Thursday, April 26, 2007

5 Reasons to Read: Total Money Makeover

Lately I've been contemplating a way to bring some financial books (and discussion of them) back to the light of day here at Money Musings. I'd like to revisit a few of them in the coming weeks and months. To that end, I'm starting a series called "5 Reasons to Read..." and I'll periodically use it as a way for me to get reacquainted with some of the paperbacks that are collecting dust on my shelves.

It strikes me that for some of the books I'm considering, coming up with five reasons to read them won't be easy. Thankfully, the first book on my list — Dave Ramsey's Total Money Makeover — isn't one of them.

So here we go with "5 Reasons to Read: Dave Ramsey's Total Money Makeover" ...

  1. Motivation. I'll say this: Dave did a fantastic job of motivating me — and I came in skeptical, cynical, and everything else. I knew I needed to get my debt dispatched; Dave took it a step further and made me gung-ho about Getting It Done. Put more succinctly, he made me believe.

    This is one area where Suze Orman, David Bach, and all the rest come in a distant second. Where they deliver rationale, Dave Ramsey delivers energy.

  2. Simplicity. There's nothing complicated about Total Money Makeover. And that's exactly what most debt-laden consumers need. Dave draws a straight line from Point A to Point Z. While real life doesn't always cater to such neatness, I'd say the odds for financial progress are heavily weighted to the side where people don't have to "think too hard."

    Also, when Ramsey lays out his plan for debt paydown, he directly acknowledges most people's dire need for quick and visible progress in any long-term behavioral change they undertake. Argue about the bottom line all you want; I am dead certain that seeing quick progress by "paying balances from smallest to largest" is the make-or-break success trigger for a huge number of in-debt households.

  3. The Baby Steps. To my mind, Dave's Baby Steps are the souped-up V8 in his Get Outta Debt Corvette. For me, the Baby Steps' validity is summed up like this: I've heard from way more folks who used the Baby Steps and successfully defeated their debts than I've heard from all other guru's plan's followers combined. (To be fair, though, Ramsey-ites tend to be more vocal about their successes than do others. )

  4. See What All the Noise Is About. Some of Ramsey's followers are devout to the point of ... well, cultishness. Some of his detractors would sooner drink battery acid than give Dave a penny of credit for anything he teaches. Put the two groups together, and you have a debacle — which is what you commonly find on financial message boards and blogs where these folks meet up.

  5. Build Unreasonable Expectations for Investments. Well, to be more specific, I should say "Build Unreasonable Expectations for Mutual Funds." Dave is oh-so-fond of basing his investment models on "12 percent annual returns" garnered from mutual-fund and other stock-market investments. Sorry, but I don't buy it. Not going forward, anyway. Throw in management fees and other assorted costs, and I'd venture to guess that 12 percent annual returns might be your best possible return over, say, any 20-year period in the future. Average returns for the same period? I'd put them closer to 6 or 8 percent annually.

So there you go. Next up? Well, I haven't decided yet. But I have a whole lot of books to choose from!

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— Posted by Michael @ 9:59 AM


Good post. Thanks for helping us spread the message of hope and debt freedom!


Hello Michael,

Nice post on Dave Ramsey's Total money makeover.....

I liked your new idea of 5 reasons to read post...great job Michael...thanks for sharing..

Finance Guide 101


Good post!

Made me laugh what you said about the Ramsey-ites being more vocal. To be double fair, though, maybe they are more vocal about their success because they are surprised it works so well.

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]