The Total Money Makeover by Dave Ramsey

Sometimes, I’m amazed at the depth of thought that the new age development experts put in through their books. To be honest, I have benefited immensely from this genre, though some people may call it candy-floss literature or non-serious literature. Whatever the world says, like me, millions of people have picked up nuggets of wisdom from these Gurus whom I and many like me, would have never met perhaps.

4.5

4.5/5

Author : Dave Ramsey
Originally Published :2003
Publication : Thomas Nelson
Pages : 237
Genre(s) : Non-Fiction, Money, Finance, Investment & Trading

From Simon Sinek to Steven Covey and Napoleon Hill to Jeff Sanders, how many of them would you have possibly met in person and partake of the wisdom that they dole out through their books? Not likely. David Lawrence Ramsay is a notable Personal Finance Advisor, Radio Host, Author and Businessman. He has, to his credit, the largely popular ‘The Dave Ramsay Show’ on American Radio. Dave is someone who has seen the sun and rain of life, having become a real estate mogul early on, amassing millions and then going on for bankruptcy two years later due to changed bank laws. His steady rise back to financial stability is the foundation for this book.

At the outset, Dave Ramsay tells you that personal finance is 80% behavior and 20% knowledge. It is more of how you deal with wealth that makes all the difference. The book does not tell you secret formulae for earning money, nor does it propagate ponzi schemes to get rick quickly. Through small anecdotes and childhood stories, Dave highlights the point that one’s financial process and principles must work in good times and bad or you must know they don’t work at all! Taking cue from the disastrous consequences for many during the 2008 global recession where even the mighty fell, Dave quotes Warren Buffet where he says, “When the tide goes out, you can tell who was skinny-dipping”.

Dave’s advice

  • Yes, you in the mirror, are the biggest problem to your money and the biggest solution too if you work wisely. Dave spells out the motto of the total money makeover ‘If you will live like no one else, later you will live like no one else’. So if you push away the sacrifices now, you will never be able to live decently later
  • Through several real-life stories, Dave shows us how his advice of a total money makeover was followed by families and strengthened their financial health. The first advice is to come out of denial as soon as possible and accept the facts. Once you know what’s wrong with your life and with your money, get going for the change
  • Change, that Dave speaks of, is hard to adapt to, but inevitable if you want to get back on track. Taking help of quick-fix tasks like pay-day loans, title pawning, Rent to own are schemes to make the owners of these businesses rich and not the lower-income people for whom they’re made out to be for.
  • Merely emulating the rich won’t work. One must know how the rich get rich and stay rich
  • Ignorance about how money works is a bane, so it following trends merely because others are following without knowing if what works for them does so for you. There are no one-size-fits-all mantras in personal finance.
  • Start small. Start saving small and you end up with a substantial corpus. No one can underestimate the power of savings, investing, and spending wisely. Also, highlight that fact that an emergency fund is essential.
  • Start retirement investing from as early as possible. Retirement is never ‘still far away’. Before you know it, it’s knocking at your doorsteps.

Key takeaways

  1. Dave Ramsay speaks out of the experience and how. From assessing one’s financial health to remedial actions (read: a strong retirement plan and a debt-free life), he tells you the ‘how’ of the ‘what’ in personal finance
  2. Mere earning is not enough to grow wealth. A lot of planning needs to go into investment and an equal amount of savings
  3. Plan for yourself and your kids if you want to fund their higher education.
  4. Being debt-free as soon as possible is the key to good financial health. Credit cards give you a false sense of money power which you soon repent because it is, after all, debt.

Why I recommend this book

Because as I always say, it takes someone who’s been there done that to give advice on matters that you know you must change but don’t have the will to. Finance is something which cannot be dealt with in a one size fits all advice. As Dave rightly says, it’s a process that is born out of financial behavior.

Read this book as early in life as possible. Not only does it show you the pitfalls, it also shows you the booby traps of credit and mortgage and ways to avoid falling into some.

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