Dave Ramsey is so popular that I now use his name as a verb in my counseling sessions with clients. His work is simple but mind-blowing and that’s what makes it magical. My own personal journey with his magic was when I first sought out The Total Money Makeover after glancing at our full amount of consumer and student loan debt. The number was suffocating. Reading Dave Ramsey helped me refocus and feel hopeful and motivated instead of cowering in fear.
Here is my biggest take away from Dave Ramsey’s The Total Money Makeover, a short story of my own attempt to “Dave Ramsey” my life, and some tips that my clients have found helpful. As with all “good reads” I reflect on, I highly recommend this book if you:
- Feel suffocated and terrified when you glance at your total amount of debt
- Aren’t sure how to live within your budget
- Aren’t sure if you even have a budget
- Somehow keep watching your credit card balances rise
- Want to live debt-free and worry-free
There are a million websites out there that describe the many steps that are part of the Dave Ramsey plan (one of my favorites is from The Savvy Couple) so check those out for more details but here’s a super short synopsis of the principles.
First things first – The Total Money Makeover encourages us to take baby steps. If you agreed with the Reason #1 above for who should read this book and you’re truly feeling suffocated and terrified by your financial situation, then the last thing you want to do is baby steps. Nope, it’s too late for that. It’s time for big changes, you say. But the problem is that big changes aren’t often very effective so we need to start small. Remember Bill Murray’s What About Bob? Baby steps.
RAMSEY’S BABY STEPS:
- Save $1,000 as an emergency fund.
- Pay off all debt (including student loans) except your mortgage.
- Create a savings equal to 3-6 months of your expenses.
- Invest 15% of your income to retirement.
Actually, Ramsey has seven total baby steps but here’s the thing… he lost me at number two. Pay off all my debt? How is that a baby step? So let’s skip ahead to another important principle.
Living debt-free is a behavioral problem, not a math problem. Scroll back up to reasons 2, 3, and 4 to read this book and you’ll know what I’m talking about. We don’t teach budgeting in school and most families tell their kids not to spend more than they earn. But in a consumerist culture with easily accessible debt and overwhelmingly high (but deceivingly marketed) interest rates, budgeting is not a skill we learn until trial and error. Even then, it proves somehow wildly challenging. Ramsey tells us that this isn’t about just making a budget, though. Spend hours on all your free weekends crafting the perfect budget and setting goals and categorizing all your receipts and you’ll still likely overspend. Why? Because it isn’t a math problem. We know we can’t spend more than we earn so why do we keep doing it? Because money is a behavioral problem.
I think the real baby steps should be even smaller babies. I want just came out of the womb, still covered in vernix baby steps. Ramsey’s baby steps are great goals but I don’t think they should be called baby steps. After reading The Total Money Makeover and attempting to Dave Ramsey my own life, here is what I’m suggesting:
NEWEST NEWBORN BABY STEPS:
- Stop using credit cards.
- Create a separate account for all your consistent bills and set them to autopay.
- Observe your spending habits for two months and track where the rest of your money is going.
- Make realistic budget limits.
- Go on a shopping ban for one month.
- Use a cash envelope system. NOTE: If you have children in still in car seats, you are allowed to use your debit card for gas and only gas. Keep it in your car.
However you decide to jump into your own changes, remember to think small and manageable. Maybe even try habit stacking – this new technique a client recently told me about. If you’re needing some motivation, read The The Total Money Makeover. Better yet, I suggest listening to it as an audiobook so you can hear his voice and inflection. He’s quite convincing. For other good books, check out this list and start changing your life, one baby step at a time.