A total money makeover is not for the weak...
For those who are not familiar with Dave Ramsay, he is a financial expert who advocates the use of cash and despises credit. He is the host of "The Dave Ramsay Show" which is listened to weekly by millions of people on over 400 radio stations nationwide. On his show he fields financial questions from people who are in difficult situations and offers advice that is always rooted in his "no debt" philosophy.
I have just finished reading "The Total Money Makeover" by Dave Ramsay and was so profoundly impacted by the book that I wanted to write a review on it. I will warn you, this book does not offer a minor financial tune-up. It is written for those who are in dire straits and have very little handle on their money. In Dave's opinion, this is most of America, and I tend to agree.
Review of " The Total Money Makeover" by Dave Ramsay
This book is unique in that it's written from a Christian perspective, placing focus on tithing and other forms of giving as a means to meet your financial goals. It also offers advice that you are unlikely to hear elsewhere, and that is to eliminate any and all forms of debt from your life to achieve financial peace. Our culture embraces debt so tightly that I found this advice to be not only counterintuitive but a little offensive at times.
The entire book however, is laced with stories of people who have followed Dave's system to get their financial lives back on track and achieve financial peace. He teaches that your income is your best wealth-building tool and you need to take control of it if you ever want to be financially free. When you are burdened with monthly, weekly or annual debt payments, you don't have control over your income, as soon as you recieve your money, it's already spent. He often draws parallels between finances and weight loss and the challenges associated with each.
Dave Ramsay's Story
Throughout the book, Dave frequently touches on his own financial journey. It's an interesting story. He became a millionaire in his twenties through his real-estate business, and went on to lose it all and become completely broke. Even through his hardest times Dave held on tightly to his prized possession, a Jaguar. Dave developed his "baby steps" system from his own financial experiences.
Dave is proud of the fact that even though he is now financially independent, his habits have not changed. He still gives, pays cash for his homes and vehicles, and refuses to take on any type of debt.
What Can I Learn From "The Total Money Makeover?"
If there's any one take away principle to be found in this book, it's that debt is not necessary for day to day life. It is possible (although very, very difficult) to live debt-free. Dave repeats this phrase throughout the book.
"If you live like no one else now, later you will be able to live like no one else".
Dave insists that the people he has counseled and worked with over the years have found a greater quality of life by eliminating debt and the stress that comes with it, paying cash for everything, and building a reserve of emergency cash. Dave will challenge you to do things that you may not be comfortable with including paying off your car loan early and maybe even selling your car.
Dave's "Baby Steps"
This book teaches that by taking "baby steps" to financial freedom, you can achieve your goals in time without overwhelming yourself. Dave maintains throughout the book that he is not the first to teach this type of system. He does not claim to be an innovator, simply a teacher. The baby steps are as follows.
1. Quickly save $1000 cash for an emergency fund
2. Pay off all outstanding debts using a debt snowball
3. Save 3-6 months of expenses in an emergency fund
4. Invest 15% for retirement
5. Build children's college funds
6. Pay off mortgage early
7. Build wealth and give
Dave claims that if you follow this seven-step system diligently, you will find financial peace. You will be able to buy things with cash (in time) and can relieve yourself of the burden of debt forever.
I found the book to be well-written and easy to read. Dave's advice can be difficult to stomach because it runs contrary to what most of us learn about money. Most of us have been taught that debt is a tool and that debt is necessary for us to build credit. Dave debunks those myths and teaches the power of cash and investing. Dave will challenge you to consider new ideas like not purchasing a new car, but buying a used beater that you can pay cash for instead. I appreciate how he chose to include dozens of stories about real people who have beaten their debt and created a new life for themselves.
This book will likely be a little too preachy for some. Dave is a Christian and makes absolutely no effort to hide that. He uses many examples from his church that some may not like. I found it to be a refreshingly divergent from the typical "me me me" attitude that most of us have towards money because his church-talk is primarily about giving.
If you're looking to get out of debt, and want some unconventional, uncommon advice, then I believe that this book is a great choice for you. I learned an entirely new method of handling money from this book including how to save money and how to invest and will use it to make a better future for my family.
Amazon Price: $24.99 $10.63 Buy Now
(price as of Nov 29, 2013)