First off I have to admit, I love this book!! 5 out of 5, two thumbs up, A+, however you want to rate it, just know this is by far one of my favorite books to date.
Many of you know I am a big Dave Ramsey fan; I listen to his radio show podcast every morning during my drive to work. I really appreciate his candid, humorous, and blunt honesty when dealing with finance and debt. I do want to make it clear, I do not agree with absolutely everything he talks about, as he does express non-financial opinions on the show, but we see eye to eye when it comes to everything financial.
The Total Money Makeover lays out the path to getting out of debt, saving, making big purchases, investing, and maintaining a financially sound life.
Dave begins the book by discussing some common debt myths. Personally, it pains my heart that people look at debt and living above their means as a normal thing. People swipe a credit card and not think twice. I mean did you really have to borrow money at 20% interest to buy that $5 footlong from Subway?! I mean it’s really ridiculous when you think about it!
He makes a point to debunk the old “money is the root of all evil” myth in the first section as well. I agree with his outlook on this; I wish people would view money as a great tool to achieve your goals.
The bulk of the book is Dave laying out the Baby Steps in detail. This is where he tells the reader exactly how to reach financial prosperity. See the steps below and note that these absolutely must be done in order!!
- Save $1000 emergency fund
- Develop a debt snowball and pay off all debt except the mortgage
- Develop full emergency fund – bring the $1000 to a 3-6 months of expenses
- Save 15% of your income for retirement
- Save for your kid’s college
- Pay off your mortgage early
- Invest for wealth
Another note: baby steps 4, 5, 6 should be done at the same time. When you get to baby step 7 you should be doing three things with money: saving, giving, and spending! Boy I can’t wait to get to this point where I can save, spend and give freely.