by Dave Ramsey
I was weird before weird was cool. I started saving for my first home at age seventeen and paid half down at age twenty-three. My wife, on the other hand, was slightly different. When we got married, she had thirteen credit cards and a car payment totaling $30,000. I knew this was not a good place to be as newlyweds, so we agreed to become debt-free.
Even though my wife was a little reluctant, we started to work on paying off the consumer debt and the $95,000 on our new house. This is when I found out about The Total Money Makeover and decided to get intense. So I started a part-time lawn-care business using the tools I already had, and my mother-in-law let me use her riding mower as long as I cut her yard every Saturday. We started paying off bills left and right.
My wife dreamed about being a stay-at-home mom for our kids. So with the help of the booming lawn-care business and a tight budget, we killed the consumer debt in ten months, and when we decided to start a family, she was able to do just that. For a long time, we put almost every free cent toward paying off our mortgage, and today we can proudly scream, “We’re debt-free!”
Arguments about money are gone. If something breaks, we just fix it or replace it. It’s not even a concern. I have all the time I want to spend with my family knowing that their future is going to be bright because we sacrificed for it.
A short time after paying off the house, we started Baby Step Seven, and let me tell you . . . giving money away is a great feeling, and it’s easy to do when you are debt-free. Our Traditional and Roth IRAs are funded, as well as college funds for our two boys. Investing is key! You have to do it NOW because you can’t get that time back. Later in life, you will be so happy you did. Now we can retire the way we want to and when we want to. Today we have over $100,000 in retirement funds,$90,000 in savings, our house is now worth $450,000, and we’ve paid cash for two newer cars. So my status symbol of choice is the paid-off home mortgage AND the BMW in the driveway.
Luke (age 36) and
Laura (age 34) Lokietek
Senior Programmer Analyst; Homemaker
13
Live Like No One Else
You started this book financially flabby, overweight with debt, out of shape in savings, and in desperate need of a personal trainer. In these pages, you have reviewed how tens of thousands of ordinary people have gotten into great financial shape. This is a book about getting out of debt and into wealth. However, there is a problem with following The Total Money Makeover plan. The problem is simply that it’s a “proven plan” because it works. If you follow this system, it will work. It will work so well that you are going to become wealthy over the next twenty to forty years. The problem with becoming wealthy is that you stand a chance of becoming enamored with wealth. We can easily start to worship money, especially after we have some.
False Cents of Security
According to Proverbs 10:15, a rich man’s wealth can become his walled city. In Bible times, the wall around the city was the city’s protection from the enemy. If all you get from your wealth is the wrong view of it, wealth will destroy your peace. If you get from your wealth the idea that you are some big deal because you gathered some money, you missed the essence of a Total Money Makeover. The wealthy person who is ruled by his stuff is no freer than the debt-ridden consumer we have picked on throughout the book. Antoine Rivaroli said, “There are men who gain from their wealth only the fear of losing it.”
Since you have read many pages learning a wealth-building system from me, you might think that I believe stuff is the answer to happiness, emotional well-being, and spiritual maturity. You would be wrong because I know that is not the case. On the contrary, I see a real spiritual danger to having great wealth. The danger is old-fashioned materialism. In his great book Money, Possessions, and Eternity, author Randy Alcorn takes a probing look at materialism. Randy discusses a disease running amuck in America: “Affluenza.” Affluenza is a malady that affects some of the affluent and their children. Because some of the affluent and their children seek happiness, solace, and fulfillment in the consuming of stuff, they face a problem. By trying to get stuff to do something it wasn’t designed to do, they come up empty and end up depressed and even suicidal. They discover bumper-sticker wisdom: “He who dies with the most toys is still dead.” Stuff is wonderful; get some stuff, but don’t let the pursuit of wealth become your god.
My wife and I are concerned that our wealth could be a blessing and not a curse to our children. So we are tough on our kids regarding work, saving, giving, and spending issues. We expect a lot from them and have since they were small. I am very proud of the character of our children. They, like their parents, aren’t perfect, but they are doing well. When one of my kids was a teenager, she complained to me, “Do you know how tough it is being Dave Ramsey’s kid? Dad, you are so hard on us, making us buy our own cars, manage our own checkbooks. You cut us no slack.” I replied that we are tough on them because one day they will inherit our wealth, and that wealth will either ruin their lives or become a tool for great good.
My kids, you, and I can have good things happen as a result of our Total Money Makeover only if we have the spiritual character to recognize that wealth is not the answer to life’s questions. We further must recognize that while wealth is very fun, it comes with great responsibility.
Another paradox is that wealth will make you more of what you are. Let that one soak in for a minute. If you are a jerk and you become wealthy, you will be king of the jerks. If you are generous and you become wealthy, you will be most generous. If you are kind, wealth will allow you to show kindness in immeasurable ways. If you feel guilty, wealth will ensure that you feel guilty for the rest of your life.
The LOVE of Money, Not Money, Is the Root of All Kinds of Evil
As a Christian, I am amazed how certain political and religious groups have decided that wealth is evil. Many of the heroes of biblical faith, of world history, and of our nation were very wealthy, including King David, Solomon, Job, and most of our Founding Fathers. There is a negative mind-set justifying money mediocrity that is maddening. Wealth is not evil, and people who possess it aren’t evil by virtue of the wealth. There are rich jerks and poor jerks. Dallas Willard, in his book The Spirit of the Disciplines, says to use riches is to cause them to be consumed, to trust in riches is to count upon them for things they cannot provide, but to possess riches is to have the right to say how they will or will not be used.
If you are a good person, it is your spiritual duty to possess riches for the good of mankind. If you are a Christian like me, it is your spiritual duty to possess riches so that you can do with them things that bring glory to God. The bottom line is, if you take the stand that managing wealth is evil or carnal, then by default you leave all the wealth to the evil, carnal people. If wealth is spiritually bad, then good people can’t have it, so all the bad people get it. It is the duty of the good people to get wealth to keep it from the bad people because the good people will do good with it. If we all abandon money because some misguided souls view it as evil, then the only ones with money will be the pornographer, the drug dealer, or the pimp. Simple enough?
To Give You Hope
I think you can tell by now that The Total Money Makeover is more than just a discussion on money issues. The Total Money Makeover makes you face the man or woman in the mirror. Facing that man or woman makes us face emotional, relational, physical, and even spiritual aspects of our lives. The wealthy people that I know who are fulfilled didn’t just have a Total MONEY Makeover. They had a life makeover. Because personal finance is 80 percent behavior and 20 percent knowledge, you will either make your life over in this process, or you will end up miserable. I’m being very spiritual here at the end, but the spiritual is a legitimate aspect of behavior. I see well-rounded, mature people who become all God designed them to be when they get their money closets cleaned out. God has a plan for your life, and that plan isn’t to harm you; it is a plan for your future to give you hope (see Jeremiah 29:11).
Hope is what I want you to walk away with from this book. Hope that you can be like the people whose stories I told in this book. Hope that you can turn your money troubles into money triumphs. Hope that you can retire with dignity. Hope that you can change your family tree, because by building wealth you leave an inheritance. Hope that you can give money in a way you have never given before. It is time for you to become a gazelle. It is time for you to leave the reading and the classroom behind and apply these principles. They are age-old principles, and they work. Tens of thousands of ordinary people just like you and me have become debt-free and even wealthy using this plan. It isn’t magic; it is common sense. The exciting thing is, anyone can do this—anyone. Are you next? I hope so.
Meet the Winners of The Total Money Makeover Challenge
When The Total Money Makeover first released, we began a contest to see who could have the greatest change in financial position in a six-month period. Hundreds of you sent in your entries, and I had the pleasure of reading all your fabulous success stories. I would have taken everyone to the Bahamas, but unfortunately the contest only allowed me to take ten finalists. While at Atlantis, we awarded one family—Chance and Kimberly Morrow and their five children—the $50,000 grand prize. Since that time, the Morrows have continued their Total Money Makeover:
Several years ago we were drowning with over $56,000 in credit-card debt and a $35,000 income. Our minimum payments were a whopping $1,200 each month! We met with a financial planner who told us it would take forty years to pay off our debt. We felt hopeless and continued to accumulate debt, using credit cards to pay for basics, such as groceries, and any unplanned events, such as car repairs.
Chance began listening to The Dave Ramsey Show, but it took a while for him to get me to reluctantly listen. I soon realized Dave had a plan that could work, and once we both got excited, there was no turning back!
That Christmas we had planned on using Chance’s bonus check to buy a fancy tree, but when we realized the check was just under $1,000, we decided to put up our old scrawny Charlie Brown Christmas tree. Instead, that money went for Baby Step 1.
We immediately stopped using all ten credit cards and set a goal to pay off $10,000 in debt that first year. We lived on a written budget for the first time ever. We cut every expense we could, no matter how small. Chance worked crazy overtime, and we had two garage sales, selling almost everything. By the next Christmas we had surpassed our goal and paid off $14,000.
Chance decided to turn things up a notch and took a second job delivering pizzas five nights a week. It was a crazy schedule, but we were attacking the debt! We accepted The Total Money Makeover Challenge as a way to keep us motivated.
Then we had an epiphany: If we sold our home—which we’d already outgrown—we could be debt-free with the equity we had in it. We followed Dave’s advice on getting a house ready to sell. It took a couple of months of blood, sweat, and tears, but once the house was ready, we had a contract within a week. Not only were we debt-free, but we had our full six-month emergency fund.
Then came the phone call—we were finalists in The Challenge and would be going to Atlantis. It was a great “attaboy” for our hard work. In Atlantis, we were shocked when Dave announced we were the winners of The Challenge. There were so many great finalists.
We gave part of the prize money to our church, took our kids on a trip to celebrate, and put the rest toward the down payment on a house. But what’s bigger than the big check we received is the change in our lives. Working together as a team strengthened our marriage incredibly, and our children will never remember the time we were in bondage to debt. The best part is the peace we get from having a plan. Once upon a time if we had won $50,000, we would have just spent it foolishly and then wondered where the money went.
Four years after beginning our Total Money Makeover, we are debt-free, including our new house. That’s just thirty-six years earlier than the financial planner estimated.
Not all of the blessings, however, have been financial. Shortly after returning from Atlantis, Chance became a Christian. That was directly related to Dave’s ministry and this journey we had taken. Chance was also reunited with a twenty-one-year-old son he had not seen since infancy. It came at a time financially when Chance could just jump on a plane and go see his son Ben, knowing we could afford it. And to celebrate, Chance, Ben, and our ten-year-old son, Jett, took a trip back to Atlantis this summer. Like Dave says: when you live like no one else, you really can live like no one else.
We still use that old Christmas tree. It has become a symbol of what we’ve accomplished, who we’ve become, and how we’ve changed our family tree.
Dave once signed our Total Money Makeover book with Romans 12:2: “Transform!” By following Dave’s plan—which is really God’s plan—that’s exactly what we’ve done. It has been an amazing financial, relational, and spiritual transformation!
We want everyone to know they can have financial peace. We share our story in hopes that others will see it really is possible and worth all the hard work.
Kimberly and
Chance Morrow (both 40)
Stay-at-Home Mom; Cable Technician
About the Author
America’s trusted voice on money and business, Dave Ramsey is a personal money-management expert and extremely popular national radio personality. He’s authored four New York Times best-selling books—Financial Peace, More Than Enough, The Total Money Makeover, and EntreLeadership. The Dave Ramsey Show is heard by millions of listeners each week on hundreds of radio stations throughout the United States. Millions of families have benefited from attending a Financial Peace University class or one of his many live events.
Total Money Makeover Worksheets
For the digital version of these worksheets, visit daveramsey.com/budget-forms.
Monthly Cash flow Plan
Yes, this budget form has a lot of lines and blanks.
But that’s okay. We do that so we can list practically every expense imaginable on this form to prevent you from forgetting something. Don’t expect to put something on every line. Just use the ones that are relevant to your specific situation.
*Dave’s Recommended Percentages
Allocated Spending Plan
Life pulls your money in all directions. Spend time here before spending your cash.
Allocation is a fancy word for “when you spend your money.” We’re going to build on your monthly cash Flow plan here and get a little more in depth by breaking your income down by pay period. The four columns on this form represent the four weeks in a given month. If you’re married, combine your spouse’s income with yours.
Irregular Income Planning
Some people’s paychecks all look the same, and some people’s don’t.
If you’re self-employed or in sales, you really understand this! but you’re not free from filling out budgets. As a matter of fact, this form is vital for just that reason! It can be easy for debts and expenses to overtake what you’re bringing in. stay on top of your money here.
Debt Snowball
You’ve got your emergency fund taken care of. now it’s time to dump the debt!
The Debt snowball form will help you get some quick wins and develop some serious momentum! you’ll make minimum payments on all of your debts except for the smallest one. Then attack that one with gazelle intensity! Throw every dollar at it that you can!
Breakdown of Savings
These items are also called sinking funds. These are the safety nets in your plan.
After fully funding your emergency fund, start saving for other items, like furniture, cars, home maintenance or a vacation. This sheet will remind you that every dollar in your savings account is already committed to something.
Consumer Equity Sheet
Your net worth: what you own minus what you owe.
Use this form to list all of your assets and their value. Then subtract what, if anything, you owe on each one. When you total the columns
, the Total equity box at the bottom shows your net worth.
Lump Sum Payment Form
These items are also called sinking funds. These are the safety nets in your plan.
After fully funding your emergency fund, start saving for other items, like furniture, cars, home maintenance or a vacation. This sheet will remind you that every dollar in your savings account is already committed to something.
Major Components
Your financial plan has a lot of moving parts.
So you have to know what you need to do and when you need to do it. This form shows you the essential things that absolutely must be part of any successful plan. go line by line and note what action you need to take for each item, then put a deadline on it.
Recommended Percentages
How much of your money should go where?
We’ve got some recommendations based on experience and research. If you find that you spend much more in one category than we recommend, consider adjusting your lifestyle in that area in order to enjoy more freedom and flexibility across the board. These are only suggestions though. For example, if you have a higher income, your percentage for things like food will be lower.
