This week, The Simple Dollar is conducting a detailed review of radio host Dave Ramsey’s The Total Money Makeover. This book is basically a printed distillation of Dave’s “financial preacher man” style on his radio show. Is there serious meat to be found here, or is it a bunch a fluff around a few small ideas? Let’s find out.
The first five chapters of The Total Money Makeover focus primarily on psychological hurdles that one must overcome in order to be ready to build up their personal finances. Perhaps more than any other part of the book, this first portion is imbued with the “Dave Ramsey philosophy” of no debt, no matter what.
The first hurdle is denial. Many people simply deny that there is a problem with their own finances, even as they slip further and further behind. Even people with only a small amount of debt often find themselves in denial if they are spending as much as they are bringing in. What is being denied? The possibility of a disaster, as well as the possibility of great financial success.
The second hurdle is debt myths. Dave asserts that there is a great mythology in the Western world about debt, particularly in the sense that debt is normal and healthy and acceptable. The philosophy here is that debt is never a healthy thing to have, particularly when you’re not mature enough to quickly reduce and eliminate it.
The third hurdle is money myths. Similarly, The Total Money Makeover says that there is a mythology about money as well, that it is the key to solving all of our problems, when the truth is that money is nothing more than a tool. We set ourselves free if we use money as a tool, otherwise money uses us.
The fourth hurdle is ignorance. Most people simply don’t have any idea what it takes to get ahead financially; they just imitate what everyone else does and considers that to be right. Once a person sits down, looks at the problems, and considers a solution, they’re often already on the right track.
The fifth hurdle is keeping up with the Joneses. Hand in hand with the last problem is te need to keep up with the Joneses. Many of us get into debt because we imitate the neighbors so that we “fit in.” The truth of the matter is that the neighbor is likely in as poor financial shape as you are: saddled with tons of debt and so forth. Stepping back and not worrying about the Joneses for a while can set you free.
Tomorrow, we’ll move onto the next part of The Total Money Makeover: building a solid financial foundation.
The Total Money Makeover is the fifth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.