This is the book to read if you are in debt. “The Total Money Makeover” by Dave Ramsey is the premier book to read if you are just starting out. It is the book that should be on your bedside table and one that you reference constantly. While there may be better books to read to learn the ins and outs of investing, there is no better book that will help you learn how to get out of debt, how to start an emergency fund, and how to get your financial life in order.
“The Total Money Makeover” by Dave Ramsey is the book that cemented Ramsey as the premier “get out of debt” guy. His book is a framework for getting your financial house in order whether you are just starting out or trying to take back control of a situation that seems like it has spun out of control. The book and his financial philosophy are broken down into seven steps, baby steps, as he calls them. The baby steps are meant to be followed in order and completed before moving on to the next step in creating financial peace in your life.
Baby Step 1 – Save $1,000 For An Emergency Fund. Debt is a cycle that a lot of people struggle to get off of. When you do not have a budget and spend more than you make, many people rely on credit cards to fill the shortage. But, Ramsey’s plan and philosophy rids you of credit card debt once and for all. To lay the ground work, you have to save $1,000 in an emergency fund to help you stock using credit cards. There are very few real emergencies that cost more than this amount.
Baby Step 2 – Pay Off All Debt But Mortgage With Debt Snowball. This is the meat of the book. This is where Dave Ramsey earns his bread and butter in the book and on his nationally syndicated radio show. Baby step two involves paying off all of your debt except your mortgage: credit cards, car loans, student loans, medical bills, family loans, etc. All of them! Check out a full description of the debt snowball on our sister site, Own The Dollar.
Baby Step 3 – Complete Your Emergency Fund. You need to have three to six months of your living expenses set aside in an emergency fund. After you pay off all of your debts beside your mortgage, you should have a lot of disposable income to throw at this task. Step three is completing your emergency fund by boosting up your earlier $1,000 savings.
The four other steps of the Total Money Makeover are…
Baby Step Four – Invest 15% of your income for retirement
Baby Step Five – Start saving for your children’s college
Baby Step Six – Pay off your mortgage early
Baby Step Seven – Start building wealth and give like no one else
Instead of giving you a complete recap of these last baby steps, I recommend that you grab a copy of Dave Ramsey’s book and dive in deep yourself. If you are just dying to know a little more about each baby step, I have put links to several great explanations of each step. I cannot recommend this book enough. Everyone no matter your strengths and weaknesses with money should read this book. Every single person from the novice to a professional money manager can learn a thing or two from Dave Ramsey’s “The Total Money Makeover“.
The Piggy Bank Rating - This book is without a doubt, definitely a five piggy banks out of five rating. You should read this book, circle ideas, earmark it, highlight it, and hold on to it. Don’t pass it on to a friend. Instead, you should buy your friends a copy. They make awesome gifts! Do not let go of your copy though. This book is that good and should be read by everyone! This book is that good!
See the complete guide to the site’s piggy bank rating scale.
