Book Review by Daniel R. Murphy

Title and Author:  The Total Money Makeover by Dave Ramsey  

Synopsis of Content:    

Dave Ramsey teaches and preaches a gospel of debt elimination. He stresses the negative aspects of personal debt and teaches people, many of whom are deeply in debt, to get out of debt and gain financial independence through austerity coupled with debt elimination followed by systematic investment. 

Ramsey starts by discussing the problem – how debt buries people, severely limits their options, puts undue stress upon them and destroys relationships and marriages. He goes on to describe many of our dearly held American beliefs about debt as myths propagated by industry and the finance to enslave Americans and take a large share of their income in interest every day. He teaches that debt is not a tool and that the rich become rich not through debt but with cash.  

He then provides a step by step plan for gradually eliminating all debt through what he calls Baby Steps. First is the creation of an emergency cash fund to cover all those unplanned events from car breakdowns to pregnancy to layoffs that people use as reasons to rack up credit card debt and second mortgages.  

He also emphasizes the importance of using smart insurance to cover emergencies to further avoid incurring debt.  

The first debt to pay off is credit card debt. He advises that you attack your smallest debt first and pay it off before anything else. The psychological advantage of eliminating that first debt pay off helps people maintain the momentum of paying them all off.  

The methods for paying off this debt involve a high level of financial self discipline – creating a bare bones budget to meet your needs and using any excess income to pay down debt. He calls this the Gazelle mentality, using the intense focus that a gazelle does when escaping an attacking cheetah.  

Next he advises to pay off all auto loans and never incur any more. Buy cheaper used vehicles by saving money and paying cash saves a fortune in the interest that auto loans cost us each year.  

Next he advises to increase that emergency fund while attacking other debts. Once all consumer debt is eliminated he focuses on creating reserves for auto purchases and college funds.  

He then discusses how to pour more money into retirement savings and finally the coup de grace of debt elimination: paying off the house mortgages.  

Once all the debt is gone the reader can use all the money devoted to monthly payments and debt reduction to invest in larger amounts. People who stick with this plan for a number of years can not only eliminate all debt but invest enough to attain financial independence – that point where one’s returns on investments meet all current living expenses and one no longer has to work at a job.  

For most people he suggests that total debt elimination can be accomplished in seven years of highly disciplined austerity. The financial independence comes some years later depending on income.  

In addition to giving out very practical financial advice Ramsey, a self proclaimed Christian, adds a dose of religion to his teaching He is not too preachy for most however and provides a spiritual flavor for his work that many would welcome.  

Readability/Writing Quality:    

Ramsey writes clearly and simply. His book is peppered with dozens of case histories showing how ordinary folks have used his approach to eliminate debt and gain financial independence. He spends a lot of time persuading because he knows that people are resistant to the kind of self discipline this will take.  

Notes on Author:    

Dave Ramsey is a financial planner and bestselling author. He has a popular radio program and has written for newspapers and magazines. He also has spoken at and taught at corporations.  

Related Website:   

http://www.daveramsey.com/home/ 

Three Great Ideas You Can Use:    

1. You must understand that debt is incurred to enable people to buy now what they cannot actually afford and is therefore not a tool but a dangerous trap that takes large amounts of people’s income to pay interest.  

2. For most people their income is not sufficient to incur debt and maintain a decent standard of living. Only by eliminating debt, at first a painful process, can they truly become financially independent.  

3. No one else will provide financial independence for you. Your bank will not. Your car dealer will not. Your mortgage company will not. They are all in the business of making big profits from your inability to put off gratification. You must take control of your own finances to get out of debt and gain independence.  

Publication Information:    

The Total Money Makeover by Dave Ramsey 

Copyrighted 2003, 2009 by Dave Ramsey 

Published by Thomas Nelson, Inc. 

Rating for this Book 

Overall Rating for Book: Excellent 

Writing Style: Easy to Read, although a bit redundant.  

Usefulness: Very useful. I wish I’d read this book when I was 20.