Updated on 04.22.07

Review: The Total Money Makeover

Trent Hamm

The Total Money MakeoverThis week, The Simple Dollar is conducting a detailed review of radio host Dave Ramsey’s The Total Money Makeover. This book is basically a distillation of the “Dave Ramsey philosophy” into the form of a self-help book that, in terms of language, has more in common with books like Joel Osteen’s Your Best Life Now or Steven Covey’s 7 Habits of Highly Effective People than with typical personal finance books. If you’re looking for motivation more than for technical personal finance advice, this book will have a lot of appeal; if you’re looking for specifics on how certain investments work, you might not like this one.

Of course, the Dave Ramsey philosophy has its own quirks, as anyone who has listened to his radio show will know. Dave is a big proponent of the “no debt” perspective, meaning that you should pay for everything using only cash. This philosophy is a constant throughout this book, underlining all of the ideas that Dave presents.

In fact, the plan in a nutshell is to save $1,000 as an emergency fund, pay off all your debts, build up a six month emergency fund, then start saving to buy things never using a loan. He’s against credit cards in every form and basically eschews credit in every possible form.

Dave has a very, very strong voice (if you’ve listened to his show, this is pretty obvious) and it continually shines through here, almost to the point of being abrasive. This makes for entertaining reading, but it can almost be distracting from his main points.

So let’s dig in.


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.

The First Steps

The second portion of The Total Money Makeover, which includes chapters six through eight, is the building of a financial foundation upon which you can grow. Dave’s a big proponent of the one step at a time concept and proposes a “three step” plan for building a foundation, but upon careful reading it becomes clear that there are actually six steps.

First, develop a budget. To many people, this is a scary step, but it’s actually quite easy for a first-timer to make a simple budget. The goal is to find areas that you’re spending too much on and cap those areas – these tend to be shopping, expensive cars, and other non-essentials.

Second, get all of your accounts current. Hopefully, you can skip this step, but if you have any late bills, pay them off first. You don’t want late bills hanging around that continue to damage your credit.

Third, build up a $1,000 emergency fund as fast as possible. This fund exists to keep you from failing in your plans if a disaster occurs, such as a damaged vehicle or so forth. This is absolutely essential, to the point that Dave encourages people to take out second jobs and sell some of their stuff to create such a fund. He also requires that it be liquid (in a savings account, not in a CD or something you can’t easily touch) so that you can get to it in an emergency and not risk sliding back on your progress.

Fourth, pay off all debts (except the home). Dave advocates a “snowball” approach, in which you list all of your debts in order of balance due from smallest to largest, then make minimum payments on all but the smallest and make a large as payment as possible on that smallest debt. Once that’s paid off, apply everything you were paying on that smallest debt to the new smallest debt, and so on. Eventually, when you get to the big debts, you’ll be making very large payments on them and paying them off quickly.

Fifth, build a “real” emergency fund. Once your debts are gone, you should continue to build up that emergency fund up to the point where it can replace three to six months of salary. You should basically just move the total debt payment you were making in the past straight into saving for this emergency fund.

Sixth, start saving for real purchases. Once your emergency fund is built, now is the time to start saving for big items. That debt snowball payment should now be directed into saving for expensive items, such as a house down payment or a new car that can be paid for in cash.

According to The Total Money Makeover, once a person has reached this level, they have a firm foundation upon which to build.

Building Wealth

Once you’ve built a solid foundation by following the steps outlined in the middle portion of The Total Money Makeover, Dave offers suggestions on how to build up your wealth.

It is important to note that prior to these concepts, the book instructs the reader to pay off all debts except for the home loan and build up a six month emergency fund before moving on.

First, start paying for your retirement. Dave advocates pretty strongly that one should save 15% of their income towards retirement using the basic formula of paying into the work retirement plan until you reach the matching cap, then maximizing a Roth IRA contribution, then putting the rest in the work retirement plan. It’s the basic rule of every retirement advisor because it works.

Second, start paying for the kid’s college education. This chapter felt sort of wishy-washy, mostly because Dave strongly hinted that a child learns more if they have to pay for college themselves than if their parents cover it for them. Still, a well-funded 529 savings program is recommended.

Third, pay off that home mortgage. Once the first two items are in place, you should be paying off that home mortgage as fast as you can. He advocates getting into a 15 year mortgage and still overpaying each payment if you can, just so you can get the mortgage finished off much faster.

Now it gets fun. If you’ve trained yourself well enough to reach this point, you should know very well how to manage your money and suddenly you’ll have more of it floating around than you can imagine. The rest of the book focuses on this stage in life, which we are all striving for: keep some goals, remember who you are, and keep investing.

Buy or Don’t Buy

Before you decide on whether or not to buy this book, I want you to answer yes or no to the following five questions.

1. Have you ever read a general (non-financial) self-help book and enjoyed it?
2. Are you completely lost with your financial situation and want a firm, clear, and simple guiding hand?
3. Have you ever listened to and enjoyed Dave Ramsey’s radio show?
4. Are you a practicing Christian?
5. Do you find anecdotal evidence to be more enlightening than detailed instruction?
I recommend that you buy this book if you answered “yes” more often than you answered “no,” and I also recommend that you don’t buy this book if you answered “no” more often than you answered “yes.” Sound strange? Let’s break it down.

First of all, this whole book is written like a self-help book. It’s not written in the more dry and informative style of many personal finance texts. Dave is up there preaching the truth of personal finance success, and if you’re open to it, he’ll take you along for the ride.

Second, the advice is very basic and direct. The Total Money Makeover plan is about as simple as it is going to get when it comes to personal finance. If you’re really lost and most personal finance advice seems over your head, Dave can probably help.

Third, it comes off like a continuation of Dave’s radio show. If you’ve heard Dave’s show on the radio, what was your gut reaction to it? If you liked it, you’ll like this book; if not, then you’ll probably find this book less than compelling as well.

Fourth, there are some Christian overtones. Dave quotes Bible verses multiple times each chapter. If this makes you uncomfortable, you’ll probably have a wave of feeling uncomfortable every fifteen pages or so; if it’s fine, this is a non-issue.

Fifth, the evidence for success relies heavily on anecdotes. Unlike the conclusions in many personal finance books, which offer raw numbers and walk you through calculations to show you how to do it on your own, Dave’s ideas are often supported by anecdotes. Admittedly, most of the ideas are easy enough to grasp that you won’t need a calculator, but the flood of personal stories from hundreds of people is almost overwhelming at times.

I enjoyed it, and I would recommend it to many people, but not to everyone. It’s a great, simple methodology for getting your money in line, and Dave is an enthusiastic promoter of the message.

I originally reviewed The Total Money Makeover in five parts, which you can find here, here, here, here, and here if you would like to read the original comments.

The Total Money Makeover is the fifth of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

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  1. Peter says:

    I’ve read this book (from the library), merely because I’ve heard so much about it, and the above review captures it quite well. Essentially, if you’re not put off by the heavily Christian bias, don’t know much about personal finance, and need a shove in the right direction, this is a book for you. I will admit to essentially flying by all the ancedotal “Dave’s program is so great, we sucked and he saved us.” testimonials. That alone will save you plenty of pages of reading.

    The one down side, and this might be because of when the book was actually written, is that I feel $1000 is not enough for any kind of emergency fund. But this might be more of a personal grip and not a realistic one.

    On the good side, something not mentioned above is that Dave includes examples of spending plans (aka budgets), debt snowball tracking sheets, and other useful items in the back of the book. I liked them enough that I used them as templates for modifying my current financial tracking documents, and I feel they’re a great start for someone looking at getting a handle on the basics for the first time.

  2. MrsMoney says:

    Wow, this is a GREAT review. I love it. I have been debating buying the book. I think you’ve given a lot of people a great review of the book! Keep up the good work!

  3. Steve says:

    My work is offering Dave Ramsey’s Financial Peace University to all their employees and spouses (since Dave is an advocate of both spouses being on the same financial page).

    I do agree with most of the comments made about Dave’s book (I have read both of them).

    The only slight disagreement I have with Dave’s approach involves the debt snowball. If you are in the position were you need the “ra-ra” feeling of paying off a small debt, that’s fine; pay it off. But at some point, you need to be able to reposition the remaining debt balances to attack the largest interest rate % balance first, or it will cost you more money in the long run.

    Overall, I did enjoy Dave’s methodology (I am a practicing Christian, as well as my part of my work’s first “graduating” class from FPU). I have encouraged my co-workers to take his class & read the books. If they only get one thing from each chapter/day, that’s one more thing they now know that they didn’t before.

  4. Kary says:

    I could easily be one of Dave’s testimonials. Five years ago my husband and I were almost $200,000 in debt. Today, all we have is our mortgage, which is down to $60,000. So, yes, his method does work.

    Your review was very accurate. It is important to note that the reason Dave quotes the Bible alot is because the Bible does teach alot about how to take care of finances. If your offended by that then no, you probably wouldn’t want to read his book.

    It’s also important to note that the Bible is full of advice on lots of things other than money…you don’t have to become a “christian” to benefit from the advice.

    Anyways, one other thing that you touched on was the fact that this book is not for everyone and you are right. If you’re not motivated to actually get out of debt then why read it? I do strongly believe that regardless of your age, race, gender or even financial status this book can help you if you want to be helped. It’s simple, no-nonsense approach is what turns alot of people off because they think that something so simple could never work. Take it from a family who took care of $140,000 worth of debt in less than 4 years. It DOES work. But, it’s like Dave says…How bad do you want it?

  5. Steve says:

    Kary (as well as Dave) both nail it on the head: attitude is what it will take to get out of debt, and with the right attitude, stay out of debt. That is the main basis of Dave’s course. And if you can get that, you will be able to handle future financial decisions the proper way.

    For my own personal testimonial, I have a car payment (my last time I don’t pay cash for one); 48 months. After going through a major attitude adjustment about debt, and putting in the commitment (KEY!), I will have it paid off around the 2.5 year mark. That’s after I had paid off $2500 in remaining credit card debt. That’s after finishing Dave’s course in September. That’s after making the decision about putting off any major purchases (new computer, lcd tv, etc.) until then.

  6. happywife says:

    This is a great and accurate review. I’ve read TTM several times, and I agree with everything you said. I did personally find the book to be both motivational and helpful.

  7. Bob says:

    I have one more thing to add….. if you are not a reader, by the audio book! I have the book on CD (3 to be exact) and love it. I have probably listened to it three times now. It is Dave himself reading it, so you get a much greater feel for Dave’s enthusiasm about everything.

    Plus, I knew my wife wouldn’t read the book if I gave it to her. But being trapped in the truck on our last road trip, she had no choice! Now she is on board 100%!

  8. Emma says:

    Hi, I just have a question about this book. I am living in New Zealand, and no stores here stock it. I am contemplating ordering it online, but before I do, was wondering on whether the reason it’s not stocked here may be due to heavily American content, that won’t be relevant here. Any thoughts on this, before I commit to the freight?

  9. Oh this is really a nice book. I remember an online friend told me to never really avail of a loan when you want something. Instead save money and then buy it. YOu will never be able to experience a debt relief if all your life, you rely on credit cards, availing of a loan and etc.

    By the way, how much is this book cost? I love to blog this nice book also.

  10. rrsafety says:

    To Emma: the lessons you learn from the book will work just as well in NZ as in the US… check out Ebay to see if you can buy a cheap copy..

  11. Neil O'Rourke says:


    I’m Australian, and our local bookstore did stock it (it helps living in Sydney).

    Although the book is very US centric, the basic principles are the same. 15% of your income invested in a retirement account is the same, be it a 401(k), IRA, superannuation, whatever.

    The underlying methodology of the book is that it’s your behaviours that are the problem, and that is a constant.

    So, if you have debt and want to get ahead, it’s worthwhile. My wife and I are following the plan, and it’s working for us.

    You can the audiobook on iTunes, and most of his stuff on ebay.

  12. Thank you for your review of “The Total Money Makeover”. We appreciate you sharing your opinion and doing the research needed to fairly evaluate the book. We have seen fit to link to this article in our independent Total Money Makeover reviews section. Anyhow, Keep up the good work spreading truth.

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