This is an honest review of The Total Money Makeover book from Dave Ramsey.
In this article I’ll briefly review my financial situation before, during, and after I read this book. Then, I’ll note the most important details, his ‘baby steps’, in the book that helped me get out of debt. After that, I’ll provide my recommendation on whether or not I think you should purchase this book.
Be sure to read all the way to the end as this recommendation varies from person to person.
A Review of My Financial Situations: Before, During, and After Reading The Total Money Makeover.
Before I read this book I was a typical 26-year-old in debt. The debt consisted of college, hospital, and credit card debt. Fortunately, I wasn’t in an astronomical amount but I will say that it was less than $10,000 combined. According to CNBC, the majority of twenty-somethings have anywhere from $22,000 to $42,000 in debt. Because I qualified for FAFSA, I was able to come out of college with a relatively low amount of debt.
Anyway, about a year after graduating I worked my first salary job. During this time, I randomly happened upon Dave on YouTube and started listening to The Dave Ramsey Show whenever I could. I’d listen to his calls, debt-free screams, and his millionaire theme hour segments
in my free time all the time.
On November 6th, 2017, I purchased The Total Money Makeover book from Amazon.
It was an easy read. After having listened to Dave’s voice on his show the text moved fast as I channeled his tone and diction. You can definitely he wrote it himself.
In his book he provides an amalgam of relatable anecdotes and actionable steps that light the path to being debt-free and building wealth. I found these steps easy to understand and totally doable if the right behavior is applied.
Staying Motivated on Becoming Debt-free.
Reading success stories from people with different backgrounds helped me stay the course. As well, I should mention that having a book to read that takes longer than watching a 10 minute YouTube video helped ‘keep me company’ if you will.
Dave talks about this thing called being ‘gazelle intense’ which means getting out of debt as fast as a gazelle can run. This meant cutting out all spending habits aside from necessities like rent, utilities, food, and gas. Money not spent meant money you can put toward paying off debt faster.
Eventually, I paid off my credit cards using the debt snowball method Dave recommends.
Just a few months after having read his book I was able to claim a debt-free status. I was even able to gift my mom $5,000, the same amount of money she gifted me for college. Even though she didn’t ask for it back, I felt like gifting it back was the right thing to do. That and I knew she needed money for a new roof.
Without a doubt, being truly debt-free lit a fire in me that fueled my ambitious side. I felt like I could do anything I put my mind to, so long as I had a plan to stick to.
Introducing Dave Ramsey’s 7 Baby Steps Financial Fitness Program.
The following is what I believe to be the most important part of what the book had to offer: a proven plan.
The Baby Steps program is Dave Ramsey’s 7-step plan to getting out of debt and building wealth. Millions of people have used this plan to get and stay out of debt. So, no matter what stage of debt you’re in, I’m confident this plan can work for you.
The 7 Baby Steps
- Save $1,000 for your starter emergency fund.
The first step to Dave’s Baby Steps plan is to build a starter emergency fund of $1,000. This accomplished two things. First, it helps cultivate confidence, discipline, and visible traction. You can feel your behavior transforming into a money saving mindset as opposed to a spending mindset. Second, it gives you a small cushion to take care of any unforeseen bills.
The best way to do this step is to track your money, which means making a budget. There are lots of budgeting resources out there but I chose to use Dave’s Everydollar app. It’s free for both iOS and Android.
- Pay off all debt (except the house) using the debt snowball.
The second step is a bit more challenging but is still an easy concept to understand and execute. If you haven’t googled it already, the debt snowball refers to a debt-free plan where you pay off your debts from the smallest amount to the largest amount. For example, let’s say you have two credit cards, one with $500 owed and one with $1,000. You should pay off the $500 debt first, then move onto the bigger $1,000 debt.
This is step is another momentum builder. Once you clear the balance of one card, you’ll feel a rewarding sense of accomplishment and encouragement from within to tackle the next.
- Save 3-6 months worth of expenses in a fully funded emergency fund.
This next step is to be done if and only if step number 2 is accomplished. You don’t want to do step 2 and 3 simultaneously because the interests built between the two would just cancel each other out. So, do this step only if all your debt is paid off.
Now, in order to calculate living expenses factor in your monthly recurring bills. These are things like rent, utilities, gas, and food. Add these up so that you know how much your monthly bill is. Then, multiply that by the number of months you feel comfortable saving for. Dave recommends anywhere from 3 to 6.
Note, if you’re in a fairly stable job, you can lean more toward the 3 month range. If you’re in a relatively unstable job, you should aim toward the more cautious 6 month range.
- Invest 15% of your household income in retirement.
This step is where you’ll start to put money into retirement accounts (Roth 401K, Roth IRAs, etc). The first thing you should do here is find out if your employer offers a 401k matching. This means your employer will give, or match, dollar for dollar, the amount you choose to contribute into your retirement account. Most places offer employer matching for up to 3% to 6% of what you put in.
If that option isn’t available, it is still advised to open to a retirement account and contribute 15%.
- Save for your children’s college fund.
Skip this step if you don’t have children or don’t plan on having children.
- Pay off your home early.
Step 6 is the is last step that annihilates all of your debt. Having a mortgage is often many peoples largest monthly expense. In my opinion this is one of the biggest baby steps in the plan.
Unquestionably so, if you’ve gotten this far, you surely posses the discipline and perseverance to get this step done. And after you come out triumphant, Dave’s plan moves onto perhaps the most rewarding and fun step of all.
- Build wealth and give.
Dave Ramsey famously likes to say:
“Live like no one else now, so later you can live and give like no one else. “
This is the grand prize for all your hard work. You get to live a life doing pretty much anything you want. Now, you can afford to really treat yourself. Now, you can afford to support family, businesses, or organizations you believe in.
For more information, visit Dave Ramsey’s website where he explains more about the 7 Baby Steps.
Recommendation: To Buy or Not To Buy?
So, I’ll be honest, just knowing the baby steps might be enough to get you by so long as you stick to the plan. After all, these steps are the foundation of this lifestyle change.
In addition to following the baby steps, you could supplement the program with listening to his podcast or watching his shows on YouTube. These are both free options that provide a priceless sense of motivation, encouragement, and community.
With that said, if I had to do it over again I’d still buy the book. I enjoyed reading about his stories and appreciated how he went more into detail with the baby steps. It also gave me something to do after I unsubscribed from Netflix.
Reading his book was kind of like having a conversation with Dave himself. He knew what my financial behaviors were and in a father-like fashion, he told me the hard truths. I guess you could say that reading his book was kind of like having a financial fitness coach.
My final recommendation is to get the book, if you can afford it. If you are unable to purchase it, try searching for it at your local library.
All in all, buying The Total Money Makeover book was the best investment I’ve ever made. I’m thankfully out of debt and am armed with a mindset I’ve never had before. Additionally, a couple weeks ago I was able to lend it to a friend who is now starting their debt-free journey. I introduced her to Dave’s famous debt-free screams and his millionaire theme hours on YouTube. She was hooked.
Click here to buy The Total Money Makeover.