2013 Reading frugality

Reading 2013: The Total Money Makeover

June 6, 2013

moneymakeover

I have known about Dave Ramsey’s financial wisdom since my dad listened to his radio program during my high school days, and I’ve listened to his programs on and off through the years. I recently read EntreLeadership, and while listening to a Dave Ramsey radio show, I realized I had never actually read Dave Ramsey’s most well known book, The Total Money Makeover: A Proven Plan for Financial Fitness.

Although I exited college with 5 figures of debt (not my choice, but one that parents and other authorities directed me to at that time), and we made about the same annual income as my debt (or, often less) for our first years of marriage, we are now totally debt free, with the exception of our mortgage. So, in some ways, I thought this book wouldn’t offer much personal financial fitness advice I wasn’t already familiar with. However, I definitely came away from this book with both inspiration and some new plans to improve our family finances.

Dave Ramsey is famous for his “baby steps” toward financial freedom, and these seven steps are the framework for the book.

His steps are:

  1. Save $1,000 for an emergency fund.
  2. Pay off all debt using the Debt Snowball (excluding house).
  3. Have 3 to 6 months of living expenses in savings.
  4. Invest 15% of household income into Roth IRAs and pre-tax retirement.
  5. College funding for children.
  6. Pay off home early.
  7. Build wealth and give.

We’ve not done these in this exact order (and, of course, are not at the end), but reading this book highlight the importance of making some changes, and that as self-employed, we also need to have several months more of living expenses saved up than we already do. Over the years, we’ve heard varying advice from wealthy acquaintances, and many have advised keeping a mortgage at all times, contradicting Ramsey’s advice. However, we have felt the growing desire to be free of a mortgage (or at least have it paid off sooner than later), and so reading this reaffirmed the direction we wish to head. One of Dave’s helpful methods in these steps is pushing to pursue just one step at a time.

As fitness is part of the title, Ramsey often uses the analogy of physical fitness to illustrate financial fitness concepts and importance.  As I have also been pursuing changes and improvement in physical fitness, I found cross-pollinating concepts to literal fitness to be helpful, as well.

Overall, it is a helpful book. If you’re familiar with Dave Ramsey, the concepts in this book won’t really be groundbreaking, though this certainly packages the basics of Dave’s groundbreaking ideas and teachings neatly into one book. If you haven’t read or listened to Dave Ramsey and are under a mountain of debt, this book very well could be paradigm-shifting, although additional resources may make progress more likely. At times, I bristle under some of his perceived harshness and even the way he seems to focus on building wealth; however, I think Dave anticipates such reactions and does a fairly good job at addressing many of the common concerns.

Table of Contents: 

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  • Crystal C. June 6, 2013 at 4:27 pm

    Thanks for this review–I feel confident about our money, but it sounds like I should read this one!!

  • Sheila @ The Deliberate Reader June 6, 2013 at 5:19 pm

    Congratulations on being debt-free except for the mortgage! With hefty student debt, that’s a big accomplishment.

    I liked this book, even if I don’t follow all of Dave’s advice. It’s still motivating, and good at getting me to think through why I’m not following everything he suggests.