Comments below.
Other Books In Which You May Be Interested
- Get the Inside Scoop on Financial Aid (Public University)
- No Excuses! The Power of Self-Discipline by Brian Tracy Book Review
- The Intelligent Entrepreneur by Bill Murphy Jr. Book Review
- Rich Dad Poor Dad by Robert T. Kiyosaki Review
More Articles With Dave Ramsey
Learn more about Dave Ramsey at http://www.daveramsey.com/home/.