★ Rockstar Book Review: “The Total Money Makeover”
This is part of our Rockstar Book Review series.
Be sure to check out all previous books we’ve covered!
“The Total Money Makeover” – Solid Advice for Those of Us Who Seek Financial Security
The author is a straight shooter. Right from the start, he makes it clear what the book is and what it is not. He also acknowledges that there’s something in it to offend just about anyone. I find that quite refreshing. Dave also writes as he speaks, which means that anyone who likes his style is likely to find this book entertaining.
Here’s an example:
Change is painful. Few people have the courage to seek out change. Most people won’t change until the pain of where they are exceeds the pain of change. When it comes to money, we can be like the toddler in a soiled diaper. (pg. 14)
Beyond its edutainment value, TTMM is first and foremost a how-to type book, taking a reader through the stages of financial management from reality check to true financial wellbeing, often using physical fitness as a metaphor and real life success stories to help convince readers that financial freedom is achievable.
This well-known Ramsey quote sums it up nicely:
If you will live like no one else, later you can live like no one else. (pg. 5)
The 10 Steps of “The Challenge”
The following are the steps you’ll find explained and supported in this book, which he calls “The Challenge” and which are in line with his now-famous Baby Steps:
- Addressing Denial
- Rethinking Consumerism (a.k.a. addressing the need to “Keep Up with the Joneses”)
- Building a $1,000 Emergency Fund (Baby Step #1)
- Eliminating Consumer Debt (“The Debt Snowball” a.k.a. Baby Step #2)
- Building an Emergency Fund of 3-6 Months of Expenses (Baby Step #3)
- Investing in Retirement Savings (Baby Step #4)
- Saving for Kids’ College Fund (Baby Step #5)
- Paying off the Mortgage (Baby Step #6)
- Building Greater Wealth & Prosperity (Baby Step #7)
- Reaching the Pinnacle Point (ability to live off 8% of the household nest egg)
The steps and the advice listed above are sound for the most part (I’ve already noted some objections in the summary above). Anyone who follows this advice will find themselves well ahead of the Western norm for household financial management.
[I]f the Joneses (all the broke people) think you are cool, you are heading the wrong way. If they think you are crazy, you are probably on the right track. (pg. 100)
I offer one additional cautionary note regarding the strong emphasis on home ownership (which is prominent in the book due to the strong psychological benefit of owning the roof over our head): Given the wild ride that has been real estate over the last decade or so, especially in larger urban locales, smaller square footage apartments are becoming an increasingly-favorable option. It’s an option that can spare a number of individuals from the pain of finding themselves house poor.
Yes, owning a home free and clear is wonderful, but it is not a requirement in achieving financial security. A house is an asset first and a poor performer as an investment, given the maintenance requirements and the fact that a significant portion of a family’s net worth is “locked in” and inaccessible without getting into debt to tap into the equity (which would defeat the purpose of pursuing financial security in the first place).
The Bottom Line
I would recommend this book for anyone who carries any amount of consumer debt. Its message is powerful and persuasive, and is supported by worksheets and other motivational tools. It offers everything we need to convince ourselves to take and sustain real action.
For other books in this genre, I would suggest “I Will Teach You to Be Rich” by Ramit Sethi, “Dear Debt” by Melanie Lockert, “Your Money or Your Life” by Vicki Robin and Joe Dominguez, “The Automatic Millionaire” by David Bach and “The Wealthy Barber” by David Chilton.
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