One of my favorite books in my library is the Total Money Makeover by best selling author Dave Ramsey. In this easy to read book, Dave offers financial advice on a variety of topics that us ‘normal folk’ face every day. These topics include: debt myths, budgeting, saving, paying off debt, planning for retirement, paying for college, paying off your mortgage, investing, being generous with your money, and most importantly, building wealth!
Throughout the book, Dave talks a lot about the ‘normal’ American. Credit cards, car leases, expensive houses and other poor financial decisions that leave people with an empty wallet. Dave reiterates the concept that personal finance is almost 100% behavioral and really has little to do with how much money you make. He talks a lot about how households making over $100k are sometimes worse off than a household making $50k because of the destructive financial behavior that sometimes comes along with making more money.
Another topic which is covered in great detail in the book is insurance. No matter where you are in life, there is always going to be insurance products being shoved down your throat. Dave touches on which types of insurance he sees as beneficial (term life insurance, long term care insurance) and which types of insurance are destructive (cash value life insurance). According to Dave, the proper insurance is essential in order to mitigate risk and ensure financial security.
Dave’s famous coined term which you will hear a lot in the book is, “If you live like no one else, later you can live like no one else.” What he means by this is that financial security often doesn’t come without sacrifice. If you have $50,000 in debt maybe you’re going to have to live frugally for a few years to pay it off. Those years paying off the debt will be long and tiresome but will be very beneficial to you in the long run. The debt snowball is another tool that Dave is well known for. In a nutshell, the debt snowball is the method he recommends paying off your debt by paying down the smallest balances first to gain momentum before attacking the larger balances. Dave argues that this method has been proven more effective than paying down debts with the highest interest rates first because it gives the individual a psychological boost.
Overall, this book was fantastic and easy to read even if you have little knowledge of money and financial products. He wrote it in a no nonsense way so that everyday people could benefit from it. Instead of using fancy jargon and sophisticated economic lingo, Dave keeps it simple and sprinkles in his own sarcastic personality which you will find surprisingly refreshing. I hope you get a chance to read this informative and life changing book!
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