Updated on 06.26.09

The Total Money Makeover: The Challenge … and Denial

Trent Hamm

This is the first of twelve parts of a “book club” reading and discussion of Dave Ramsey’s The Total Money Makeover, where this book on debt reduction is teased apart and looked at in detail. This first entry covers the preface and the first two chapters, finishing on page 16. The next entry, covering the third chapter, will appear on Saturday.

ttmmLet’s get this straight right off the bat. I like what Dave Ramsey has to say when it comes to personal finance. I find much of his material makes a lot of sense and he does a great job of balancing a “coaching” attitude without going too over the top a la Larry Winget.

That being said, I don’t care much at all about his political commentary. I know that his relationship with Fox News pretty much requires a conservative bent, but his political perspectives feel very much out in right field to me with only a tenuous connection at best to his personal finance talk.

Given that, I’m going to completely ignore his politics for this discussion. If it’s not inside The Total Money Makeover, which is an excellent book on debt reduction and focus, I’m not going to talk about it.


So what exactly is The Total Money Makeover all about? It’s just a very straightforward plan for getting in control of your finances, particularly in terms of overcoming a heavy load of debt. Many people have “turned the corner” – meaning they’ve realized that debt is dangerous and are actually committed to spending less – but the mountain of debt they’ve incurred makes it almost impossible to move forward. That’s exactly who the book is written for.

‘80% Behavior, 20% Head Knowledge’
Right off the bat, on the first page of the introduction, the basic idea is made clear:

I am positive that personal finance is 80 percent behavior and 20 percent head knowledge. Our concentration on behavior – realizing that most folks have a good idea of what to do with money but not how to do it – has led us to a different view of personal finance. Most financial people make the mistake of trying to show you the number, thinking that you just don’t get the math. I am sure that the problem with my money is the guy in the mirror.

I wholeheartedly agree with this. All of us know that it’s important to save and can see the numbers on how useful it really is. The trick is actually doing it – and that’s all psychology.

If you don’t truly make up your mind to achieve financial success, you’ll hold back. You won’t save – or you won’t save much. You’ll keep telling yourself that “later” is the right time to do it.

And then you’ll find yourself in ten years having not made any progress on your big goals in life.

The choice to start spending less than you earn is a hard one, but it’s the most important one. That choice has nothing to do with math, with running the numbers, or anything else. It’s inside your head.

If You Will Live Like No One Else, Later You Can Live Like No One Else
That phrase is found at the bottom of virtually every page in the book – it’s basically the book’s mantra. Dave’s take on it is clear: live hard now and you’ll live easy later. My take is a little bit different.

I agree with him largely on the first part: it’s incredibly important to tighten up that spending and get rid of the debt. Doing that requires learning how to spend less – and also not allowing yourself to use that extra money for anything but getting rid of debt and building a future. That requires living “different” in a way – your goals shift from the shiny new car and the shiny vacation to the removal of all of your debt.

On my block, I can certainly say I see a lot of shiny cars – my truck is the oldest vehicle on the block, by far. In the end, though, my truck works – and that’s all I can really ask of it. It gets the kids to daycare and gets me to the library, which is really all I need. As long as it keeps running, we’ll keep it. And that’s living quite different when we’re surrounded by vehicles more than ten years newer than my truck.

It’s the other part that’s tricky. I don’t view the “later you can live like no one else” as meaning I can afford that shiny new car. Instead, I take a perspective closer to Your Money or Your Life – the “live like no one else” in the future for me is complete financial independence, meaning I don’t have to work for money.

That, to me, is “living like no one else.” I won’t have to factor in money at all when it comes to choosing how to spend my time, and that’s my real dream.

A 12% Rate of Return?
One big flashing question mark comes on page xv in the preface:

Sadly, many intelligent but ignorant people seem to think that making a 12 percent rate of return on your money in a long term investment is impossible. And that if I state that there is a 12 percent rate of return available, then I have lied to you or misled you. […] The S&P 500 is the 500 largest companies traded on the New York Stock Exchange, sometimes called “The Big Board.” So it is widely accepted to be the best average of the market. The S&P 500 has averaged 11.3 percent per year for the last seventy-plus years, as of this writing.

So, I immediately flip to the front and discover that this revision was published in 2007. Something tells me that 2008 hurt those numbers quite a bit.

Here’s the point, though: The Total Money Makeover tends towards the optimistic when it comes to investment returns. While there are certainly long-term stretches (more than ten years) where the market as a whole – or certain pieces of the market – have returned more than 12% annually, the truth is that there is no guarantee that any 10 year, 20 year, 30 year, or any year period will return any percent. Surely, 2008 taught us all that, loud and clear.

Instead of relying on that extremely optimistic forecast, I’ve come to use Warren Buffett’s more realistic (perhaps even a bit pessimistic) forecast that in the future we should expect 7% returns on average. This might be slightly on the pessimistic side, but when you’re making calculations for your future and banking on them, you’re better off being pessimistic (and having more money than you need when the day comes) than optimistic (and having to work for the rest of your life).

Calculating with 12% returns gets people really excited – and it might happen. But my perspective is that using such hugely optimistic numbers puts your future at risk. Better to finish with more than you expect than with less.

Tapes and Books Aren’t the Solution
On page 4, a certain quote really caught my eye:

So my Total Money Makeover begins with a challenge. The challenge is you. You are the problem with your money. The financial channel and some tape sets aren’t your answer; you are.

All the blogs, all the books, all the “tape sets,” all the financial products in the world won’t help if you’re not committed to sucking it up and making it work.

If you’re not willing to look at your behaviors, step up to the plate, and make some changes in your life, nothing is going to change.

This kind of talk generates three kinds of reactions. It makes some people angry – they want to believe that they can suddenly get rich without changing a thing, even though it hasn’t happened yet. It makes some people stick their fingers in their ears and sing “lalalala” – they know it’s true, but they’d rather keep the sinking ship they’re on than try to change anything. And then others embrace it and work hard for something better.

I was in the “lalalala” group for years. I knew very well what I needed to do, I just didn’t want to hear it. I knew on some level that what I was doing wasn’t working, I just didn’t want to think about it.

My epiphany threw me on a new track – the “embrace change” track. I finally woke up and realized that if I didn’t take charge of my situation, I was going to keep sinking slowly. This one choice led to tons of things – I paid off four credit cards, two vehicles, three student debts, totaling $30,000 or so in debt; I bought a house; and, finally, I switched careers, earning less but doing what I love.

All of the moves I made were simply the aftermath of that one choice to really make a change. That choice is up to you – no blog or book or podcast can make that happen (well, except for MY blog or book or podcast … just kidding).

King of Denial
The second chapter of the book focuses on denial – simply ignoring that there are problems. Like I said, I did this myself for far too long. One quote from the chapter took my breath away, though:

For your own good, for the good of your family and your future, grow a backbone. When something is wrong, stand up and say it is wrong, and don’t back down.

Powerful stuff, and exactly right. If you’re not going to take charge of things, who is?

The Pain of Change
Another interesting piece comes in on page 15:

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.

I strongly believe that for many people in a routine of spending more than they own, there’s a “bottoming out” effect, not too different than a junkie. At some point, the problems that have been building for a long while explode – you can’t pay the bills any more (which happened to me), you’re forced into bankruptcy, your family splits apart.

For many people, that final point is painful enough that it tips the scales. Suddenly, in comparison, the big change doesn’t seem so painful any more.

I like to think of it like the Mississippi River flood of 1993, which destroyed my hometown. It kept raining and raining and raining throughout the months of June and July, like debt building up. The river kept rising, pushing against the levees, until that fateful day when the levee broke. Chaos ensued and new patterns were rapidly discovered in countless lives.

Soon, we found that the actual path of the river had changed – in many places, it had found a new channel to flow through. The new patterns of life began to settle in place and soon things began to return to normal – but with some big changes. Levees were rebuilt stronger than ever. People prepared their homes for future flooding.

In short, life took on a new, better, safer routine. When you’re recovering from a financial meltdown and discovering new ways to live, this happens – you begin to discover new, better, safer routines.

And you begin to live like no one else.

Do you have any other thoughts on the first two chapters of The Total Money Makeover? Please share them in the comments – and feel free to respond to any of my impressions as well. After all, a good book club is all about discussion!

On Saturday, we’ll tackle the third chapter – Debt Myths: Debt Is (Not) A Tool.

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  1. Brian G says:

    After reading his books, seeing him in person, and listening most days to his show Dave Ramsey has become my Financial Advisor of choice. He’s been rich, broke, frustrated, angry, and back to being rich and doing what he loves. He’s frugal on the things not important to him, but spends money on the things that are important.

    I’m hoping to make it to his Entre-Leadership class in Atlanta in September.

    Check out his video “Town Hall for Hope” on Hulu for free.

  2. Mark L says:

    I’m a huge Dave fan as well. We weren’t in financial trouble when we started with him. We had been debt free thanks to the dot-com bubble. However, we were starting to pile it up again. We had a single used car payment, and we had piled up about $5,000 in credit card debt again. Nothing insurmountable, but I saw where it was leading, and didn’t want to go there again. The money mismanagement was mounting, and my wife and I were fighting more about it.

    Then, our church offered Dave’s Financial Peace University – the first time I’d ever heard of Dave Ramsey. We signed up to see if it would help, though we were skeptical. In the intervening month, I got the audio version of TMMO for the car. It opened my eyes! I love his first couple of chapters that you go over here. Before even getting to the numbers, Dave gets you fired up to change, and tries to keep the momentum going throughout. I think it’s great that he goes past the math first. There’s too many people out there who get analytical about debt, without addressing the underlying problem of most people – that your emotions and “I want it now” attitude usually gets you into debt in the first place. It’s that part that needs to change before you can use math.

    FPU was much of the same, but I still think it’s the bigger “bang for the buck” of all of Dave’s products. The insurance lesson, for example, was what saved us a lot of money each month.

    Dave’s teachings are common sense, and he admits it. Still, he has the attitude of a good, tough, but encouraging couch.

    We’re 18-months debt free again, but this time, it’ll stick.

  3. MegB says:

    Wow, Trent! Loved the tone with which you started this post. A little feistiness, a little humor. Good stuff!

  4. Amber says:

    I think you’ve misunderstood Dave’s intention behind “later you can live like no one else”. I don’t think Dave only means for it to indicate that you can buy new trucks or whatever. I think he means you aren’t worried about money anymore which is the financial freedom of which you speak. The later aspect of living like no one else is whatever you want it to be. And even if your end-goal is to have a shiny new truck, you’ll still be living like no else if you bought it with cash!

  5. Steve says:

    If his politics don’t appear in the book and mean nothing to you, why did you feel compelled to devote a short paragraph to them?

  6. Trent Hamm Trent says:

    Amber: doesn’t having a shiny new truck in the driveway mean you’re living like everyone else?

  7. Kevin M says:

    I got the same meaning Trent did out of his “live like no one else…” mantra. Meaning if you sacrifice now, you can actually afford all the toys in the future. I was a little turned off by that since it seemed to be reverting back to the behavior that gets people in trouble in the first place. Otherwise, I thought the book was a good, easy to understand read with actionable steps.

  8. I like Dave a lot and listen to his podcast weekly. He doesn’t allow callers to play financial games with their debt to get ahead which is a very good lesson.

  9. SteveJ says:

    @Trent Slightly off-topic: Do you have a rule of thumb for when you’ll replace the truck?

    My car is getting up there and I’ll certainly drive it as long as it gets me here and there. I just paid $300 to get something fixed to pass an emissions check and I was pretty tempted to just leave it on the lot and go without for a bit. I figure that $300 is about a third of what I’d get for it without fixing it up (new paint, etc), but when another $300 thing pops up I’ll start to wonder when I’ll wise up :)

  10. Baker @ ManVsDebt says:


    First, I admire the way you do these book reviews. Usually reviews are rather boring and tedious, however I almost always make it through yours.

    Second, Ramsey obviously interjected his politic views far before he was ever associated with Fox News. His slightly libertarian/republican slant has been a cornerstone of his writing and show since the beginning.

    Obviously, this doesn’t change the fact that you dislike that part, but it’s important to point out he’s not just shilling for Fox News. :-)


  11. KC says:

    SteveJ – As long as your car is safe and reliable you should keep it. Now some people think as soon as you have an oil leak it is neither safe nor reliable. My point is that you will have small fixes with any car. But when your car is really beat up and unsafe (like no air bags or other current safety features) or the car has something going wrong every month or two – it isn’t reliable. I’ve always driven older cars (bought at about 5 years old and driven for at least another 7 years) eventhough I can afford to pay cash for about anything new I’d want. As long as we’re talking about maybe 1 or 2 repairs a year I don’t have a problem with the car. I’ve always had imports that had a good history when I purchased them so I’ve never had anything major break (engine, transmission, etc). Even if you have to spend around $1500 one year for a lot of repairs its still cheaper than just the tax alone you’d pay buying a new car. Most any car – foreign or domestic – should give you 120k miles and 10 years. After that you may think about replacing it – then again, you may decide to keep it and not risk buying a newer “lemon”.

  12. ChrisB says:

    I’m a big fan of Dave… when we decided that we needed to be more systematic in our approach to personal finance, we reviewed a number of books and while they all had essentially the same message (spend less than you make; 3-6 months’ expenses; pay down debt asap; etc.), Dave has a talent for making it *exciting!*

    We don’t follow everything he proposes (we use a rewards credit card), but by and large, I agree with him. With one exception…

    Investing. Trent noted the 12% interest thing… Dave also seems to favor active investing and is against bond funds, neither of which makes much sense to me (I’m a Boglehead when it comes to investing). I think Dave’s just wrong on this, but on most everything else, I’m a fan.

  13. Misty says:

    I am really excited you are using Total Money Makeover in the book club series. I really love this book and it just spoke to me.

    Also, I’ve been following your site for a couple of years and just wanted to let you know how much I appreciate your blog. It’s really helped me get my personal finances sorted out. Thanks.

  14. cv says:

    With regard to SteveJ’s question, when should you think about a car in terms of its value as an asset, and when should you think about how much you pay per month to have a car at all? In SteveJ’s case, it sounds like pretty soon it won’t make sense to put more money into it. However, if a $300 repair every 6 months lets you keep driving it, then you’re paying $50/month for the car – much less than a car payment, and less than the cost of a new vehicle amortized over the life of the car. So keeping the car and making the repairs is the cheapest way to continue to have a functioning car.

  15. Ann says:


    I think you wouldn’t be living like everybody else if you buy the new truck with cash, as Amber stated (#3). You may HAVE the shiny new truck like the Jonses, but you will not have the the monthly payment (debt) to worry about like they do. By driving my old truck now for as long as I possibly can, I am saving the money that most would use NOW for a monthly car payment to get a new vehicle every three years. So when the day comes that my vehicle has to go to the scrap yard I will have cash to pay for the next one and will not be taking on any debt in the process. To me that would be living like no one else.

  16. russds says:

    I read this book a while back. Loved it. I will enjoy the discussion regarding it.

  17. Marsha says:

    For those of you who listen to DR regularly (or watch him on TV), is he currently suggesting a rate of return on investments different from 12%

    Nice review, Trent – or, shall I say, start of a book club discussion.

  18. Sandy E. says:

    Nicely written Trent. I like Dave Ramsey too because he does write in a succint style, that is also charismatic. When I read this book, I felt like I was acquring knowledge and being entertained at the same time.

    (I visit his website periodically). I think he was a real estate agent at one time.

  19. wvFrugan says:

    As a Christian, I have a real problem with this guy. His networking via churches and wearing his religion on his sleeve is much of the usual “trust me” stuff I see so much off. It is in poor taste as it becomes a form of marketing & advertising as well as subtilely implying that if someone does other than what he advises, they are less Christian or just plain wrong. We all know the disasters That have occurred with “Christian” businesses, at best it is often a poor witness for Christ, and often a scam run on trusting people of faith. I agree with most all of his practical financial advice (now I will note that some of his right wing beliefs are in opposition to consumer interests and much of the social justice Jesus taught IMO) and do not question his personal Christian experience. Dave, let your acts & deeds speak for themselves.

  20. James says:

    Dave’s advice re. rates of return and sustainable withdrawal rates are foolishly aggressive.

    Most obviously, returns of 12% clearly don’t exist over time — it’s well beyond the fundamental growth rate of the economy (which maps to corporate earnings and cash flow).

    Even Bufett’s more realistic expected return of 7% is bullish if you’re planning 25 years into the future — and your meals and roof depend on it.

    But, both these returns ignore inflation. At 3-4%, even Bufett would agree taht you can only draw down your assets by 4-5% each year if you want them to safely last a lifetime. And, if you get a stretch of time with prolonged negative returns, even 4-5% might be ambitious.

    Net, Dave knows a lot about people and psychology … but he knows precious little about anything beyond rudimentary saving and investing. As he would to a doctor or lawyer, he should defer to people (fee only planners with CFP/CPA credentials, I’d suggest) that know this field better than he does.

  21. David says:

    Well done review Trent!

    I agree that behavior (and permanently modifying of your behavior) is the biggest help that will turn your financial picture around. Easy to say, but hard to do at times!

    The other part of helping one get out of their financial woes and on the road to freedom is the practical tips, strategies, encouragements, and reading of blogs like this one. Another blog that is helpful is thedaviddickinson.com . It focuses on helping those get on the road to financial freedom as well.

  22. I listen to Dave Ramsey’s podcasts, and agree w/Amber when he says: If You Will Live Like No One Else, Later You Can Live Like No One Else — he doesn’t mean deferring purchases, but living a financially independent life further down the line. I’ve heard him repeat that in many different contexts, and it was always about financial freedom.

  23. Derek says:

    “Live like no one else, so that later you can live like no one else.”

    I’ve been a fan and listener of Dave for quite a few years now, and his principles helped my family *work* our way out of debt and forward to a better outlook.

    A catch-phrase obviously will have different meanings to those who read it, but consider that numerous people are living: 1) paycheck to paycheck, 2) in debt with credit cards, mortgages, etc. and 3) have nothing going toward their future.

    Following the Total Money Makeover principles, you can get out of those ‘statistics’ and into the statistics where you aren’t living like anyone else. It’s not about toys or hoarding of money, its having the peace of mind and spirit that you can achieve something that gives hope for a future without (or less) junk in your life.

    We’re only debt-free (we don’t have big investments or anything), and it has helped us tremendously.

  24. Troy says:


    Nice review. However, mentioning shiny new cars in the driveway of your neighbors and omitting your own brand new 4 month old shiny new Prius with a payment in the garage is disingenous. Might want to use a different example in the future.

    Dave excels because he mass produces and markets the little known truth that money is SIMPLE. Very simple in fact.

    All you really need to know about money is addition and subtraction. 3rd grade stuff. The rest is window dressing and tax avoidance.

    Make more, spend less. Assets and liabilities. simple adding and subtracting with a little common sense and self control and you are set.

    He dispells the myth that money and PF is complicated. It is not. People try and make it complicated, and businesses thrive on helping those who believe it is complicated but it is really simple when broken down.

    My favorte take from Dave’s book applies to everyone equally. “It is your fault.” You are in control of your life and situation and money. If you are not where you want to be, look in the mirror. It is your choices that got you where you are. Not the banks, or your spouse, or your parents, freinds, childhood, job,etc. It is YOU.

  25. Kate says:

    Nice review, Trent. On the “later, you can live like no one else,” I don’t interpret that to mean buy all the toys. Here’s my interpretation: It’s so sad to hear older people call into the show, who have credit card debt, car notes, and upside down mortgages. I think what Dave is saying is: Enjoy your golden years (or sooner, if possible!) free of all that worry. Sheesh – it’s motivational to think that I do NOT want to be owing when I am a senior citizen!!

    On the politics: LOL — I agree with Dave, politically, and I think he’s actually quite measured and respectful in how he articulates his views. I don’t know how he stays so even keeled, in the face of all the Washington craziness!

    Anyway — love your site Trent. I drop in now and then to comment – this one got my attention!

  26. LC says:

    S&P 500 12% — I think that requires a 20 year horizon — in other words, you will get that, but only after 20 years.

  27. karl says:

    I went thru Financial Peace University last year and have led 2 sessions since then. Dave is an entertaining presenter and his common sense approach I appreciate. So far I’ve paid off over $3000 and my goal is to be debt free in a year.

    I always encourage my FPU students make the commitment to themselves, and their families, to change the way they think about money. It’s that 80% behavior that’s (usually) gotten them into their current financial situation. Changing your “stinking thinking” is quite important.

    In September Dave is doing a live internet broadcast, a 5 hour session of TMMO. Details are at http://www.daveramsey.com/live/
    Might be a nice follow up for people following this series here.

  28. Willamette says:

    Couple of general thoughts on Dave R (I’ve read a number of his books, and other PF pieces, and read GRS and The Simple Dollar every day). I like 80% of his stuff, and I think his emphasis on motivation is great.

    – His is a lock-stock one-type personal finance plan…you take it or leave it and he doesn’t admit that different plans might work for different people. I’m always wary of this type of thinking. As an attorney, it would be malpractice for me to write the same will, contract, or motion for each and every client.

    – Don’t agree with his NO CREDIT CARDS mantra in all cases, especially his bent that “Credit Ratings Don’t Matter” –> yes, they do…home loans, school loans, insurance, jobs, etc., etc., etc…they are increasingly relied upon, and successfully managing a credit card by having a high limit and low/no balance (paying off every month) is the easiest way to build good credit. Not to mention rewards, identify-theft protections, and travel benefits (rental car insurance, for one) that you get with credit cards.

    – His envelope system is way too much work, and way too dangerous ($2000 in cash sitting around the house, in my pocket, etc…just waiting to get misplaced or lost…no thanks) in my opinion.

    – Regarding the last two comments, I am the first to admit that I have friends who love and do great with his no credit card, all-cash envelope system. They don’t like having credit cards and couldn’t control them in the past.

    – I also don’t completely agree with his “do without now so you can do with later” attitude. All things in moderation, I say. As an individual who has seen three siblings die in the last 5 years (all before the age of 40), completely going without so I can have a great retirement that may not happen is no good for me. Had I followed his system to a T, I would have less law school debt no doubt (that and the mortgage are the only debt I have), but I would also have missed out on dozens of trips to India, Europe, Canada, Hawaii, and all over the U.S. that I took with my wife during our first 5 years of marriage as college students/grad students. We did the trips frugally, met lifelong friends, undertook volunteer work and ministry, and developed our own relationship. Under Dave’s plan we would have been at home eating PB&J’s…which just doesn’t fit with our worldview or desires.

    – Dave exists in part to sell books, DVDs, and marketing time on his radio program…he has great info but no incentive to take a more nuanced approach that wouldn’t sell as well.

    – All that said, Dave does a great job most of the time, presents personal finance in an accessible and entertaining manner, and is a great influence IMHO. But his is not the gospel.

  29. Blou says:

    I’m a huge fan of Dave Ramsey and am currently participating in his Financial Peace University program at a local church. I highly recommend it, even for someone who isn’t Christian or a regular church-goer. The program is also available to facilitate in a workplace and other settings.

    I don’t agree with Dave’s political views either, but I find that easy to overlook when I consider how clearly and simply he’s able to explain financial matters and give good, solid (sometimes hard to hear) advice to people who really need to get their financial act together.

    What I respect about Dave is, even with his tough-guy, suck-it-up-and-get-out-debt approach, he also shows a lot of compassion to people who fell into hard financial times for reasons out of their control. Many times I’ve heard him on his radio show counsel a widow whose husband died and left her deeply in debt, or a man or woman whose spouse left them and isn’t taking any responsibility for their debts. But he doesn’t allow people to wallow in a victim mentality. He gets them on the right path to take charge and overcome their financial obstacles.

  30. C.J. says:

    @Trent – I am very happy to see you did not let his political or religious views effect your real thoughts on his book. There are alot of people who have and will, and they really miss out on the life change they could receive from his lessons. I am a former graduate of his FPU and a present coordinator. His FPU program changed my life and I am watching it change other people’s lives as well. It’s awesome to see the hope he gives to these people in my class who never thought they would see the end. They are learning things they should have known from the start and being encouraged to act on the things they have known. This stuff is so basic, I don’t think it can be broken down any further. And this is what alot of people need. Not because they are dumb, it’s just that people don’t know how to live financially responsible. This is only from the lack of personal finance education received in school and the way of life people know in America. Even after FPU, TMMO is still my favorite! I am sad to see that you take his quote the way you do. Maybe if you listened to him on his radio show or read Finacial Peace it would help you realize his meaning of “..later you can live like no one else.” It is obviously a quote that can be taken a couple of different ways, but as you can see from the words of his fan club in here that he definitely doesn’t mean you have to buy new shiney cars.

  31. Lenore says:

    I just love when a conservatively-aligned @$$#*!% trumpets some &*!!$#!+ like, “You are the problem with your money,” when he and his capitalist pig cronies are exploiting working people and bending or disregarding laws to stay in power. No doubt personal responsibility plays a huge role in individual finances, but most Americans are at least somewhat subject to the whims and excesses of corrupt corporations like Halliburton, Exxon, big tobacco, pharmaceutical companies and the banks “We the People” recently bailed out.

    Most of the time, GREED is the problem with America’s money, and we will never crawl out of the mess we’re in until we counter it with compassion, rationality and restraint. Yes, it’s wasteful when an individual runs up debt for non-essentials or fails to prepare for life’s inevetible setbacks. When a major company does the same thing, it impacts hundreds or thousands of lives and jeapordizes the entire national or global economy.

  32. C.J. Holmes says:

    @Trent – I am very happy to see you did not let his political or religious views effect your real thoughts on his book. There are a lot
    of people who have and will, and they really miss out on the life change they could receive from his lessons. I am a former graduate of his FPU and a present coordinator. His FPU program changed my life and I am watching it change other people’s lives as well It’s awesome to see
    the hope he gives to these people in my class who never thought they would see the end. They are learning things they should have known from
    the start and being encouraged to act on the things they have known. This stuff is so basic, I don’t think it can be broken down any further. And this is what a lot of people need. Not because they are dumb, it’s
    just that people don’t know how to live financially responsible. This is only from the lack of personal finance education received in school and the way of life people know in America. Even after FPU, TMMO is still my favorite! I am sad to see that you take his quote the way you do. Maybe if you listened to him on his radio show or read Financial Peace it would help you realize his meaning of “..later you can live like no one else.” It is obviously a quote that can be taken a couple of different ways, but as you can see from the words of his fan club in
    here that he definitely doesn’t mean you have to buy new shiny cars.

  33. SteveJ says:

    Sorry to hijack the discussion…I don’t have much to add to these chapters other than the psychological angles are obviously spot on. My mom and I have the same personality, if the numbers don’t work, you don’t do it – end of story. It’s been a steady struggle to learn how to help with “coaching” others…your first instinct as a numbers person is to show them the math, which just freaks a lot of people out. It’s funny it played out that way, because while I love playing with numbers, my mom despises anything more complicated than division. If you put a dollar sign in front of a problem, she’ll nail it, no sweat.

    Re 12%: I’m currently reading Enough by Bogle and it struck me how “conservatives” are anything but conservative when it comes to stock projections. Or is that financial liberals are even worse? Sign me up for ultra-conservative then. Financial Fascist is probably available as a domain name :)

    @KC, @cv – Thanks for the advice! I’m pretty happy with it and I’ve been spoiled by repair costs (1x sensor valve, 1x Serpentine, 4x pad + rotor, 10x tire, 1x battery). It’s a Cavalier with 125K miles. As KC points out, at least it’s a known quantity, I drove it off the lot with 8 miles on it. It’s horrible for baby seats (coupe), but it starts without hesitation and the a/c blows cold, which is all I really ask for in TX. I’m betting I’ve got costly repairs around the corner though, thus the question. My wife and I are currently in disagreement, I don’t think we logistically need 2 cars between us, but she’s running on the “just in case” mantra (with good reason). So when the car does go for good, my preference is to go without for a time to see if we can, and then at some point later buy a “reliable” used with cash. So it’s not really a question of not having a payment, it’s whether that money is earning 1% in a savings account while it’s bled dry by repairs vs not having the money and hopefully lower recurring costs. Just not sure what the tipping point is, honestly.

  34. Amber says:

    Trent – As Ann said in #12, the crux of the situation is not in HAVING the truck, but in how the truck was obtained. Even if you look the same on the outside, you are still WEIRD if you bought the truck with cash on an auction after doing appropriate research into what you wanted and what you were willing to pay for it.

    Everybody has a different end goal. I don’t think anybody should be faulted for wanting a specific toy. It is the manner in which the toy is obtained that makes you different.

    Also I think you have to consider the target audience. A first-time reader of TMM who lives a lifestyle of keeping up with the Jones might be motivated by the idea of being able to afford more toys, but may discover new and different goal as they journey towards financial freedom. The important part in this chapter of the book is to find the thing that will get people started!

  35. KC says:

    It still sounds like a good car, but if I had kids riding in a Cavalier I’d be getting something else. If this is just a second car and only you and occasionally you and your wife ride in it then see how long it will last. But if kids are in that car on a regular basis I’d be getting something bigger and safer. I could be wrong as I’m just going on instinct here, but you might check the crash ratings on that Cavalier and particularly the back seat crash ratings. I don’t have kids, but I think safety of a vehicle when kids are involved is the most important thing to look for in car ownership.

    Anyone else with kids and a similar dilemma have any experience with this question?

  36. sumit says:

    It is great way of representation on the economic article and this are very much helpful for the conscious people for making money. Also we need some carefulness like Royalty Agreement to cope up with the situation and overcome it in a healthy and productive way.

  37. Dishes and Laundry says:

    Just remember when you “live for later” you _are_ taking a risk as well. There may be no later. Don’t squander “now.”

    Don’t forget to have fun and do the things you want to do with your life now. A lot of them don’t cost money… but some things, like travel do. I put it off and off.

    A fancy tombstone is not going to make you happy when you’re dead.

  38. Paula Freeman says:

    I enjoy the total money makeover book. I listen to his show and I was able to take FPU over the internet during the beta version test period so it was free. I have falling off the wagon so to speak but I always jump back on. Thank you for your review. I enjoy hearing what other people have to say.

  39. This is probably my favorite motivational book on getting out of debt. Yes, his personal views are a bit strong and out there, I never really made the connection to Fox News but it makes sense.

    I’m excited to dust off this book again and dig in as I love the personal stories in it. His Baby Steps got me out of more than $36,000 in consumer debt during a 12 month period late 2007 – late 2008.

  40. Mike says:

    Hi Trent, I respectfully disagree with your understanding of the “live like no one else” mantra. I think Dave means that once you are financially secure, should you need to upgrade your car you can pay cash, rather than take on debt. Same goes with paying for a vacation, or a new roof or whatever. Also, I think Dave is a big advocate for charity, and being able to give to help others reach their financial goals truly is living like no one else.
    I know Dave has his toys, and a “beach” house, but, I don’t think he buys “stuff” just because.
    FYI I really enjoy your posts, and plan on making my own laundry soap soon. Michael

  41. Joey says:

    @ Lenore: Well said.

  42. Ms. Clear says:

    Great post. My own political views are diametrically opposed to Dave Ramsey’s. However, I borrowed an older edition of Total Money Makeover from the library yesterday and buzzed through it. It’s really good advice.

    I’m also with Lenore that you have to look at the larger economic system of the US. That’s not an excuse. It’s an acknowledgment of reality. And it’s a damn good reason to be financially prudent. You have to understand what your family is up against.

  43. lurker carl says:

    Dave Ramsey’s own explaination of his mantra, “If you will make the sacrifices now that most people aren’t willing to make, later on you will be able to live as those folks will never be able to live.”

    I would assume that means living for life instead of for money. Tightening the belt now and changing your spending habits allows you to create a future that is debt-free and without money worries, acquire the moral authority to keep from sliding back into destructive spending habits, and having the ability to GIVE like no one else. Ramsey calls it the “pinnacle point” when your money works harder than you.

    It’s a Lake Wobegon life when you don’t have money worries. The grass in your backyard really does feel better when that mortgage is gone. Cars are nicer if you never have payments. Everything is easier, smarter and good looking when there aren’t any payment books or amortization schedules in your life.

  44. Warren Buffett is right, Stock market returns have been roughly 7% over the last 134 years that data is available. I don’t know where the figure of 11 to 15% comes from, but I can only find those returns looking at specific 10 year periods, most notably from 1987 to 1997. Moneychimp has a great calculator for those wanting look more closely at the returns of the S&P.

  45. Charlene says:

    I am also on the opposite end of the political spectrum as Dave Ramsey. However, I find the mantra about ‘living like noone else’ to mean something totally other than a ‘shiny new truck’- whether it is financed of paid for in cash. For me, this mantra means that I would have the funds and means to provide for my extended family or those who need a helping hand. I think the ‘live like noone else’ has different meaning for each person. If it means you can buy your truck w/ cash- great. If it means I can send my nieces to college- that’s great too. The point, I think, is to work hard now for untold freedoms later. And since we live in a great country, we are all free to define what ‘living like noone else’ means for us.

  46. J says:

    @Trent — Dave has been very clear on the radio show (and later in the book) that he doesn’t care if you buy a new truck, expensive toys (boats, watercraft), take expensive vacations, buy vacation homes and so on so long as you have the financial bases covered.

    So if you want to buy a shiny new truck, and you have no debt, emergency fund, retirement in order, kid’s college funded, and you are paying down (or have paid for) your (fixed rate 15 year) mortgage, and of course you pay CASH, Dave would be all for it, although he’d probably tell you that your money would be better spent on a used model. He tells a story about a Jaguar he owned in this book (or Financial Peace, I can’t recall).

  47. Lisa says:

    Thanks for this review. I’m reading the book now (I got it at the library :)) and as a diehard California liberal, sometimes it’s hard to digest Ramsey’s message because of the political and religious slant. However, there is definitely really solid material in there – and if the religious message is what gets through to people and allows them to eventually live free of debt – great, I’m all for it.

  48. Fiona says:

    I agree that Dave gives great financial advice, but like Lisa, I wish he didn’t feel the need to throw politics and religion into it quite as much. On the other hand, I can tune that part out, and it is the religious part that got my heavily in debt mil to listen.

  49. J says:

    Oh, and I’ll also add that Dave would, of course, want you to be giving some of that money away. Given Dave’s religious background, it’s obvious to know where his giving goes, but there are many, many good causes that are non-religious that could do with donations.

    I also disagree with a lot of Dave’s politics, but I will echo those who are worried about the debt culture that pervades the financial / business world. I’m lucky enough to work for a well managed, privately held firm that has zero debt. We have had to cut back on expenses like pretty much everyone else during this recession, but we have complete control over our destiny, and with no debt obligations, the management has one less thing to worry about with managing the financial side of things.

    Contrast this to the companies (and government agencies) who have tremendous debt loads, and you can see what happens on the corporate level when you are carrying too much debt — it eats away at your ability to be agile when you most need to be. The same thing happens on a personal level, too, and I think the TMM is a wonderful tool for establishing a workable framework for personal (or family) finances. We are still working on debt elimination, and do deviate in some places from following the plan exactly, but our deviation is based on discussions between my wife and I regarding the pros and cons of such deviations, and acceptance of the consequences. But the TMM plan provides the framework for those discussions to take place.

  50. Deb says:

    As far as the 12% return in any given 10-year period, I’m afraid that your problem is that you are too young and too freshly out of debt to see the big picture. And even if 2008 does change the numbers – that would make it the FIRST TIME that a 10 year period did not produce 12% return, which doesn’t sound like a huge risk to me. It bothers me that you criticize Dave Ramsey’s plan when you have so little debt free history – and not even debt free because you recently borrowed money to buy a car.

  51. JK says:

    Trent, why bring up the political aspect at all? Those of you opposed to his views will soon learn why he is correct. Out of control government that will overwhelm all of our lives. If you thought that getting ahead was tough before, just wait. For those of you on the other side, California is a perfect example of the liberal mindset and of reaping what you sow. Dave Ramsey is correct on so many levels.

  52. Des says:

    @J (comment 28)

    I agree with what you said, but the story he tells of the Jaguar is illustrating a financial *mistake* he made (buying a car he couldn’t afford to impress others), not encouraging readers to buy expensive cars.

  53. J says:

    @Des — the Jaguar used to illustrate the mistake is later replaced by another Jaguar, after he has his finances in order and can properly maintain / afford it. IIRC he describes himself as a guy who likes cars.

  54. Perry says:

    In one of his FPU classes, Dave talked about a shiney, expensive vehicle that he wanted, which I am sure he could afford, but didn’t have because he felt buying it would be antithetical to what he teaches. So I think his definition of “living like no one else” is pretty similiar to yours.

  55. Mark L says:


    Maybe corporations and governments are greedy, but that doesn’t change the fact that you still have to balance your checkbook at the end of each month. If it’s not, you ARE the problem, the not the company.

  56. Steph says:

    I started doing the Total Money Makeover about 2 months ago, and have already paid off two credit cards. For me, a very basic budget and switching to a cash based system has worked very well. I’m hoping that it will take me less than the estimated 11 years to pay off my student loans.

  57. Ro says:

    Interesting discussion! I’m a Dave fan and I agree with those who interpret his “live like no one else” statement to mean financial independence.

  58. “While there are certainly long-term stretches (more than ten years) where the market as a whole – or certain pieces of the market – have returned more than 12% annually, the truth is that there is no guarantee that any 10 year, 20 year, 30 year, or any year period will return any percent. Surely, 2008 taught us all that, loud and clear.”

    Trent–Point very well made. There’s a strong argument to be made that much of the debt frenzy and lack of traditional savings over the past couple of decades can largely be attributed to an overly-optimistic assumption of double digit returns (forever) in the stock market.

  59. Erin says:

    I also don’t agree with his politics, and his political rants have gotten much more frequent since Obama was elected. I’m also not religious at all, but the rest of what he teachers make so much sense to me that I just love his show.

    I think that “live like no one else” simply means living without debt and the worries and constraints associated with it.

  60. Andy says:

    I everyone, every business, and every government were debt free, our economy would stop.

    Why, because with no one to borrow money, banks would go out of business, and there would be no where to save cash. With no banks and no savings, money itself would loose its meaning. We would become a cash-less society, and we would have to barter for things. Economic collapse ensues.

    Debt is not a bad thing. In fact, its essential.

  61. Andy says:

    Above should read “IF everyone, every business . . .”

  62. Joanna says:

    @ Lenore: I agree 100% that GREED is what got us into this mess. However, while Corporations make an easy (and vague) target, they are entities made up of individuals, which takes us right back to individual responsibility, whether on the part of consumers or employees/business owners.

    Take the mortgage crisis. It’s not only the Big Bad Greedy Banker that caused this, but also the Individual who wanted more house than he could afford and lacked the patience and/or discipline to save/look for more money making opportunities so that he could afford it. Greed was present in both individuals in that scenario.

    It goes both ways here. I’m not advocating letting Wall Street off the hook, but ALL of it comes back to individual responsibility and, at the end of the day, YOU are the only person that YOU can control.

  63. Joanna says:

    Trent: One of the things I admire about you is that you typically do a great job of leaving the controversial issues like politics out of the discussion. In this case, though, I think you missed the mark by even mentioning Ramsey’s political views. It clearly drove some seconding of your opinion. We’re just lucky that those who agree with Ramsey’s politics have not taken the bait.

  64. A.M.B.A. says:

    FYI: check out http://www.daveramsey.com to hear full length versions (either LIVE (2-5 pm EST) or a two week archive of his radio show. Also, http://www.llnoe.com (Living Like No One Else) is a forum that encourages and supports DR’s financial teachings.


  65. A.M.B.A. says:

    Also, on DR’s website, all his books are $10 plus s/h through the July 4 weekend. He usually runs these specials every holiday. Great way to get your own new copy of TTMMO inexpensively.


  66. I’ve been watching Dave for a while now and just finished up his book. I really like what he has to say and he reminds me of my parents and the financial values they instilled in me. Dave just seems to sum everything up in a nice package (ie the 7 baby steps)

    When it comes to his religious and political views… although I agree with him, sometimes you have to just ignore them and see the real message behind what he says. (that’s if you don’t agree with him).

    I’ve been living like no one else ever since I had my first job and it has given me a huge head start on achieving my financial dreams.

    -Gen Y Investor

  67. Kristen says:

    First, I have to say great review… and very glad that you did not allow differences in political views to cloud your opinion on the financial aspects of his book. My husband and I took Financial Peace University almost 2 years ago, after digging ourselves into a big hole of about $100,000 debt not including our house in just our first 5 years of marriage (gasp). Our first class we had a huge discussion about “80% behavior, 20% knowledge” and it really hit both of us. We couldn’t believe how selfish and immature we were each being by spending money that we didn’t have. I had read tons of financial books before and since this one, and though there are many that I love, this one has been life changing for us. I highly recommend Dave to anyone regardless of religious/political views. P.S. we have paid off almost half of that debt in the past two years, and I went from working full time to staying home with my kids full time. My husband is a teacher so our salary isn’t fabulous.

  68. J says:

    @Andy — you do realize that one of the world’s largest faiths (Islam) is against debt/interest? Look up “Islamic Banking” on Wikipedia for a primer. Millions (maybe billions) of people live debt free.

    People (and businesses and governments) would still need to purchase goods and services, people would still need to provide them. Companies would continue to grow. Commerce would adapt. As a small example, in a debt-free world, you might see rental/leasing of equipment (rather than buying with a loan) become a more popular thing for businesses that do not have the cash to pay for something up front.

    Debt is by no means essential. Many, many people live without it and many, many businesses run just fine without it — including the company I work for, which has been debt free since day one. Bills are paid on time, contracts are honored and we are quite successful — and we are privately held, so we don’t have to answer to investors, banks, VC firms, etc.

  69. Randy says:

    Regarding Dave’s politics – I agree with them, but I think he offends a lot of people with them and does himself a dis-service.

    Regaridng the LiveLikeNoOneElse mantra – I think that most people, when they’ve lived debt free a number of years, they will change radically and not want to live like everyone else. In effect, they will be satisified.

    Dave Ramsey is an evangelist with religous ferver. His message is to live debt free. (Scary thought) has he traded God for an idol? Instead of worhsipping money is he worshipping the “no debt” plan?

    Lastly – regarding trading the Cavalier – I say keep it ’til the kids are teens and then let them drive it (oh the shame). Seriously, look at the monthly cost. When it becomes more than the monthly cost of a new car, trade it. Amortize the cost of a new (or used) car over the expected life. Then there’s the preceived (real?) value of a shiny new car….

  70. kitty says:

    “@Andy — you do realize that one of the world’s largest faiths (Islam) is against debt/interest? Look up “Islamic Banking” on Wikipedia for a primer. Millions (maybe billions) of people live debt free.”

    How good is the economy of these countries? How many corporations you know from them? Also, do they have banks? If they have banks, how do these banks operate? Do you understand how banks work? They borrow money from YOU in form of deposits, put some of it in reserve, lend the rest and make money on interest. So if Muslim countries have banks, they have lending whatever the religion says.

    Also, name one technology or pharmaceutical country from one of the Muslim countries? Sure, if you sell shoes to your neighbors you may not need credit. But how are you going to finance research in new drugs without it? For example.

  71. Paul Workentine says:

    I’m a conservative who enjoys reading your blog. Why did you need to bring up Dave’s political views and disavow them? What do his politics have to do with his financial advice? You inserted politics into a discussion that had nothing to do with politics. I have no problem taking financial advice from a political “liberal.” I wish we all could evaluate people’s ideas on the basis of their merits without politics intruding.
    Otherwise, keep up the thoughtful blogs!

  72. guinness416 says:

    J/kitty – I’m dubious about those numbers. Billions of people? My husband is from a large (161 million people) Muslim country that has plenty of “western” style banks; our account in his home country is with HSBC and certainly pays interest, and none of his family have any issue with interest. This is like one of those “all christians believe ….” things.

  73. velvet jones says:

    I very much disagree with Dave’s religious/political views. For that reason I won’t financially support him. I listen to the free podcasts and if I were interested in the book, I’d get it from the library. That all said, I believe a good deal of his financial advice is pretty solid. I don’t agree with everything (one size does not fit all,”your mileage will vary,” etc.) What I like about his system is that he has very specific, easy to understand steps for people to follow. When someone is just starting to realize that the need to get their financial act together it can be overwhelming. I believe Dave’s plan could help a person that doesn’t know where to start.

  74. Kris says:

    @ Lenore – You are completely wrong and its obvious you do not understand the true problem. Capitalism is what made this country great. The true problem as to why we are in the mess we are in has to do with our governments taxing our businesses to death to the point where they had to send everything off-shore. Also, our government is in so much debt that if China or Japan were to call that debt, we’d be bankrupt as a country in a heartbeat and other countries will have to have charity drives to feed us. Big government spending by both parties ( remember, Reagan was a huge spender ) has caused our economic crises, not businesses.

    You blame the businesses for the bailouts when its the government that gave them the money. There is no such thing as a business too big to fail and the government should have let them fail, but in their infinite stupidity and their claims that they know best, they are going to drag out this recession and probably remove the US as an economic powerhouse in the world.

  75. Andy says:

    I bet that a lot of people are living debt free, perhaps billions. And I bet that many of them are extremely poor and would love to be able to borrow money to buy a new hoe, or wheel barrow, or livestock. Lending and borrowing, when done correctly, helps economies grow, and its absence can cause poverty.

  76. J says:

    @guinness416 — I guess what I am getting at is that I don’t think we would revert to a barter economy without debt. Money is a representation of something that allows us to exchange something for goods and services. Without debt, we’d still need to eat. We’d still want to be entertained. We would still want the Internet and supermarkets and houses and cars and coffee and chocolate bars and all that. The economy would not collapse, it would adapt.

    Some of the “old ways” would, of course, fall away. But in our lifetimes so many things that were once “essential”, “impossible” or “solid” have passed on, you can’t even keep track.

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