Before The Dave Ramsey Show joined the talk radio airwaves, Dave was counseling people one on one with his tried-and-true money principles. Seeing the need for a relatable and proven financial plan to get your money in shape, he wrote The Total Money Makeover, a follow-up to his first book, Financial Peace.
The Total Money Makeover is Dave’s how-to approach for living out the Baby Steps in everyday life, complete with shots of inspiration from people who have worked the plan and made it to the other side to scream, “We’re debt-free!”
What Is a Financial Plan?
A financial plan is your map to get from where you are to where you want to be with your money. It’s the process of setting goals and thinking through the steps it will take you to reach them. Remember: Each person’s financial plan looks different, depending on their short-term and long-term financial goals.
But no matter what your goals look like, it’s important to think about where you want to be and then figure out how you can get there. That’s why you need to create a solid financial plan that’s easy to understand.
A Financial Plan That Works
With so many self-help books and thousands of new ways to do a budget on the market today, it can be . . . overwhelming, to say the least. But you can trust that we’re here to cut through all the self-help clutter out there and help you make a financial plan that will work for you and your family.
Say hello to The Total Money Makeover. In a no-nonsense kind of way, this book walks you through the steps you need to reach financial peace.
The 7 Baby Steps
Dave breaks down the 7 Baby Steps and walks you through each stage of the journey. Dave wouldn’t tell you to do anything he hasn’t already done himself—he fought his way out of debt and bankruptcy using this exact plan! Whether you’re trying to save money for retirement, invest, or pay off debt with a plan that actually works, you’ll find out how to do it with the Baby Steps.
Baby Step 1: Save $1,000 in a Beginner Emergency Fund
Baby Step 2: Get Out of Debt Using the Debt Snowball
Baby Step 3: Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund
Baby Step 4: Invest 15% of Your Income for Retirement
Baby Step 5: Save for Your Children’s College
Baby Step 6: Pay Off Your Home
Baby Step 7: Build Wealth and Give
Saving for Emergencies
Otherwise known as Baby Step 1, this step is crucial for when life happens. And we all know life has a way of showing up unannounced and unwelcome—and it’s usually not free.
When the A/C unit goes out during the hottest week of the summer or your pipes burst while you’re on vacation . . . there’s nothing to do but fork over the cash to fix it. But instead of letting your Mastercard cover it with interest (and making payments for the next two years), what if you could pay for it with cash on the spot? That’s why you need an emergency fund.
How to Pay Off Debt
If you’ve spent even five minutes listening to The Dave Ramsey Show, you’ve probably heard that we’re pretty serious about helping people get out of debt. We’ve said it before, and we’ll say it again: Debt sucks and we don’t want you to waste even one more dollar on your past when you could be planning for your future.
That’s where the debt snowball method comes in. It’s the best way to get out of debt—and we aren’t just saying that. Here’s how it works:
Step 1: List your debts smallest to largest, regardless of interest rate. Pay minimum payments on everything but the little one.
Step 2: Attack the smallest debt with a vengeance. Once that debt is gone, take that payment (and any extra money you can squeeze out of the budget) and apply it to the second-smallest debt while continuing to make minimum payments on the rest.
Step 3: Once that debt is gone, take its payment and apply it to the next-smallest debt. The more you pay off, the more your freed-up money grows and gets thrown onto the next debt—like a snowball rolling downhill.
Step 4: Repeat until you’re completely debt-free!
Investing for Your Future
What if your financial plan actually led you to the retirement of your dreams? What if your plan included a way for you to live and give like no one else? Guess what—it can.
The Proven Plan to Reach Your Financial Goals
When The Total Money Makeover hit the shelves, it skyrocketed to #1 on The New York Times best sellers list in its first week—and has continued to spend more than 200 weeks there. Today, over 6 million copies of the book have been sold worldwide, giving people the hope and strategy they need to create a financial plan and take on their own money makeover.
The Total Money Makeover gives you a simple, straightforward plan for breaking bad money habits and beating debt—and it works! Here’s a sneak peek into what you can expect to find in Dave’s best seller.
Commonsense Financial Advice Your Grandma Would Give You
The Total Money Makeover doesn’t list sophisticated or hypothetical tips that are hard to understand, and you don’t need a corner office (or a three-piece suit) to understand them either! These are simply the same nuggets of advice your grandparents followed. Live within your means. Don’t mess with credit. Save for a rainy day. Quit trying to keep up with the Joneses. These tips may seem obvious, but they stand the test of time.
Busting the Money Myths
Sadly, most of us have accepted money myths as gospel and use them as a standard for making financial decisions. Some we just grew up with, and others are societal norms we’ve bought into—hook, line and sinker.
Here are a couple myths Dave calls out in The Total Money Makeover:
Myth: A credit score is the only way to show how great I am with managing money.
Truth: “Bankers, car dealers, and unknowledgeable mortgage lenders have told America for years to ‘build your credit,’” Dave said. “[The FICO score] is not a score that says you are winning with money or that you have a million dollars; it mathematically says you LOVE DEBT.”
Myth: Having a credit card will help me build wealth.
Truth: “When you play with snakes, you get bitten. I’ve heard all the bait out there to lure the unsuspecting into the pit,” Dave said. “Broke people use credit cards; rich people don’t.”
Success Stories From Real People Who Have Been There
As you flip through the pages, you’ll follow the journeys of everyday people who have been in debt, worked their way through the Baby Steps with dedication, and completed their own total money makeover.
David and Tayelor used credit cards as their income and lived paycheck to paycheck until they started on their own financial plan. After cutting up their credit cards and becoming debt-free, they now live their lives without fear of the future.
Autumn is a single parent. She was living off of $400 a month and drowning in $100,000 of credit card debt. After following the plan, she paid off her car loan, continues to pay off her debt, and even owns her own company!
There are thousands of stories from incredible people just like you who decided to make their financial plan, chipped away at mountains of debt, paid off their homes in record time, and are on the path to becoming everyday millionaires.