Giving money out is equally as enjoyable as spending it, if not more so. When the perfect occasion arises, you should be willing to give your money away as well. For example, if you borrow Rs. 1 crore, you may save about Rs. 1 crore in interest costs if you accept a 15-year mortgage rather than a 30-year mortgage.
Dave Ramsey is a best selling author of many popular self-help books about getting your finances together. While you don’t have to follow every rule to the letter, the 7 Baby Steps provide a solid foundation for financial health. If you have kids, Ramsey suggests preparing for their future to help them avoid student debt. This protects you from life’s bigger surprises like job loss or health issues. Once debt is gone, Ramsey advises saving enough to cover 3–6 months of expenses. In this post, I’ll share my honest review of the book, what I loved, what I didn’t agree with, and the key lessons you can apply right away.
Our Overall Book Review: Pros and Cons of the Total Money Makeover
- Without a budget, it’s easy to overspend and lose track of where your money is going.
- For most people, this is the final stumbling block on their journey to financial independence, and paying it off will put them completely out of debt.
- Ramsey breaks down complex financial topics into easily digestible steps, making it perfect for readers who may be overwhelmed by personal finance.
- This book shows you how to manage your resources in a way that honors Yahweh.
One of the book’s greatest strengths is its simplicity. Ramsey encourages saving for your kids’ future so they can avoid student loan debt. Save 3-6 months of expenses in a fully-funded emergency fund. This small cushion helps protect you from needing to rely on credit cards when emergencies happen. Ramsey’s \”Baby Steps\” are the core of his financial system, and they serve as a roadmap for achieving financial success.
What I Liked About the Book
Ramsey suggests using tax-advantaged accounts such as 529 savings plans or Education Savings Accounts (ESAs) to prepare for future education expenses without relying on student loans. The fifth step is to start saving for children’s college education. This step provides financial security in case of job loss, medical emergencies, or other unexpected financial hardships.
Thus, he argues, going into debt for college might not be worth it. If you have children, Ramsey recommends you send them to school debt free. As you successfully erase debt, it will inspire you to tackle the bigger ones. The first step then is to set aside $1.000 for emergency situations. Emergencies are part of life, and there’s a 78% chance we will all experience major negative life events. He says that debt has become such a part of our culture that simply seems normal to be in debt.
- Meanwhile, Your Money or Your Life focuses on emotional and lifestyle transformation.
- One of the final steps in his plan is “giving,” which reflects Ramsey’s belief that true financial freedom allows you to be generous and help others.
- The second step involves paying off all debt using the debt snowball method.
- The book lays out seven practical “Baby Steps” that gradually guide readers toward financial independence, helping them eliminate debt, build savings, and create long-term wealth.
#2. Pay Off All Debt With Debt Snowball
Start saving money in a Roth IRA or in some other kind of retirement savings plan. The road to financial stability starts by setting up your finances in a stable, long-term way. Dave Ramsey helps provide the financial motivation and advice everyday people need to make financial changes in their life. The Total Money Makeover is written as a financial self-help book. The Total Money Makeover is one of the best personal finance books for beginners.
The Total Money Makeover Book Review
For example, the emphasis on cutting back on all luxuries might not be feasible for high-income individuals or those with unique financial circumstances. His advice is full of tough love, which can be just the push that some readers need. The Debt Snowball, for instance, is designed to give people small wins early on to build confidence, even if it’s not the mathematically optimal solution. He understands that personal finance is as much about emotions and habits as it is about dollars and cents. While many financial experts focus on the numbers, Ramsey focuses on behavior.
Pay Off All Debt (Except the House) Using the Debt Snowball
For Ramsey, this is about delaying gratification to build a better financial future. Ramsey is a big proponent of frugality, especially in the early stages of a financial overhaul. As you eliminate each debt, you gain momentum and confidence, allowing you to tackle the next one.
Although popular, the total money makeover also receives meaningful criticisms that should be included in any balanced book review. Real-Life MotivationThe book is filled with stories of average people paying off extraordinary levels of debt. Clear, Action-Based InstructionsThe book tells readers exactly what to do, step by step. Readers appreciate that these steps are sequential, removing the temptation to multitask financially. The total money makeover uses a simple, conversational writing style that appeals to beginners and anyone intimidated by financial jargon. At its core, the total money makeover promotes the idea that most financial issues do not stem from mathematics but from mindset and daily choices.
Its structured, step-by-step approach provides a clear roadmap for eliminating debt, building savings, and achieving financial independence. Ramsey’s emphasis on living below one’s means and avoiding debt at all costs may be challenging for individuals with very low incomes or high-interest student loans. While the book provides a highly effective financial plan for many, some critics argue that its approach may not be suitable for everyone. By promoting the idea of financial independence without reliance on credit, The Total Money Makeover offers a refreshing alternative to traditional financial advice that often normalizes debt. The book serves as both an instructional guide and a source of encouragement, helping readers stay committed to their financial goals.
But for “carefree spenders” it’s very useful. This little exercise can be very helpful for many personalities that tend to spend easily and sign up for random services.It can provide a good overview to quickly reduce their expenses. As long as you can spend without going into debt and can afford… Do enjoy your disposable income. The Total Money Makeover doesn’t want you to live like Scrooge McDuck but to enjoy life as well.
Step 2 – Start paying off your debts one at a time
However, borrowers often use these loans over a period of months, which can be expensive. Some customers applying for payday loans or installment loans may be required to submit additional documentation due to state law and qualification criteria. All loans are subject to approval and verification under applicable law. Loan products, terms, amounts, rates, fees, and funding times may vary by state and applicant qualifications. This content is for informational purposes only and does not constitute financial or legal advice. He’s realistic and believes that money is a tool to create stability and contentment in our total money makeover review lives, not the secret solution to all our problems.
The Total Money Makeover: 5 Insights For Lasting Financial Change
Once you’ve paid off debt and established your emergency fund, Ramsey shifts focus to building wealth. Ramsey insists that before you begin aggressively paying off debt, you should save a $1,000 emergency fund to cover unexpected expenses. This approach involves listing all your debts, from smallest to largest, and paying off the smallest one first while making minimum payments on the rest. He advocates for living within your means, cutting out luxuries until your financial foundation is solid, and avoiding debt at all costs.
Budgeting Brings Freedom
It is a must-read for anyone looking to break free from debt, develop healthy financial habits, and work toward a stable and prosperous future. Those with complex financial situations or a higher tolerance for investment risk may benefit from supplementing Ramsey’s advice with additional financial planning strategies. Ramsey’s no-nonsense style and emphasis on disciplined financial habits make this book an excellent choice for those who are serious about making lasting financial changes. Ramsey advises against debt, including low-interest borrowing for investments, and he prioritizes traditional retirement savings over more aggressive wealth-building strategies. Ramsey presents financial concepts in a straightforward, relatable manner, making the content accessible to readers of all financial backgrounds.
Ramsey’s blanket rejection of all debt may not resonate with those who are in a position to leverage debt as a tool for building wealth. This behavioral approach is empowering for readers who have struggled with sticking to a budget or managing debt. His baby steps provide a clear and actionable path, and his straightforward style ensures there’s no confusion about what needs to be done. This step ensures that if something major happens, like losing your job, you’ll be financially secure. Pay off all debt (except your mortgage) using the debt snowball method.
This begins with setting up a beginner’s emergency fund of at least $1,000. One of the biggest factors that hold people back from taking full control over their finances is the proper encouragement to make necessary changes to their lifestyle. The book also includes a lot of motivational help along with tips and advice. He’s inspired many with his simple, no-hassle philosophies on how to manage money.