Updated on 07.07.09

The Total Money Makeover: Two More Hurdles

Trent Hamm

This is the fourth 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 entry covers the fifth chapter, finishing on page 92. The next entry, covering the sixth chapter, will appear on Wednesday.

ttmmThe first five chapters of The Total Money Makeover don’t actually address Ramsey’s plan at all. Instead, it’s mostly an argument against culture, mostly the idea that the easy availability of debt in our modern life is a serious problem.

I agree with Ramsey in that regard, but I usually find that the root of it is deeper: a lack of personal finance education mixed with a prevalence of awful messages about ourselves delivered by the media. Think about it: did you learn anything about personal finance in school? Also, think about the ads you see – don’t they portray the people in those ads as being somehow better than you?

Together, that’s some awful medicine. Dave, in his own way, takes on both of those factors in this chapter.

Ignorance Isn’t a Four Letter Word
We live in a culture that rewards intelligence and knowledge, and often ignorance is seriously derided when it shouldn’t be. Dave spells it out pretty well on page 78:

In a culture that worships knowledge, to say ignorance about money is an issue makes some people defensive. Don’t be defensive. Ignorance is not a lack of intelligence; it is a lack of know-how.

The idea that ignorance is not a lack of knowledge is vital. Intelligence is the ability to take the knowledge that you have and put it together in interesting ways. Intelligence shines when you read two articles on only vaguely related subjects and are able to put together a completely new idea from those two articles. Intelligence does not mean that you’ve got tons of knowledge in your head. In fact, I’d often make the opposite observation – many of the most intelligent people I know continually respect how little they know and how much they do not know.

I’ll use myself for an example. I don’t know much about world history. I don’t know much about physics. I don’t know much about high-level athletic training. I don’t know much about fixing cars. I don’t know much about plumbing. I don’t know much about complex mathematics. There are countless other areas that I’m willing to admit ignorance in.

Ignorance can be overcome, though. If I so chose, I could spend some time educating myself on plumbing with a good do-it-yourself book or two and some time around the pipes. I could learn more about physics by reading up on the subject and perhaps taking some coursework on it. I could learn more about working on cars by simply trying it. Hard work overcomes ignorance every time.

It’s not shameful to admit you do not know everything – no one does. In fact, I’d argue the opposite – pretending you know everything when you do not is dangerous and harmful to yourself and to others. This same exact logic applies to personal finance – it’s fine to admit that you’re ignorant about money. What’s dangerous is when you choose not to admit it – or you delude yourself into thinking that you truly aren’t ignorant about it.

Overcoming Ignorance About Money (or Anything Else)
Dave’s recipe for overcoming ignorance matches up well with my own feelings on the topic. On page 79:

Overcoming ignorance is easy. First, with no shame, admit that you are not a financial expert because you were never taught. Second, finish this book. Third, go on a lifetime quest to learn more about money. You don’t need to apply to Harvard to get an MBA with a specialization in finance; you don’t have to watch the financial channel instead of a great movie. You do need to read something about money at least once a year. Your actions should show that you care about money by learning something about it.

This really is a strong formula for overcoming general ignorance on a subject. It will not make you a world-beating expert, but it will give you the background you need to actually make that topic work in your everyday life.

Let’s translate it a bit. Pick a topic you’d like to not be ignorant on, then do as follows.

First, with no shame, admit that you are not an expert on that topic because you were never taught or were taught poorly. Second, read a general book on the topic. Third, go on a quest to learn more about the topic. You don’t need to apply to Harvard to get an advanced degree in the topic; you don’t have to watch documentaries or read piles of dry books instead of watching a great movie or reading a fun book. You do need to read something about the topic at least once a year. Your actions should show that you care about the topic by learning something about it.

Sounds like a recipe for getting up to speed to me!

What’s Expected of Us
On pages 81-82:

Peer pressure, cultural expectations, “reasonable standard of living” – I don’t care how you say it, we all need to be accepted by our crowd and our families. The need for approval and respect drives us to do some really insane things. One of the paradoxically dumb things we do is to destroy our finances by buying garbage we can’t afford to try to make ourselves appear wealthy to others.

I fell into this trap big time before my financial turnaround. I constantly tried to buy things to impress others. I’d pay for a huge group to go out to eat. I’d buy gadgets I didn’t even really want simply because it was impressive to have an amazing item. I had to always have the “latest” of everything.

Now? I realized that people didn’t like me because I had the latest things or because I bought dinner. They liked me because I was me. Sure, there were a few hangers-on who didn’t want to hang out with me any more because I wasn’t engaged in whatever activity they were obsessed with, but what was that friendship, really, if that happens?

In fact, it became easier to relate to people once I realized this. I was no longer worried about saying the right thing, having the right thing, or keeping up appearances. People wanted to be around because I was me – and that’s all I needed.

Who cares what the Joneses have? I can either be me, or I can be me with a car I don’t really want and a debt burden making me sad.

What’s Your Jaguar?
I really liked the tale Dave told about owning a Jaguar, starting on page 86:

I had the eye of my heart set on a Jaguar. I “needed” a Jaguar. What I needed was for people to be impressed with my success. What I needed was family raising an eyebrow of approval based on my ability to win. What I yearned for was respect. What I was so shallow to believe was that the car I drove gave me these things.

My Jaguar was food. I felt a constant desire to take people out to eat at my favorite restaurants – often very expensive ones. I’d take my parents out. I’d take my friends out. I’d seek out really expensive amazing places and tell the waiter to just give the whole bill straight to me. I’d tip really big right in front of everyone.

Doing this made me feel like I was important and that I was earning respect. What I found was that mostly I was just making the other people feel sort of awkward. They weren’t there to be shocked by my largesse – they were there because they wanted to go out for a nice evening with someone whose company they enjoyed.

Guess what? I stopped paying for meals for others. Guess what else? Whenever I ask any of my family or friends to actually go out to eat – something I don’t do too often any more – they’re still quite happy to accept and quite happy to fit the bill. In fact, they may be happier – they don’t have that vague sense of discomfort they used to get when I’d grab the bill and throw down the plastic.

The American Nightmare
If you’re jealous of what others have, put yourself in their shoes for a moment. Do you think they are actually able to afford what they have? On page 83:

They present the perfect picture of the American dream that has turned into a nightmare. Behind the perfect hair and the French manicure, there was deep desperation, a sense of futility, an unraveling marriage, and disgust with themselves.

The people that you’re jealous of often have had to make huge sacrifices to get the things you want. The fancy car? It’s often paid for with a huge pile of debt. The amazing career? That person spent a lot of sleepless nights cutting their teeth to get there – and likely has sacrificed a strong relationship with the people around them to get it. That perfect marriage? It’s likely either the result of a lot of maintenance or it’s a facade.

There is no such thing as a free lunch in life. The people that have those things that you’re jealous of have often paid dearly for those things. When you peek behind the mirror a bit, you’ll see the cost they paid – and are likely still paying – to get there. And, quite often, when you look at things as a whole, you find a balance of affairs that you don’t want yourself.

That’s why I gave up so much spending. I once thought I couldn’t imagine life without lots of trips to bookstores and game stores and coffee shops. At the same time, though, I was up at night sick with worry about my debts and leashed to a paperwork-filled career. I had those little oases of seeming happiness, but they were surrounded by lots of unhappiness. If you saw me out and about at the bookstore or at the coffee shop, you might have been jealous – look at that guy with the armload of books and the smile on his face?

But if you saw the worried guy, sitting there writing computer code at eleven at night, then not sleeping at two in the morning because he was worried about the bills… then you might get a different picture of things.

A Useful Lesson from Twelve-Step Programs
On page 91, Ramsey points out a worthwhile lesson from twelve step programs:

The Twelve Steppers have it right. They say, “Continuing to do the same thing over and over again and expecting a different result is the definition of insanity.”

If you’re trying to succeed in life – or in some specific aspect of life – and you keep failing at it or never getting anywhere, you probably need to change your approach.

Obviously, Dave is referring to money issues here. If you keep doing the same things you’re doing and you’re not getting ahead financially, you need to make some changes.

But it’s true for everything. Let’s say you’re a writer and you’ve finished a book. You’re trying to get it published but you’ve received twenty rejection letters. You need to change something. Why not give away the book in bite-sized increments? Why not chunk it down into 1,000 word segments and blog the entire book? Why not put that book aside for a while, write something new, and look at it later? The key here is that what you’re doing isn’t working, so you need to try something else. Getting a steady stream of rejection is never the road to success.

On Wednesday, we’ll tackle the sixth chapter – Save $1,000 Fast.

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  1. Sandy E. says:

    I’ve read this chapter too, and it’s true that if our parents didn’t teach us about finances, and we surely didn’t learn anything about personal finance in school, then it’s okay to admit we’re ignorant in this subject, and read and learn what we can. The next thing Dave points out, as you addressed, is that our need for approval and respect is so strong that we do some really insane things, such as you picking up the tab at restaurants, when you couldn’t afford to, and people keeping up with the Joneses. Dave goes on to say how we “destroy our finances by buying garbage we can’t afford to try to make ourselves appear wealthy to others.” I’ve never been like that, but over the years, I’ve known a lot of people who were. It puzzled me and I would conclude that their self-esteem must be really low and leave it at that. It made no sense to me. Would family and friends want you to go into debt for them? No.

    But what really caught my attention in this chapter, that you didn’t address, is the other side of the coin, and what I could relate to 100% and I know there are many people like me out there. That is the study done of America’s millionaires: Ramsey says: “the typical millionaire found infinitely more motivation from the goal of financial security than from what friends and family thought. The need for approval and respect from others based on what they owned was virtually nonexistent.” That’s me! I’m not a millionaire (yet) but according to Dave, I’m in the 2% of the population with no debt, including mortgage. These people, Dave says, drive an older, paid-for car, live in a middle-class neighborhood and buy blue jeans from Wal-Mart.

    Until I read this chapter, I thought there was something wrong with me that I’ve never had any desire to keep up with the Joneses, and frankly have always been amazed at people that do! Like why? Seriously, why? When I moved into my house 5 years ago, my neighbor across the street had a professional landscape company come out and redo his front yard, to the tune of $8,000, plus replaced his wooden garage door. I redid my front yard myself for a whopping $120, and when I had problems with my wooden garage door, instead of replacing it like all my neighbors, pretty much have, I got ahold of a repairman who replaced the coils on either side and told me that if I painted the door it would outlast the rest of the house, oh, $150.00 for his services. I painted the door. What I’m leading up to is that my dentist neighbor across the street lost his house last month! His business was down, he couldn’t make his payments, the value has depreciated, so he walked! He lost his down payment and money spent on home improvements. Another neighbor is leasing a Mercedes SUV, and while I love that car, it only made way more sense to me to use my extra money to pay off my house, and so I’ve always been happy with my no-name used car that’s paid for. Well now he has been laid off from his job! His house isn’t paid for and he’s got those lease payments.

    Anyway, like Dave says peer pressure is very powerful, and for people to have a money breakthrough, they need to stop purchasing stuff with money that they don’t have for their quest for approval. I’ll admit that the majority of people are like that, so you were right to focus about that in your review. I just wanted to mention the other side of the coin for those of us who aren’t like that and never have been. Basically, all my life I’ve been scratching my head, seriously beginning to think there was something wrong with me for having no desire to impress others, only to come to find in this chapter there isn’t. But our society made me feel there was. Kind of interesting.

  2. Someone says:

    *grin* I’m with Sandy…”These people, Dave says, drive an older, paid-for car, live in a middle-class neighborhood and buy blue jeans from Wal-Mart.” That’s me too, except I won’t shop at W-M…I get my jeans at the JCPenney outlet. ;)

    I would make a great millionaire…I’ve always enjoyed the ease of ignoring social buying pressures; what I need is to increase my income. :P

    Know what, maybe the other side of *my* coin of disconnect with social buying pressure is my concurrent lack of social job pressure. I don’t care to impress anyone with a job title or a perception of income, so I don’t have as much of a drive to be a high-paid bigwig. Hmmm….I think I need some other kind of motivation…

  3. ann says:

    My favorite quote, and I think it’s from Dave Ramsey: “You are spending money you don’t have, to buy things you don’t want, to impress people you don’t like.” That is so true of lots of people.

    I’ve never been a “follow the crowd” kind of girl. Good thing, since we didn’t have a lot of money when I was growing up. When everyone was wearing Izod polos, I was wearing the JCPenney Fox. Guess what? My friends still liked me. Maybe it was a great lesson to learn young.

  4. Derek Epperson says:


    I’ve read most of your reviews of the chapters of Total Money Makeover, and I think you’ve made some very fair assessments – even in the parts where you don’t agree.

    I find that when you don’t necessarily agree with something in the book, it’s easily seen as a matter of ‘personal finance maturity.’ Some people need to go cold turkey or have it fed to them straight-laced. But those who have “grown-up” in responsible PF (much as you have described in your blog) and are determined and responsible might make good decisions outside the principles.

    My thought: you can always learn something, so a reader shouldn’t knock the whole book for one thing they might disagree with.

    Keep up the good work.

  5. I really liked your (and Dave’s) explanation of the difference between intelligence vs ignorance. I’ve always said that you can learn just as much, if not more from reading books and researching a subject with a passion than taking expensive classes. (Not saying that college is bad though).

    I’m not really sure what my “jaguar” would be. I don’t really spend money to empress people; although, I’m surrounded by people do every day living in nyc. I do spend a good amount of money going to great restaurants, but that’s one of my passions and I don’t spend a lot in other areas (ie transportation).

    There’s nothing wrong with spending money on things your passionate about. Just make sure to balance it out by spending less in other areas of your life and living below your means overall.

    On a side note, this has to be one of the best blogs I read. The writing is great and the comments are equally good.

    -Gen Y Investor

  6. guinness416 says:

    I think this is a great summary with the exception of the American Nightmare bit. While there are financial train wrecks all over the place saying people are “often” like this is a bit weird. I have no idea what sort of crowd you run with obviously, but I certainly know a number of people who own nice cars (and even homes) debt-free and have great careers without sacrificing friendships/family to get there. Which isn’t to say they haven’t worked hard for these things in one way or another, but it just seems … I don’t know, uncharitable or reverse-snobbish (I’m in the know, not these idiots with the BMWs!) to assume they’re living some behind the scenes horror show, to me. Which attitude isn’t uncommon in moneyblog articles and comments.

  7. steve weaver says:

    Will Rogers once said, “Everyone is ignorant…..only on different subjects”.
    That quote seemed especially appropriate for this post.
    Now to address my form of “The other side of the coin”. I’ve always been poor, or pretty close to it, mainly because I’m just not a materialistic person and care little about the opinions other may have of me. Only recently have I begun to worry about my future. I started establishing credit 3.5 years ago with a 500 dollar secured credit card. Fifteen months later I made the worst financial decision of my life, (Believing it would be worth it to raise my credit score!) I bought a new car. Two years later, I would love to get a home of my own but my debt, and low income, greatly reduces the chances and choices. Thanks to the massive drop in home prices,(especially in the Orlando area) it is now possible, if not probable, for me to do this.
    I don’t care how ugly and small the house is, I just don’t want to end up like so many people I’ve known, who had nothing to live on except a meager stipend from Social Security. Unless you’ve seen a few people who literally live off the kindness of others (Who ironically are often barely in better shape.), you may not know how sad these elderly peoples lives have become.
    My point in sharing this is twofold: 1)While not being too concerned with material things is usually a good thing, when taken to extremes it can cause untold hardship later & 2) It’s never too late to start building a better future.
    I’m 48 years old, with a little luck, persistence and study, I believe I can retire at 68 with my home paid for and enough to live comfortably, though not lavishly, until my death.
    Thanks Trent, for providing me with an excellent place to study. Rest assured, this isn’t my only source of material but it IS one of the most helpful. THANKS AGAIN!

  8. MattJ says:

    Trent: “The idea that ignorance is not a lack of knowledge is vital.”

    Based on the rest of what you’ve written, I’m sure you got his message, but your attempted restatement is incorrect. He says that ignorance is not a lack of intelligence, and he’s right. On the other hand, ignorance IS a lack of knowledge – that’s its dictionary definition.

  9. Rosa says:

    What a great insight, that you were treating people to dinner for yourself, not for them – and that sometimes it was making them uncomfortable.

    @Steve Weaver – I do know how desperate many older people are. We used to rent out rooms in our house and when I made the mistake of placing a Craigslist ad we got a TON of people calling who we just couldn’t accomodate -all older, single men who couldn’t live with the only bathroom being on the second floor. Even with the housing bubble bursting, the rental market in that kind of price range hasn’t gotten any better.

  10. “Ignorance” and “expectations”…who doesn’t already know we need to reduce debt, spend less and save more (and exercise more and eat better foods)? We have an ample supply of diet books and and ample supply of personal finance books. What’s needed is the diligence and conviction to restore our financial (and physical) health. We need to sit down, make a personal plan to restore our financial health…and then, importantly, work the plan.

    What is helpful to all of us is that there is a new mindset of austerity. It provides us with a foundation for saving that we didn’t have before.

    Good post and comments.

  11. Hope D says:

    I was always amazed how my father could do anything. He can do a little carpentry, a little plumbing, a little electrical work and car repair. He taught my brothers his skills. Two brothers became carpenters and the other is a very skilled mechanic, owning his own garage. He also taught my sisters and I some of these skills. One sister does landscaping and painting. The oldest does landscaping and roofed her own very large garage. Another sister is a great painter and can drywall. I can do a little of everything and am always ready to learn more. We also learned various skills from our mother.
    The interesting thing about my father’s skills are, he was raised without a father. His grandfather taught him a little, but most of his knowledge was gained from a need to know. He bought an old car, so he bought a book on how to fix it. He bought an old house, so he bought a book on how to take care of it. He and my mother showed their kids how with a little knowledge and a little work, you can save a huge amount of money and have beautiful things.

  12. Richby30 says:

    I really think education is the key to financial freedom. Dave Ramsey clearly has the right message out there.

    Rgds, Laser


  13. WilliamB says:

    “The idea that ignorance is not a lack of KNOWLEDGE is vital.”

    I think what Trent meant to write was “The idea that ignorance is not a lack of INTELLIGENCE is vital.”

    A very good writer, Lois McMaster Bujold, had one of her characters say that educated is what you are when you get [of school], not what you are going in. More than one friend of mine has, when intimidated by the idea of a fancy school or a better-educated classmate, found comfort in this. (This is one reason I like Bujold, her human insights help me in real life.)

    I agree with Trent: admitting ignorance is a characteristic of all my smart friends. So is a thirst for learning. One reason I like them is we trade knowledge bases. I share how to cook or the latest in international finance, my friend teaches me about electricity or why a diesel car doesn’t need a carburator.

    When just starting out to learn something new, I suggest trying the children’s section of the library. How-to books for kids tend to be stripped down to the basics and carefully organized – just what I need when I’m in total ignorance.

  14. Kelley says:

    Trent: “The idea that ignorance is not a lack of knowledge is vital.”
    I read this and was completely stopped. Ignorance is exactly a lack of knowlege. Ignorance can be cured with the application of intelligence and determination, exactly as you describe further in the paragraph.
    OK, now maybe I can get to the rest of the article! (Sorry, my hangup, but I just couldn’t get past that statement.)

  15. Kimberly says:

    I get your point here, but a good marriage does not=a facade and a good career does not equal someone who has taken time from their family. Some of us are responsible, good workers who have a good career and have time for our families, and some of us picked a loving partner and got it right the first time around.

  16. Kimberly says:

    I wanted to add that the great thing with this recession is that a lot of people are getting away from trying to impress others. It is almost cool these days to tell people that you don’t use credit cards or are eating at home to save cash.

  17. Michelle says:

    I truly believe that due to this widespread financial ignorance, many people were preyed upon by unscrupulous individuals & companies, contributing to the financial crisis that is affecting many of us. Ignorance is not an excuse, but it does take a lot of work to overcome…and by the time many go through the steps, they’ve already put themselves in a position where it’s difficult to get out of debt/trouble…

  18. Eli says:

    I’m with MattJ, I think you may have typed in the wrong word in your first bold statement. You end up contradicting exactly what the paraphrase states.

    Should be:
    Ignorance is not a lack of INTELLIGENCE.
    Ignorance is in fact a lack of knowledge (or as he states, “know-how”)

    Your argument below is fine but your wording threw me for a second.

  19. George says:

    I think there’s a strong potential for mixed messages.

    a) Don’t spend to impress others.
    b) Make sure you leave a good impression or you won’t advance your career.

    Which is it? Oh, so it’s a balance? Well, then, how do we manage the balance?

  20. Trent, this is a great article. By including your personal story to emphasize Dave’s arguement you really hit home these points. You tell your story eloquently and reading it I can practically feel the stress and worry in your life at those moments. Fantastic work!

  21. Trent Hamm Trent says:

    “Which is it? Oh, so it’s a balance? Well, then, how do we manage the balance?”

    You can leave a good impression without spending money. Keep yourself clean. Use good basic hygiene. Try to be confident in how you act. Share worthwhile information and ideas in a positive way. Those things cost nothing and do a powerful job of leaving a great impression without spending money.

  22. jarobins says:

    I purchased TMM 7/16/09 and just finished reading it! This is an awesome book that anyone should be able to follow the principles because they are truly spelled out in layman’s terms! Dave is right on the money when he says there are alot of intelligent people who are BROKE!

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