For your convenience, many of the products I link too are affiliate links which means I may earn money if you purchase a product I recommend.
When Aaron and I started our personal debt free journey six years ago, we started as a result of Dave Ramsey’s book, The Total Money Makeover.
I talk about Dave Ramsey and his book a lot, but I’ve never actually done a review of his book.
I know, a lot of you are thinking, “why would I want to read a book review”.
Plain and simple, “The Total Money Makeover” will change your life.
I had known about Dave Ramsey prior to reading his book, my sister and husband were on the plan and slowly whittling away at their debt.
At the time, I was only living on 50% of my income and saving the rest. I was paying off my car and student loans in a fairly quickly fashion. I didn’t think I needed any help.
I knew I was above average because of my savings rate – in other words, I was kind of arrogant.
Fortunately, a good friend gave us The Total Money Make-Over when we got married. Aaron and I both read and loved the book and were immediately ready to start our debt free journey.
Over the next five years, we would go on to pay off $293,000 of our $446,000 debt.
So yes, the book can have a huge impact on your life.
Aaron and I aren’t unusual either, we don’t have any amazing super powers. We just made a goal and did our best to stick to it.
So what is it about Dave Ramsey’s plan that is so unique?
In my opinion, it is the simplicity of his plan that makes it works.
He has Seven Steps to Financial Freedom.
That is it.
Seven simple steps to get you out of financial bondage.
Obviously, it takes a bit more work than that, but the foundation really is that simple.
The Total Money Make-Over is Ramsey’s directional book.
He lays out each of the seven steps, explains why he advocates each step and gives you practical tips on how to follow each of his steps.
The book is very simple and easy to read. Both of us read it in one weekend. Since then I’ve read it multiple times and still enjoy reading it.
One of my favorite parts is the chapter inserts. Every chapter has personal stories of people who have followed Dave’s advice. The stories are inspirational and really helped to give the book a personal feel. It is a little reminder that ordinary people are following Dave’s plan and winning.
Dave also goes through why he chose each step and the logic behind each step.
For example, in step two, which is getting out of debt, he recommends using the debt snowball.
The debt snowball is a method of debt reduction.
You begin by writing down all of your debts, smallest to largest. You ignore the interest rate, term length and focus all of your energy on paying off the smallest debt. Every little bit of extra cash goes towards your smallest debt.
Once the smallest debt has been paid off you take your monthly payment from that debt and add it to the payment for your next smallest debt.
As you go through the cycle, your payments get larger and larger.
If you stick to the debt snowball you will become debt free.
Mathematically, it almost always makes sense to pay off the debt with the largest interest rate – seems logical right. However, number crunching doesn’t take into account human nature.
It is just too easy to give up when we aren’t seeing success. Often the item with the highest interest rate is also the loan with the highest balance.
By insuring, you have small victories along the way, it is significantly easier to keep yourself on your debt reduction journey.
After years and years of financial counseling, Dave realized that people need little victories to keep them moving forward. This type of practical application is what makes his methods so successful.
His methods aren’t going to work unless you are willing to make personal sacrifices.
You are the one who chooses what level of personal sacrifice you are willing to make.
Aaron and I could have been significantly stricter on ourselves and paid off our debt about a year earlier. We made the choice to live life while paying off our debt. We just continued to do it within the constraints of our budget.
The plan is very easy to customize to your individual situation.
Did we do everything Dave recommend in his book? No.
We chose to keep our credit cards and will continue to do so. However, we do pay off our cards every 2 weeks when we get paid. I’m very scared of credit card debt and have seen how easy it is for people to rack up some significant debt.
The Total Money Makeover is a very simple book. It isn’t a crazy plan that involves get rich schemes or advocates crazy ideas.
As Dave likes to say, he using principles his grandparents used. It is a common sense approach to debt reduction that anyone can follow.
If you are interested in overhauling your finances I personally believe that Dave’s book is the best place to start.