Total Money Makeover Summary | Dave Ramsey

A Proven Plan for Financial Fitness

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Disclaimer

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Introduction

Total Money Makeover is a personal finance book written by Dave Ramsey, a financial expert, and radio host. It provides practical advice and tools for achieving financial success. 

The book starts by introducing the concept of the “debt snowball” which is a method of paying off debt by starting with the smallest debt and working your way up to the largest debt. This method is effective because it allows the individual to pay off small debts and build momentum, which can then be applied to larger debts. 

Dave Ramsey also emphasizes the importance of creating a budget and sticking to it. He also recommends investing in mutual funds and diversifying one’s portfolio and advising against high-risk investments.

The key message of the book is the importance of discipline and self-control when it comes to managing money. It encourages readers to take control of their finances and make smart financial decisions to achieve financial freedom.

About Dave Ramsey

Dave Ramsey is an American financial author, radio host, television personality, and motivational speaker. He is the author of several personal finance books, including “The Total Money Makeover,” which has become a best-seller and has helped millions of people improve their financial situations.

Ramsey’s financial philosophy centers around the principles of “living on a budget,” “saving for emergencies and long-term goals,” and “getting out of debt.” He advocates for living below one’s means and avoiding consumer debt, and encourages people to save for long-term goals such as retirement and children’s education.

Ramsey has also hosted a nationally syndicated radio program, “The Dave Ramsey Show,” since 1992. On the show, he provides financial advice to listeners and answers their personal finance questions. He also hosts a television program, “The Dave Ramsey Show,” which is a talk show format featuring Ramsey and a panel of experts discussing personal finance and investment topics.

StoryShot #1: The Super Saving

Total Money Makeover starts with the idea of super saving. You should save money before you spend it, or you’ll spend before you save. Prioritize saving money and putting it into your savings account before you use it to pay for expenses.

The book also suggests that you should set financial goals to give your savings a purpose. For example, You should set financial goals such as saving for a down payment on a house, or building an emergency fund. This will help you stay motivated and on track with your savings plan.

Additionally, the author encourages you to save for all types of expenses, not just for the big ones. You should save for both the big and small expenses, such as saving for a vacation or a new car, as well as saving for unexpected expenses.

You’ll also learn about the importance of creating a budget to help you manage your money and reach your savings goals. The book recommends using a budgeting method such as the “envelope system” to allocate money for different categories, such as housing, food, and entertainment. By creating a budget, you can see exactly where your money is going and make adjustments to reach your financial goals.

StoryShot #2: The Debt Snowball

In this StoryShot, you will learn how to get out of debt and take control of your finances. The author emphasizes that You must get out of debt before you can build wealth.

The “debt snowball” method involves paying off your debts starting with the smallest balance first, while making the minimum payments on your larger debts. You will pay off your debts one by one, starting with the smallest, while making minimum payments on the larger ones. The idea behind this method is that by seeing progress and paying off smaller debts quickly, you’ll be motivated to continue working on paying off your larger debts.

Avoid new debt while working on paying off existing debt. This will help you stay on track and make progress towards becoming debt-free.

Additionally, the author suggests that you should cut expenses as much as possible. This will free up money that can be used to pay off debt.

It’s important to have an emergency fund before investing. The book recommends having 3-6 months of living expenses saved in an emergency fund, so that you can be prepared for unexpected expenses and not have to rely on credit cards or loans.

StoryShot #3: The Three to Six Month Emergency Fund

The goal of this StoryShot is to help you understand the importance of having an emergency fund, and to provide you with strategies and tools to help you save for it. You must have an emergency fund before you invest. It’s the foundation of your financial plan. 

An emergency fund is a savings account that you can use to cover unexpected expenses, such as a car repair or a medical emergency, without having to rely on credit cards or loans. 

Actionable notes:

• Save 3-6 months of living expenses in an emergency fund
• Keep your emergency fund in a savings account that is easily accessible, such as an online savings account
• Review your emergency fund regularly and adjust it as needed to make sure it’s always fully funded
• Start saving for an emergency fund as soon as possible and make it a priority before starting to invest or pay off debt
• Keep your emergency fund separate from your other savings to avoid using it for non-emergency expenses
• Consider setting up an automatic transfer to your emergency fund account to make saving easier and consistent.

Rating

We rate this book 4.3/5.

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