Review: Dave Ramsey’s ‘The Total Money Makeover’

New plant emerging from the snowAccording to Get Rich Slowly founder J.D. Roth, Dave Ramsey and his influential book “The Total Money Makeover” changed his life:

“In the fall of 2004, I had over $35,000 in consumer debt. I was making a solid middle-class salary, but I lived paycheck to paycheck. My money habits were terrible. When I looked into the future, all I saw were years of toil to pay for the things I'd already purchased.

“Then a friend loaned me a copy of The Total Money Makeover, a book by some guy I'd never heard of named Dave Ramsey.

“I had nothing to lose — I read the book and then followed his plan. I was amazed to find that I had eliminated most of my smaller debts in just six months. Over the next two and a half years, I paid off the big debts too.”

Related >> Saying Goodbye to 20 Years of Debt

It's no wonder Dave Ramsey's book grabs you from the start. First, he describes the dread of living paycheck to paycheck with mouths to feed, and instantly you can relate. Then you learn about his success, how he lost it all, and the utter resignation of not knowing how to fix it.

And that's just the first three pages. But just as quickly, he explains what he did as opposed to giving up — and you realize he's giving you some straight talk, and you just want to hear more.

Live Like No One Else

Ramsey's method is not easy. It's not a get-rich-quick scheme. It requires sacrifice, hard work, and focus. In fact, printed on the bottom of every page is the book's motto:

“If you will live like no one else, later you can live like no one else.”
Dave Ramsey

Ramsey explains: “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.” The book is peppered with inspirational testimonials from real people who have taken this philosophy to heart, sacrificing the present for the sake of their future. This is awesome stuff.

At the core of The Total Money Makeover are Ramsey's seven “baby steps” to financial freedom. By following these in order — and not moving on to the next until the current step is complete — readers gradually progress from debt to wealth. They get rich slowly. In a nutshell, here's Ramsey's seven-step plan…

“The Total Money Makeover” Seven Baby Steps


Step 1: Save $1,000 Cash as a Starter Emergency Fund


Before you do anything else, says Ramsey, you must save a $1,000 emergency fund. This money is to be used only for emergencies: car repairs, medical bills, etc.

At first you might think you could skip this step. But Ramsey's correct that even a couple of setbacks could force you deeper into debt. The wisdom of setting this money aside is that, with a cash cushion, life's mishaps won't force you into a worse financial condition. In fact, it can help you recover more quickly.


Step 2: Start the Debt Snowball


Once you've built some savings, Ramsey lays out his plan for how to tackle your debt. You do this with the debt snowball.

Related >> In Praise of the Debt Snowball

Here's how it works:

  1. List your non-mortgage debts from lowest balance to highest balance.
  2. Pay the minimum payment on all debts except the one with the smallest balance.
  3. Throw every penny you can find at the smallest debt.
  4. When that debt is gone, do not alter the monthly amount used to pay debts, but pay all you can toward the debt with the next-lowest balance.

This is the most controversial part of Ramsey's plan. Critics note that it makes more sense to pay off high-interest debt first. Even Ramsey admits that the debt snowball isn't mathematically optimal. That's not what it's about. “The reason we list smallest to largest is to have some quick wins,” Ramsey writes. It's about behavior modification over math.


Step 3: Finish the Emergency Fund


The $1,000 emergency fund is only a start. After you eliminate your non-mortgage debt, it's time for some serious saving. Ramsey's advice is fairly standard on this point: Accumulate three to six months of living expenses. For most people, that's $5,000 to $10,000.

The easiest way to do this is to simply take the money you were applying to your debt snowball and convert it into a savings snowball. If you were paying $500 each month toward debt, now throw that money into a high-yield savings account.

Related >> Which Online High-Yield Savings Account is Best?


Step 4: Invest 15 Percent of Your Income in Retirement


While you're completing the first three steps (especially the first two), Ramsey recommends suspending all investment activity, even if you have a 401(k) with an employer match. He saves investing for last, once good habits have been established. It's true that you'll give up a few years of compound returns in your retirement accounts, but that's okay in the long run, he says. By following the first three steps, you will have developed smart money habits and a strong saving ethic, so it won't take much effort to catch up.

Related >> How Compound Interest Favors the Young

Now that you've paid off your debt and saved for emergencies, Ramsey says to invest 15 percent of your income into mutual funds. He recommends diversifying evenly among several broad categories of funds. Invest anywhere you have an employer match first, of course, and then put money into a Roth IRA. Put the rest of the 15 percent wherever it makes the most sense.

Related >> How to Start a Roth IRA


Step 5: Save for College


Once you've begun saving for your retirement, you can turn your attention toward your children. Ramsey writes, “Saving for college ensures that a legacy of debt is not handed down your family tree.” Use an Education Savings Account or a 529 plan to save for your children's college education.

Ramsey also emphasizes that kids can work their way through college in an effort to minimize the loans they need to take out. One of the best pieces of advice, however, is to seek scholarships. The students who know this are able to fund most of their education through scholarships instead of going into debt.


Step 6: Pay Off Your Home Mortgage


Once you've taken care of everything else, it's time for a final, giant step. Ramsey advocates prepaying your mortgage. He's aware of the objections, but he believes it's a smart step, anyhow. (For more on this subject, see our article on prepaying your mortgage.)


Step 7: Build Wealth


If you've done all these things — eliminated debt, built emergency savings, invested 15 percent of your income, and paid off your mortgage — you can begin to build some serious wealth, says Ramsey. By following the first few baby steps, you're far ahead of most Americans. But with the final step, you can enjoy the fruits of your labors. Invest. Give. Have fun. If you want to buy a boat and you've completed the “baby steps”, then buy a boat. Just don't go into debt to do it.


Minor Reservations

Though many agree with Ramsey's philosophy, some of his advice rubs people the wrong way. For example, Ramsey advises readers to avoid debt altogether — no credit cards, even after you've paid off your mortgage. For example, J.D. Roth said, “I used to subscribe to this line of thought, but now I recognize that credit cards can be a useful tool, if you have the discipline to pay them off every month.”

Also, Ramsey writes that “separate checking accounts mean one of two things, either ignorance or problems”. J.D. felt this was ludicrous. “Couples should choose a method that works for them, whether that's joint or separate accounts. Don't believe there's only one way to manage household finances,” he said.

Highly Recommended

Reading the testimonials in The Total Money Makeover, they might remind you of a late-night infomercial. “After years of making only $48,000 a year, with hard work we paid off $78,000 of debt in twelve months.” Yeah, right. But three years into his own money makeover, even J.D. said that he could easily write one of those testimonials himself.

Ramsey's advice strikes cynics as simplistic. But his steps work because they are simple, and because they provide tangible results. Your $1,000 emergency fund isn't just cheap insurance against real life; it's a visible reminder that you have succeeded, that you can save, that you can be smart with money. The debt snowball is built around quick wins, which give you the confidence to continue.

J.D. Roth's Recommendation


The Total Money Makeover is not for everyone. If you don't have a problem with money, there's nothing here for you. If you have a handle on your personal finances, you're better off reading The Random Walk Guide to Investing [my review] or The Bogleheads' Guide to Investing.

But if you're one of the millions who struggles with debt, who can't seem to escape living paycheck to paycheck, then The Total Money Makeover is a must-read. Your local public library probably has a copy or two. Go borrow it today.”

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Kevin
Kevin
12 years ago

I like Dave Ramsey’s work and program. I think you are right to disagree on the credit card issue. I think the best way to think about Dave is this. He needs to sell books, advertising time on his radio show, etc. So he has to take it to the most extreme level as possible. This helps sell. Also when people see extreme, they may get started on the path and only go 1/2 or 3/4 of the way. If he wasn’t at the extreme, that 1/2 way might not cut it to help people get out of debt. Just… Read more »

NCN
NCN
12 years ago

This book changed my life as well…
While I realize why some folks criticize him, I still ‘roll w/ Dave’. He keeps things simple and he helps folks who don’t want to spend hours worrying about their finances do well.
Great review, as usual.
One thing I do disagree w/ Dave about is the use of percentages. I don’t think that 15% in retirement is enough, in many cases. But, I understand why he can’t get too specific, considering his huge audience.
Rock on,
NCN

Danielle
Danielle
7 years ago
Reply to  NCN

It’s safe to say that his suggestion of 15% into retirement is most likely aimed toward a much younger audience. If you invest that much of your money and it builds over time, you could easily have a great retirement fund if you start in your twenties. I would adjust the percentage by at least another 15% per “decade” you are (30s would be 30%, 40s is 45%, so on and so forth). That should get you pretty close to the same amount by the time you hit retirement.

Stephen Martile
Stephen Martile
12 years ago

Hi J.D.,

Your story sort of reminds me of the inspirational story by Bob Proctor. It was in the 1960’s and Bob Proctor was a fire fighter in Toronto earning $2,000 per year and was $3,000 in debt.

Things weren’t looking up. His brother gave him the book, Think & Grow Rich. Bob studied this book and within 1 year he skyrocketed his income to over $100,000 and then later went on to become a millionaire.

Cap
Cap
12 years ago

If I was still in debt when I read the book, I’d wager it’ll have a big affect on me just as it did to NCN and you. Dave’s the one to go to if you want to knock down debt medium-to-hardcore style. If you follow the debt snowball plan to the latter, I can’t imagine anyone having issue paying off their debt. He’s definitely not the one to go to for wealth building advice, as that’s pretty lacking in this particular book (but it’s a debt tackling book after all). His credit card stance drives me nuts, and is… Read more »

JerichoHill
JerichoHill
12 years ago

The “Law of Attraction” is bogus Secret new age baloney, and cannot hold a candle to Ramsey’s TMM precription.

I never had the debt problems many folks have had, but I still find Dave Ramsey’s show inspiring. Hearing folks create success through hard work and sacrifice makes me look that much closer at my personal finances and question what else I could do without.

Shawn
Shawn
12 years ago

Perhaps I should read this book … I’ve gathered a Christian perspective from other reviews, though, and that’s not something I’m into …

But, here’s my question: All of these books make it seem so simple and yet it’s not. For instance, we had the $1000 emergency savings and had to blow $400 of that last Sunday in vet bills because our dog succumbed to cancer. So now I”m feeling overwhelmed to build that back up, which only sets us back in other areas. I feel like by charging that amount I would have at least saved myself anxiety.

drhands
drhands
12 years ago

Why must all gurus be bald, middle-aged men with glasses and a fu-man-chu? Am I the only one that notices this? 🙂

But seriously, I think it’s great how many people Dave has encouraged. Even if his advice can’t be optimal for each specific individual, think how many people are striving to no longer live in fear of their finances.

Sean
Sean
12 years ago

My ex-wife and I paid off 70k in two years on an income less than that using TMMO. I do disagree with Dave a bit though in that credit cards can be tools those miles are hard to resist. Like Dave says I never heard a millionaire say they got that way using airline miles. I will say this though I will follow Dave’s rules most likely for the rest of my life. Because of Dave’s principles I now actually have money to invest wholeheartedly in my retirement and not just meeting the employer match. Its not that hard “Common… Read more »

J.D.
J.D.
12 years ago

Shawn wrote: Perhaps I should read this book … I’ve gathered a Christian perspective from other reviews, though, and that’s not something I’m into … There is most certainly a Christian perspective. Ramsey quotes Bible verses frequently. This bothered me at first, too, but my recommendation is to read it anyhow, but just gloss over any proselytizing. He’s not really out to convert anyone, but to back up his arguments with scripture. (Last summer, I wrote about how to read a personal finance book so that you can filter the unimportant.) Also, Ramsey recognizes that dipping into your emergency fund… Read more »

Stephen
Stephen
12 years ago

As a beneficiary of Dave’s methods (I paid off over $90K in debt over 3 1/2 years and have $18K in an emergency fund) I am persuaded to come to his defense on the credit card issue. Dave teaches behavior modification. Do you know why every quick mart and fast food restaurant takes plastic now? Marketing studies show that people spend 10-15% more when they use plastic instead of cash. It is that behavior that made restaurants and other places see the potential for more profit – even with the added cost of installing the ACH machines and paying Visa… Read more »

Canadian Dream
Canadian Dream
12 years ago

I have to admit this guy makes my skin crawl. Why? I heavily disagree with a number of his steps. If I were to do it I would modify them as follows. 1. Save $500. The orginal $1000 is too much if you are drowning in credit debt. 2. I actually agree with his point about building motivation. 3. It depends. In my case according to Dave I should have around $20,000 in a high interest savings account. What a waste! I would invest in company match retirement accounts to get some free money and keep a secured line of… Read more »

J.D.
J.D.
12 years ago

Stephen, my own feeling about credit cards is this: A person trying to get out of debt should not have them. There’s no need. In fact, they’re an impediment to the goal. Even once you’re out of debt, it’s not wrong to refuse to use them. However, if you really have taken control of your finances, then credit cards can be a valuable tool. But only if this is the case. I was very nervous last summer when I got a personal credit card again for the first time in ten years. I didn’t know if I could handle it.… Read more »

Justin
Justin
12 years ago

The high interest savings account is an emergency fund that is meant to be liquid. Retirement accounts are not liquid – they don’t make good emergency funds. Nor do lines of credit, as those are what get most people in debt in the first place.

JD, do you think 3-6 months of expenses or 3-6 months of net income is a better choice as an emergency fund?

Jim
Jim
12 years ago

I rolled my eyes over all the Biblical mumbo-jumbo, but it was otherwise a good book and will help a lot of people who don’t know where to start.

grimsaburger
grimsaburger
12 years ago

Shawn, Ditto on Ramsey’s perspective, but I fast-forward or grit my teeth through those moments on the podcast and keep going. As for the difficulty of keep-on-keepin’-on, I think this is where Ramsey has it exactly right, and a little wrong. It’s a dollars-and-cents problem for sure, but it’s primarily a mental problem. We save in our emergency fund, something unexpected happens, and we empty it and have to start all over again. But we do that in one fell swoop, and don’t have to worry about the credit card bill that hangs over the next four months. Instead, we… Read more »

NoDebtPlan
NoDebtPlan
12 years ago

The 3-6 months emergency fund is pretty much a staple with any personal finance program. Money magazine, Kiplinger’s, Dave Ramsey… all mention it. You can disagree, but don’t bash Ramsey for it. It’s pretty common.

It needs to be 3-6 months of expenses. Let me set up a quick example:

Income: $2000
Expenses: $1999
Net Income: $1

Emergency fund needed to cover 3 months of expenses: $5,997

“Emergency fund” needed to cover 3 months of net income: $3.

If you lost your job, that $3 is not going to help.

J.D.
J.D.
12 years ago

@Justin: I think whatever makes you most comfortable is better. Obviously, the more you have saved, the better you’ll weather a storm. But it is possible to set aside too much for emergencies. I think each person needs to decide what’s comfortable for him. For me, I want $10,000 saved. I *really* want $20,000, though, because this writing thing is a huge leap of faith. I figure $20,000 would buy me almost a year.

Justin
Justin
12 years ago

No Debt plan – what I meant was 3-6 months of expenses (meaning enough to pay the bills – in your example $5,997) or 3-6 months of income (meaning what we get paid per month minus taxes, FICA, etc. – $6,000 in your example.) I forgot to add that much of the value in TMM comes in teaching people to sit down and do a budget with their spouse – giving every dollar a name. Personally, I respect Ramsey for not pretending that his religious convictions have nothing to do with his finances. Though the Bible isn’t a handbook for… Read more »

Veteran Military Wife at Life Lessons of a Military Wife
Veteran Military Wife at Life Lessons of a Military Wife
12 years ago

I have to disagree on something. David Ramsey’s plan is even good to read and follow for those who AREN’T in debt. I recently did his online course when he offered it free to veterans. Lots of good advice on all areas of dealing with money, buying and credit. He does a good job of pushing you to change your mindset about “I want it now” and putting everything on credit and living beyond your means….for those of us not in debt, it would give us a bigger financial cushion if we thought this way and were prepared with an… Read more »

Phil A.
Phil A.
12 years ago

Devoting 15% of your salary to retirement accounts would be great but it just isn’t realistic to anybody in the lower or lower middle class (say under $40,000). I am a frugal home ownwer and 15% is just not something that is realistic based on my lower middle class salary. Sure if I was earning $50,000 or more a year I could contribute 15% to a retirement account. I think 7% would be reasonable. Remember the savings rate in America is around o%.

toes
toes
12 years ago

I discovered Dave Ramsey about four years ago. At the time, I thought I was swimming in debt because I owed $2,000 on credit cards. Before Dave, I figured that it would take me about a year to pay it off. After I started listening to Dave, I realized that I needed to take a hard look at my lifestyle. I wasn’t making a lot of money but my basic expenses weren’t that high either. Most of my money was going to eating out, buying books, clothes, DVD’s and other luxuries. I cut my lifestyle down to nothing and paid… Read more »

James
James
12 years ago

Question: Is the 15% figure 15% of after-tax income or pre-tax income? Thanks.

Canadian Dream
Canadian Dream
12 years ago

I think JD nailed it when he said “Obviously, the more you have saved, the better you’ll weather a storm.” when it comes to emergancy funds.

That’s where I’m sitting. If I cash out every assest I had I can pay for over 8 years of expenses. Hence $20,000 in cash to me is a waste.

Tim

John
John
12 years ago

While I would say that Dave Ramsey changed my life, too, I agree with your few criticisms whole-heartedly. I’ve listened to him (less regularly these days) for years and subscribed to his TMM website before. Dave is best when he sticks to money matters and stays out of marriage counseling (beyond occasionally pointing out that someone may need professional marriage counseling). Leave it for the professionals, Dave.

Also, as an atheist, I’ve learned to “tune out” when he gets on an evangelical rant like the oft-repeated “it’s god’s money” jag.

But on balance, he’s brilliant, his philosophy brilliantly simple.

Rob
Rob
12 years ago

Ramsey’s plan talks about eliminating all non-mortgage debts. What about student loans? Student loans are generally lower than mortgage rates, so I’ve never known where paying off your own student debt fits into the plan (before saving for children’s education? Before investing?).

Kevin
Kevin
12 years ago

My only concern is what about college loan debt? I have paid off all credit card debt, have $5000 in a savings account, but have $40,000 in very low interest (~2%) student loans that have been put on the back burner while I save for a house. Does Dave Ramsey’s book suggest I pay off the college loan at the expense of saving for a house? That seems wrong, but perhaps I am missing something. Great review of a book, J.D.!!!

Justin
Justin
12 years ago

Here’s one reason why Ramsey hates credit cards:

http://finance.yahoo.com/banking-budgeting/article/104466/Card-Sharks

*HT- Joe Sangl

Maria
Maria
12 years ago

This book helped my husband and I turn around our finances last year. We are now members of Dave’s MTMMO site and I find the boards very inspiring and the budget tools helpful.

Our library did not have this book, so I filled out a form to request that they get it … and they did. I read it for free and then we later took Financial Peace University. Excellent investment!

Dave
Dave
12 years ago

@Shawn I’m sorry to hear about your puppy. I had the same reaction as you the first time I had to hit the emergency fund. The perspective I finally came to is to look at the entire system as a whole. I’m using the leftover money from my paycheck toward improving my financial health, and I have a game plan to make that happen. Once I accept that, it doesn’t matter if that particular money goes into an emergency fund or pays off a debt: it’s being put to good use. @Phil A. Don’t forget that, according to Dave’s plan,… Read more »

Dave Follower
Dave Follower
12 years ago

I am a Dave follower. I am a FPU teacher. I have found through countless couples, that the use of credit cards lands them back in my class in about three years. If you want to follow a path to get out of debt and STAY out of debt this is the path that is GUARANTEED to work this is the way. If you change this in any form, it is not a guaranteed method. This book and his methods work. That is what most of the population need, not tweaking, not “I have a Bigger Better Deal”. If this… Read more »

simple mom
simple mom
12 years ago

We, too, are part of Dave’s TMMO website forums, and they and the budgeting tools are extremely helpful. I have to say that I agree pretty much with everything DR says, even the no debt at all thing. I’m still on step #2, so maybe I’ll change my mind after being debt-free for several years. But I’ve been stung by credit card companies before, and I don’t like the idea of opening myself up to them again. Even for airline miles.

Ironically, I wrote about baby step #2 today…
http://www.simplemom.net/?p=13

Jen
Jen
12 years ago

Perhaps if I actually read the book I would find that this was addressed, but in everything I’ve read about Ramsey’s plans, I haven’t seen it: he talks about paying down a mortgage as one of the steps, but I have never heard anything about saving up for a downpayment for those who have not yet taken the plunge into home ownership. I assume he’d be strongly against 0% down mortgages (not that anyone can really get those anymore), so that has to fit in somewhere, but where? After the emergency fund, I hope, but before retirement investing? Concurrent with… Read more »

JenK
JenK
12 years ago

Okay, all I know of Dave Ramsey is what I’ve read here. That said, I ended up doing the debt snowball in 93-96 because I realized that IF I paid off the lowest debt – which was a little more than my annual bonus – I could stop paying minimum balance on my credit cards. Yes, the motivation of having fewer debts was a big deal. But also the motivation of being able to pay more on other debts. As the credit cards had lower balances AND higher interest rates than my student loans and car loan, well, those were… Read more »

J.D.
J.D.
12 years ago

@Jen I believe Dave’s advice for homebuying would be: save 20% for a down payment and take out a 15-year mortgage. (I don’t listen to his show yet, so I don’t know if this is exactly what he says.) In the book, he talks about people who actually save up to pay cash for their homes! @Dave @ Accidental FIRE Follower You’re absolutely right. By avoiding credit cards, you guarantee yourself that you won’t fall back into trouble again. I don’t see anyone throwing rocks at this advice, though — I think that some people, like me, are saying that… Read more »

Dave Follower
Dave Follower
12 years ago

Wise use of credit cards? Uh huh. http://www.daveramsey.com/the_truth_about/credit_card_debt_3478.html.cfm You play with fire you will get burned. Life happens. “I will only use this in a emergency.” “I will always pay my bill on time.” I have heard them all. It may take a couple of years, but the credit card will nail you for more money than you intend to spend. The reason I am so adamant about credit cards, is I have seen families destroyed. I have never met anyone who “Got rich slowly” by using credit cards. Remember credit = debt. You can become wealthy faster with no… Read more »

Justin
Justin
12 years ago

Jen : I believe that what JD said is accurate. If you’re out of debt, you can save a lot in a little bit of time. 20% down would keep you out of PMI.

Katrina R.
Katrina R.
12 years ago

I had read a lot of personal finance books and was already on the good path for years before I picked up Ramsey’s manifesto, but the writer and message still had the power to hit me hard. Dave doesn’t fool around and has a way of not letting you lie to yourself either. I realized after his read, even though I knew a lot and had some strong habits and knowledge, I was still lying to myself — mainly because I still had revolving credit card debit. I still had ways of talking myself into making purchases I couldn’t pay… Read more »

Finally Frugal
Finally Frugal
12 years ago

Thanks, J.D.! I finally read Total Money Makeover a few months ago, and I love the quote you mention: If you will live like no one else, later you can live like no one else. I try to keep this quote in mind as I struggle with friends and family who just don’t understand why I’m working two jobs, why I can’t go out for drinks/dinner as regularly as I used to, and why I can’t just drop $100 on a new pair of shoes (on credit, of course). I truly want to get to a place where I CAN… Read more »

The Happy Housewife
The Happy Housewife
12 years ago

Dave Ramsey believer here… while I don’t agree with every single thing the guy says, overall he has some great ideas. After following his beans and rice plan we were able to pay off $11,000 in student loan debt and put about $20,000 in the bank, in less than 7 months. Our income is higher than average, about $100,000… but we are also a family of eight. We went to the cash only plan and I was able to cut most areas of our budget in half.

Mark
Mark
12 years ago

I listen to the Dave Ramsey podcast available on iTunes, for advice but also to listen to the horror stories to keep me scared of slacking off on baby step #2.

For mortgages I’ve heard Dave recommend that IF you can’t save and pay in cash you should get a 15 year mortgage and the monthly payment should not exceed 25% of your monthly take-home (after tax) pay. I don’t recall about a down payment, but I would assume 20% would be safe, to avoid PMI.

Moneymonk
Moneymonk
12 years ago

I think DR plan is fantastic! I just think once you get out of debt. The hardest part is to STAY OUT

J.D.
J.D.
12 years ago

@Dave @ Accidental FIRE Follower said: Wise use of credit cards? Uh huh. You play with fire you will get burned. I don’t think anyone here will disagree with you that credit cards are dangerous. They are. But some people are able to use fire constructively without getting burned. Also, nobody’s arguing that credit cards are a path to wealth, slowly or otherwise. What I’m saying is that credit cards can be a tool for those who have developed financial literacy and responsibility. Here’s how I use a credit card. I don’t spend money I do not have. When I… Read more »

Brian Crescimanno
Brian Crescimanno
12 years ago

I listen to Dave several days a week on my way home from work and I have one concern: his constant assertion that, “the only way to financial peace is to walk daily with the prince of peace, Christ, Jesus.” (that is a direct quote, I’ve heard it enough on his program that I literally can recall it word for word) I think his financial advice (for the most part) is very sound and he definitely helps a lot of people conquer “debt addiction.” I just really, really wish that he wouldn’t insist on making it about Jesus. I respect… Read more »

Anne
Anne
12 years ago

I got my first credit card in college over ten years ago and I have never, in those ten+ years, carried a balance. However, a few months ago I decided to go cash-only for most purchases. Why? Because I realized that using a credit card made it too easy to make unnecessary purchases. I was subconsciously spending more when I used credit. Since going cash-only, my discretionary purchases have been cut in half! That more than makes up for the piddling 1-2% rewards I’m missing out on. As a compromise, I use the credit card to pay bills that I… Read more »

Sam
Sam
12 years ago

I have to add my praise for Ramsey and TMM. Husband and I paid off $55,500 in unsecured debt in 12 and a half months using the baby steps above. Yes the plan is simple and most everyone already knows the advice he suggests but something in his presentation and his ability to get people focused on their debt makes a difference. I have 3 friends who are now working the TMM plan. As for credit cards, I don’t think they are evil and husband and I just put $1500 on a 0% Home Depot credit card for one of… Read more »

Sam
Sam
12 years ago

Questions re: student loan debt. All unsecured debt is paid off during Baby Step #2. And that is what we did, half of ‘our’ debt was my husband’s MBA student loan ($27,000) and it was fixed at 3 1/2%. Yes the interest rate was super low but the TMM plan, as many say, is not really about math its about emotional financial health and changing the way you live. The goal is to live a debt free life, think about that, and that is life changing.

Sea Change
Sea Change
12 years ago

Rob brings up a good point. Where do student loans fit into the equation? I have 40K in loans and I never know whether or not I should invest any excess money I earn or pay off my student loan.

Jen
Jen
12 years ago

@JD and @Justin – I guess I wasn’t very clear. I figured Ramsey would recommend saving up at least a decent downpayment, what I can’t figure out is how that would fit in with the steps listed here. I’m just about done with his step 3 (finish emergency fund), though I’m not following his plan and have been simultaneously also putting money towards retirement (step 4) and saving for a down payment (which doesn’t seem to be a step). I don’t have kids, so step 5 isn’t an issue. Then I look at step 6, paying off the mortgage, and… Read more »

Sean
Sean
12 years ago

I also wanted to chime in that as a Christian I’m quite proud of the fact that Dave does not choose to hide his faith when it would obviously be monetarily expedient for him to do so considering how many are turned off by his Christian views. ie “The only time Ramsey turns me off is when he injects religion into what is a wholly non-religious discussion.” To Dave, and myself included, obviously how we manage our money and family finances IS a ‘religious discussion’. You can’t only be Christian in some aspects of your life. I can’t speak for… Read more »

Brian Crescimanno
Brian Crescimanno
12 years ago

The point I think you’re missing, Sean, is that while that particular belief structure works for him, it is neither necessary nor required to follow most of the strictly financial advice that he gives. I am not saying that he has to hide his views; but please read again my quote above “the ONLY way to financial peace…” That is simply not true, and rings of serious intolerance. As an atheist, I’m excluded–but apparently so are Muslims, Hindus, Buddhists, Jews, and any other religious group who does not “walk daily with the prince of peace.” He’s flat out saying that… Read more »

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