Since starting our debt-crushing journey, I’ve read a couple of the “greats” in #FinLit (a.k.a. famous personal finance books). What I’ve realized is that not all money books are equal. For instance, Your Money or Your Life was wholly disappointing to me. I found it outdated, somewhat condescending, not practical, and poorly written. That being said, I know a lot of people who swear by it. Well, after reading four #FinLit books…I’ve gotta say, I’m Team Ramsey.
The Total Money Makeover by Dave Ramsey is definitely my favorite thus far. I found it engaging, motivating, and I loved that Ramsey managed to teach acceptance over past mistakes and to move on from them – he managed to do it in a way that felt encouraging instead of just yelling at me for being stupid. I also loved the actual money makeover part – Ramsey’s plan comprised of “baby steps.”
The Makeover Part
For those who haven’t read this wonderful book, the plan is essentially seven of these “baby steps.” Summarized, they are:
- Save a baby emergency fund ($1,000)
- Pay off all debts except the mortgage – using the snowball method
- Save a full emergency fund ($10,000+)
- Save for retirement (15% of your income)
- Save for your kids’ college (or don’t worry about it because you’re a single twenty-something; $167/month per kid for those of you parents out there)
- Pay off your mortgage
- Get rich (mainly because you should be rolling in savings and compound interest at this point)
The steps are simple, you follow them in order, and you don’t advance to the next step until after finishing the previous one. But his steps work because they are simple, and because they provide tangible results. Your $1,000 emergency fund isn’t just cheap insurance against real life; it’s a visible reminder that you have succeeded, that you can save, that you can be smart with money. The debt snowball is built around quick wins, which give you the confidence to continue. While some may find it cheesy, I found his motivational and upbeat approach (both in the book and in the baby steps) to be refreshing. It’s nice to find someone who acknowledges that the mental money game is half (if not more) of the battle. I’m not going to lie, as someone who had already finished baby step one before I read this book, it definitely made me feel better to know I was basically already on track.
The book also has a lot of anecdotes sprinkled throughout by some apparent successful makeover-ists (we’re making this a word now). I’ve heard that a lot of people disliked these personal stories or thought they were too cheesy. Well, it probably won’t surprise you that I liked them, and I’ll tell you why.
Most of these stories came from people who made nice, normal incomes. They made under the American average of $50,000/year but still had average debt. It was nice for me (someone who doesn’t make much income-wise) to see other people can do this too. That’s part of the theme of the book: it might take you longer than those splashy “I paid off all my debt in 7 months” folks, but you’re going to get there, and you’re going to succeed. Part self-help, part personal finance…this book definitely spoke to me.
All-in-all, I think this is a great primer for someone just starting their personal finance journey or someone who just wants a refresher on the basics. I definitely think it’s a great read for those in the lower income brackets too. The Total Money Makeover reinvigorated me to reach my financial goals and had some good advice on how to save for retirement/future children too. And hey, even if you’re a financial pro, if you haven’t read Dave Ramsey, you probably should just so you can keep up with his popstar-esque following…it’s hilarious.
- If you’re looking for motivation more than for technical personal finance advice, this book will have a lot of appeal; if you’re looking for specifics on how certain investments work, you might not like this one.
- If you’re Christian, you’ll probably love this book; if not, either disregard the financial Bible quotes…he’s not preachy, but they are scattered throughout.
- Apparently his “No Debt EVER” policy is highly debated amongst the masses…I don’t think it matters what you do as long as you’re honest about whether you’ll actually pay off that credit card each month. The idea that one could buy a car, house, or pay for college without debt is awe-inspiring to me and definitely something I want to do now.
- Others have said these steps are espoused by Ramsey everywhere, and obviously, I just told them to you, but hey, this book was definitely worth checking out from the library…fo’ free.
Happy #FinLit reading folks!