The Total Money Makeover: A Proven Plan for Financial Fitness

Author:   Dave Ramsey
Publisher/Date:   Thomas Nelson / 2003, 2007
ISBN:   0785289089 (Hardback, 224 pages)
Related Website:
See Also:    Five Reasons to Read: Total Money Makeover

Note: Reviewed copy was audiobook (CD) version. See bottom of article for my comments on the hardback version.

In some ways, I'm a bit conflicted by Dave Ramsey.

Oh, the advice he offers is, most of the time, good as gold. And there are simply a lot of people who need to hear it Dave Ramsey's way — that is, they need the financial-advice equivalent of a two-by-four across the forehead, straightforward and unignorable.

But I also get this feeling that sometimes the guy and his financial-advice business are becoming just too glossy. Head over to his website at and perhaps you'll see what I mean. So much of it is geared to sales — look at the steep price tags for various memberships, seminars, or materials — that one has to really question just what's going on behind those help-me-help-you curtains. Then again, it might just be the cynic in me. If Dave Ramsey can help people on such a large scale — and emails I've received from his "followers" suggest that he can — he should get paid for it, right?

"It is really hard," he says, "to sell books and tapes that teach the necessity of lots of hard work, living on less than you make, getting out of debt, and living on a plan. But I'm trying."

Well, I'm quite certain that The Total Money Makeover (hereafter referred to as "TMMO," as Ramsey does on his website) pumped up Mr. Ramsey's financial accounts quite nicely — reaching New York Times bestseller status will do that for you.

Digging In to Dave

TMMO was the second of Ramsey's books that I'd read (though he's written more than that), the other being Financial Peace.

The middle portion of TMMO is, in many ways, just a rehashing of Financial Peace. But it is a needed rehashing, and told better here. In particular, Ramsey's "Baby Steps" program finds much greater detail here, with nuggets of surrounding information that would have benefitted readers of its earlier version, and will greatly assist first-time readers of the plan here.

In the first section of TMMO, Ramsey spends a great deal of time laying groundwork. He discusses (and attempts to discredit) a plethora of commonly-held money and debt myths. These include, but are certainly not limited to, the following:

  • The use of debt as a "tool"
  • Most folks' reasoning (or lack thereof) behind car purchases and leases
  • Borrowing against one's home, both for debt consolidation and/or investment purposes
  • Interest-free (90-day, same-as-cash) loans, and their "benefits"
  • The supposed "greater riskiness" of debit card fraud versus credit card fraud
  • The all-important tax "benefits" of continually paying mortgage interest
  • The "need" for building credit at a young age.

Perhaps the strongest selling point of the audiobook version is that Ramsey reads the text himself. Ramsey, who also hosts a weekday radio show, communicates his book's message with attention-getting vigor and an undeniable enthusiasm. He wrote the book, so he knows where the authorial emphasis should be. He has a strong, clear voice, and is uncommonly persuasive in several passages. (You can download a sample of the audiobook, and thus get a feel for Ramsey's delivery, at its web page.)

Those readers already familiar with "Dave," as his radio-show callers address him, will find the delivery here as direct and knife-sharp as it is in his other public arenas. "It hurts when you spend cash," Ramsey says pointedly in TMMO, "and therefore you spend less. The big question is, what do millionaires do? They don't get rich with FREE HATS, BROWNIE POINTS, AIR MILES, AND THE USE OF SOMEONE ELSE'S MONEY! What do broke people do?" His voice drops considerably. "They use credit cards."

Oh yeah. In my world, that is good stuff.

One drawback to the text is Ramsey's use of supposed real-life filler materials — which, in this case, are referred to as "Total Money Makeover Success Stories." Between many chapter breaks, the reader/listener is introduced to the stories/voices of various TMMO participants and proponents. Examples include Joyce, a poor single mother of two sons ("The most valuable lesson I learned had nothing to do with the green paper that had become such an idol to so many people; it was about trusting God,") and Steven, a young husband to Sandy; between the two of them, they dispatched $46,000 of debt in 12 months, got life and health insurance ... and then discovered that Steven had inoperable brain cancer. ("Even after I'm gone," Steven says, "I know my beautiful 23-year-old wife will be taken care of. It's all because of Dave's advice.")

Honestly, I am not certain these interludes add much to the informational value of the text, although I suppose others might derive a sort of motivation from them.

Another, and larger, point of concern:   Ramsey insists on using "12 percent annual returns" from stock-market investments (mutual funds, etc.) when he does his investment calculations. This, he says, is the "market's historical average," over time periods as long as 70 years. I'm not certain how many readers are looking at investment horizons of 70 years, though. Honestly, the reader might be more benefitted by knowing and/or using returns from, say, the worst of any 20-year period over the last 70 years or so, or perhaps the average of all 20-year periods over the last 70 years. Most websites place such rates at anywhere from 7.9 to 10 percent return annualized. Even with that, these computations usually consider only the post-WWII period (1946-1950) up through 2000. Doing so still slants the numbers in the market's favor, as it takes into account the 1990s hyperbolic market rise while disregarding the collapse of the latter 1920s and 1930s and that of 2000 through 2003. Even with the above returns, no mention is made of the effects of inflation (3 to 4 percent per year, generally), taxes, or commissions / management fees, which would reduce the real returns even further.

Debt has been sold to us so aggressively, so loudly, and so often that to imagine living without debt requires myth-busting. Debt is so ingrained into our culture that most Americans can't even envision a car without a payment, a house without a mortgage, a student without a loan, and credit without a card. We've been sold debt with such repetition and with such fervor that most folks canít conceive of what it would be like to have NO payments.
— Dave Ramsey

I mention this because there is a tremendous amount of difference between constructing financial plans which bank on 12 percent annualized returns, and plans based upon more realistic expected rates of return. According to the graph on this SmartMoney page, the worst return from any 20-year period in the span from 1950 through 2002 (large cap stocks; adjusted for inflation) was very near zero; the average return for 20-year periods in this time frame was around 6 percent annualized; and the best return from any 20-year period in this time frame was near 13 percent annualized. (These figures still do not account for commissions or management fees, which would likely lop off another 1 to 2 percent from the returns.)

From what I see, Ramsey is using figures that most likely reflect the best possible annualized returns one might hope to achieve over a 20-year time frame. Exactly how reasonable is that? Worse, he uses the same 12 percent return to develop plans and compute returns for college-savings accounts, which in most cases will NOT allow for investment periods of much longer than 10 or 15 years, and which will also likely suffer from tuition inflation at the rate of AT LEAST 7 percent per year.

Those concerns aside, this book is worth the price. It is pure Dave Ramsey. His precepts are simple and concise. He expands on ideas from his previous works — and those ideas really needed some expanding. Ramsey is quick to point out that there are no shortcuts here, no Monetary Miracles waiting to ring your doorbell and deliver carefree prosperity to your household sometime this week. Rather, readers are doused with what amounts to financial "tough love" and, additionally, strong motivation. As soon as the pages begin turning, we are warned that we will have to work hard — possibly harder than we have ever worked at anything before — to bulletproof our finances and solidify our futures.

But there is beauty in simplicity, and Ramsey's plan has simplicity as its hallmark. That makes it a notch above.

"Becoming successful financially is not complicated," he summarizes. "It may be difficult, but it is not complicated."

EDIT / ADDENDUM: In 2006, I purchased the text version of Total Money Makeover also. It contains many more real-life stories, some blank forms ("debt snowball" setup sheets, for example), and is quite a bit thicker on details. Now that I've seen both versions, I prefer the written text. I contend that it provides (expectedly) much more content for the money.

Michael • updated February, 2010

Update • May 18, 2007:

In February, 2007, Total Money Makeover underwent revision. I recently glanced through the new version, and didn't find much that would cause me to repurchase the book (though I still might). I did notice that in a preface, Ramsey spends some time defending his statements regarding "12% annual investment returns" from mutual funds. (See? I'm not the only guy that's called him on this!)

I've read TMMO three times now, and listened to the audiobook in its entirety more times than ... well, the number's in the double digits. If you want to get out of debt and get your Money Life in order, and if like me you believe that motivation will be the difference in whether you succeed or fail, then you will not find a better aid than Total Money Makeover.

There's a lot about Dave Ramsey that I don't exactly like, but the fact is that the plan he provides here is the only one to which I have ever heard someone (well, lots of someones) directly attribute their money success. Odds are that you won't hear folks say "Suze Orman's plan got me out of debt, and I couldn't have have done it without her." You won't hear this about Jean Chatzky or David Bach. You will hear it said about Dave Ramsey and his "Baby Steps."

That, to me, is proof of TMMO's immense value.

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