Dave Ramsey’s Total Money Makeover – A Review

Dave Ramsey is a personal finance guru. Does his book ‘The Total Money Makeover‘ live up to the hype?

If you have ever listened to Dave Ramsey, you probably know he is a man that despises debt and credit. He was once a 26 year old with a $4 million dollar real estate portfolio, but over a period of three years it all fell apart and his young family was bankrupt. He had built it all upon the altar of debt, and debt had come to collect what it was owed.

He was once 26 years old with a $4 million dollar real estate portfolio, but over a period of three years it all fell apart and his young family was bankrupt. He had built it all upon the altar of debt, and debt had come to collect what it was owed.

After that experience, he decided to discover how to money really works, applied what he found and became a multi-millionaire again – this time for good! His book, The Total Money Makeover, is the distillation of what he found to be his path to wealth. It is chock full of good, but simple, advice for those struggling under the chains of debt that have no clue how to escape its heavy weight.

I would split this 13 chapter book into three sections; Psychology of debt, Actionable way out of debt (the baby steps), and Wealth Building

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The first five chapters of his book are written to show you that if you apply the steps that Dave preaches, you can be debt free. It won’t be easy, but it will be work all your hard work in the end. One way he does this is by having testimonials on what seems like every fourth page. People write about how they were $100,000 in debt, but they followed Dave’s plan and became debt free in two or three years, are stress-free and life is great.

These testimonials continue throughout the book to reinforce to the reader that all this is possible.

Dave also writes his thoughts on such things as credit cards and car loans (Hint: he hates them), how payday loans and rent-to-own places are almost criminal, and playing the lottery (don’t). He hits on common sense money issues that seem to trap so many people, giving examples of why such things are bad and what to do instead.


The Chapters


The Total Money Makeover Challenge: Dave starts out with his background story and why you should listen to him. Step up and take responsibility for your situation and follow the plan that he is about to lay out and you will be debt-free.

Denial: First, realize that you have a problem that needs to be fixed. Don’t compare yourself to others to see if you are in financial shape, that will lead to financial mediocrity as you think you are doing “well enough.”

Debt Myths: Here Dave explains why you don’t need debt or credit. The bottom line is debt makes the banks rich, not you.

Money Myths: This is where he writes that there are no secrets and no ‘get rich quick’ paths, anyone that is selling you something like this is a con artist.

Ignorance and Keeping Up with the Joneses: Ignorance doesn’t mean you are not intelligent, just that you lack knowledge in a subject. Learn about how money and debt works, it is so very important to learn about personal finance so you won’t stay broke and end up eating dog food when you are old. The Joneses? They are BROKE! Stop doing what everyone else is and climb your own mountain, Dave will be your guide.

The Baby Steps

This is where Sherpa Dave starts guiding you on your climb to the top of wealth mountain. The whole task of becoming debt-free looks enormous, but you need to focus on the journey one step after another. He writes that the way to eat an elephant is one bite at a time.

Step 1: Save a $1000 emergency fund; Start a budget, first thing. You need to know where every dollar is being spent so you can knock out unnecessary expenditures. Give every dollar a job. Use your freed up money to save $1000 for true emergencies, and ONLY emergencies. You need an umbrella for life’s rainy days.

Step 2: Debt snowball; Dave says that finance is 80% emotions and 20% numbers. We know we need to spend less than we make, but doing it is hard for many people. He brings this same philosophy over to his snowball method of paying off debts, instead of paying the highest interest rate debt first which would have you pay off your debts quicker, he advocates listing your debts from smallest to largest and paying off the smallest first. This will give you the psychological boost of knocking out whole accounts. “You need quick wins to get fired up”

Pay the minimum except on the one with the smallest balance, then throw every extra cent at the smallest debt. When that is paid off, roll your payments into the next smallest and so on. Every time you knock out a debt the payments on the next one get higher and higher.

Step 3: Complete your emergency fund; After you have knocked out all your debts other than your mortgage, save up between 3-6 months of living expenses. All you do it take your debt snowball money and focus it on a savings account.

Step 4: Invest 15% in retirement funds; Now you have no debt besides your home, and you have between 3-6 months of living expenses put aside FOR EMERGENCIES ONLY. Dave says that a normal timeframe from start to finish is two to three years, now it’s time to start investing in your future. First, if your job pays you a match in your retirement 401K put in enough to get that match. Next is to save enough to completely fill your Roth IRA, and any of this 15% leftover goes back into your 401K.

Step 5: Fund your children’s college tuition; Dave says saving for your child’s education helps ensure that you change your family tree for the better. This is where he gets somewhat contradictory. He goes into saying that college is very important and everyone should attend, but it’s not a free ticket to success. He acknowledges that his success was 85% to his attitude, 15% to college knowledge, and 0% to the degree. He also alludes to having your child work to pay for their tuition can be a great way for them to learn more as they have ‘earned’ it instead of getting a ‘free ride.’

College is getting more expensive by the year, and Dave recommends using an Educational Savings Account (ESA) first before utilizing a state 529 plan. Always have them obtain any scholarships they can to avoid debt in the first place.

Step 6: Pay off the home mortgage; If you are at this point you are in the top 5-10% of Americans, congratulations! Dave always says to pay for everything in cash, but he understands that it is nigh on impossible for most people. This is the only time you will hear Dave say you can get a loan, but it must be a 15-year mortgage and payments must be less than 25% of your monthly take-home pay.

Wealth Building

This is baby step 7, but it isn’t a baby anymore.

Imagine you have no debt payments at all. No credit card bills, no car payments, no rent or mortgage – just your basic stuff. How fast could you become wealthy if you focused all that money into growing for you?

Dave writes that at this point money has three purposes: FUN, INVEST, and GIVE

One famous quote from Dave is “You’ve lived like no one else, now live like no one else.”

To have money doesn’t make you a bad person. Good people need to have money otherwise only bad people will. He goes on to write about several situations where self-made wealthy people have given away huge sums of money to those in need, often in creative ways.

Continue to invest, but now have fun too. Be generous with your fun, pay to take your whole family on a cruise or other vacation. Buy that new car you have been eyeing up in cash. You are a winner.

My Opinion


Dave Ramsey is pretty frank with the reader in his introduction, he calls its What This Book Is NOT. It is NOT complicated. It is NOT revolutionary. But it is NOT wrong.

He writes to his audience, someone who is mainly ignorant about money and is struggling under a huge debt load. His simplistic writing style allows none to get lost with his reasoning, unlike a more complicated book might. I think of The Total Money Makeover as ‘Money basics’. A simple primer that shows you what you need to know without bogging you down in exact details. Just what a large majority of the populace needs. It’s not worth much if you have already been studying the subject for a few months, though.

I agree with Dave about 75% of the time. The areas that I disagree with are when he writes about not having credit cards, that debt is all bad, and his thoughts on college.

Having credit cards is about willpower. I haven’t paid interest on a credit card in over a decade, and even then it wasn’t too much. I feel in just as much pain paying with a card as I do with cash, there is no difference in my head. With cash back rewards handing me back hundreds of dollars per year, I have no complaints. Since Dave is writing to his audience, I see where he is coming from – most people cannot control themselves with money and credit so to just say NO is a simple way to stop that from being a problem.

Just as he writes that money is not bad in itself, I believe that debt isn’t either – you just have to keep it small and under control. I will agree that going into debt to buy something that depreciates is a horrible idea, but a smart purchase using debt can be a great way to leverage into an asset. Debt is like fire, it can cook your meals and warm you up if you are in control of it or give you 1st-degree burns and turn your house into charcoal if it gets away from you.

Third, I think deep down Dave Ramsey understands that college is a bad deal for many people but he can’t seem to just say it. The version of the book I read is from 2007, so it is a bit dated and the price of a college degree has increased even further past where inflation should have it cost. He says his success comes from 15% of the knowledge he learned in college, I think with the availability of knowledge today a person can learn that 15% much quicker and for free. Still, that piece of paper is the first filter of hiring for most companies and without a degree, you will have a hard time getting your résumé read.


Bottom Line


You should read this book if you are new to managing your finances or do not pay off your credit card balance in full each month. If money seems too complicated for you, this book should help. If you like real-life anecdotes to help you grasp what is being said, this book it for you. Just be mindful that there are bible verses here and there, but I say good advice is good advice and welcome it no matter where it comes from.

If you already moved past the basics of personal finance, I don’t believe that you will find too much of value in this book.  You should find something else to spend your time on.

That being said the information is simple, sound advice and I listen to the clips that he releases on his Youtube channel every day.

Pictures: My own or 1 2 3 4 5 6 7 8


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  1. Mrs. Picky Pincher

    I do appreciate the fact that Dave Ramsey has been able to help so many people. My main issue is that he focuses so much on home ownership as part of his plan. In many areas home ownership is a HORRIBLE financial idea. In my area it’s a wash between renting and owning, but in cities like San Francisco and LA, owning might not be the best choice.
    Mrs. Picky Pincher recently posted…What A Frugal Weekend!My Profile

    1. MrDD

      Oh, I never thought Dave was too much of a home ownership pusher. From my recollection, he says have no debt – put 20% down – have a 15-year mortgage that only costs a maximum of 25% of your take home income. Maybe it just seems that way since many of the questions he answers is about owning a home?

  2. Mr Defined Sight

    Like you, I agree with much of what Dave says and some things that I don’t agree with. Like you mentioned, I think using a credit card that is paid off every month and gives you rewards is a great thing. The obvious thing is the card needs to be paid off every month to avoid those killer interest fees.
    Mr Defined Sight recently posted…There Are Things In Life That You Shouldn’t Skimp OnMy Profile

    1. MrDD

      I get where Dave is coming from with the no credit card thing. His advice is mainly for people that have really dug themselves a hole and often credit cards are a part of that. For those that are determined to succeed financially, having the willpower to use credit (and credit cards) responsibly is a core skill. So why not use them, pay them off in full every billing cycle, and gain some small rewards along the way?

  3. David Domzalski

    Great analysis, Mr. DD. Like most, I am familiar with Dave’s work. However, my wife and I only recently started the Total Money Makeover. For me, I go back and forth about credit cards. I certainly see Dave’s take and how paying in cash for things is actually freeing in a way. You don’t have the burden of wracking up debt if you’re inclined to do so and you don’t have to be tempted to buy something you don’t need. No cash for it? Can’t buy it.

    That said, I can see how you’re leaving money on the table if you don’t take advantage of rewards. The trick (for me at least) is making sure I have the money already in my account BEFORE I purchase it. That way, I can get the points, but pay it off as soon as I get home. That’s the approach my father-in-law takes and it seems to work for him. You’re still not buying things you don’t need, you’re not carrying a balance, and you’re treating “like cash” in a way.

    Great post. Thanks for sharing!
    David Domzalski recently posted…Frugal Fun: Taking the Entire Family to a Baseball Game for CheapMy Profile

    1. MrDD

      Hey, thanks for the comment David. I have been super busy with life and the new child – I haven’t had much time to sit down and write anything lately!

      I think anyone with the willpower to use credit cards responsibly should use them. Why not get a small sliver of ‘rewards’ for purchases you were going to make anyway? Also, there is some consumer protection built into credit cards as well. Credit is like fire, you can use it to BBQ you some tasty steaks, or you can fall asleep drunk with a lit cigarette and burn your house down. It all just comes down to the person behind it. Dave’s one-size-fits-all advice on credit cards is a major point on which I disagree with him.

  4. Mustard Seed Money

    Thanks for sharing!!! I am a big fan of his debt talks and eschewing getting rid of debt. But I am not a fan of some his investment advice. I think his investments rates of return are a bit high. 12% is much higher than the historical rate of 8%. I also don’t like his advice on active mutual funds instead of passive index funds. Hopefully he will take some of the research that has come out to adjust his thinking 🙂
    Mustard Seed Money recently posted…How to Diversify Your Portfolio ProperlyMy Profile

    1. MrDD

      Yes, I agree. He is great for the indebted beginner, but anyone that is past that should look elsewhere for advice.

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