The Total Money Makeover: A Proven Plan for Financial Fitness

by Dave Ramsey

For those who have followed this plan and discovered a new life of financial freedom, their lives have been changed forever! Wouldn’t you like to experience the same transformation?

You can be the next success story people hear about. You can have a Total Money Makeover starting today!

Skinny-Dipping

When you are physically fat, it is hard to be in denial, because there is the ever-widening belt line. When you are financially fat, however, you can fake it and look good for a while. Your friends and family will participate in your fantasy/denial, which makes you believe you are doing just fine. One of the four major factors that keep people from winning in money by getting a Total Money Makeover is not realizing they need one. Sadly, some of the most dramatic makeovers I’ve seen have been by people who had life smack them so hard they got the denial knocked out of them, like Sara.

You are a real candidate for financial mediocrity or even a major crisis brought on by denial, and you have to see the need to make dramatic changes. If you are apathetic because everything seems “just fine,” then you will be unwilling to make the huge changes needed to get huge results.

For your own good, for the good of your family and your future, grow a backbone. When something is wrong, stand up and say it is wrong, and don’t back down.

Mmm . . . Frog Legs

Years ago, in a motivational seminar by the master, Zig Ziglar, I heard a story about how mediocrity will sneak up on you. The story goes that if you drop a frog into boiling water, he will sense the pain and immediately jump out. However, if you put a frog in room-temperature water, he will swim around happily, and as you gradually turn the water up to boiling, the frog will not sense the change. The frog is lured to his death by gradual change.

The enemy of “the best” is not “the worst.” The enemy of “the best” is “just fine.”

I was in denial for a long time about my life and my spending habits. By my midtwenties, I was $23,000 in debt and had little motivation to get out of it.

My biggest problem wasn’t realizing how nice it was to be free of financial concerns—it was gambling.

The Dave Rams...

Celebrate Recovery,

Baby Steps one by one.

emergency fund

gambling add...

But as my addiction weakened and I established a budget, the debt I had incurr...

Now I’m saving for a down payment on a house. I hope to reach my goal by next year. It is a wonderful feeling to live without the strain of debt on my life! Tony E. Newman (age 26) Financial Analyst

Change is painful. Few people have the courage to seek out change. Most people won’t change until the pain of where they are exceeds the pain of change. When it comes to money, we can be like the toddler in a soiled diaper. “I know it smells bad, but it’s warm and it’s mine.”

If you keep doing the same things, you will keep getting the same results. You are where you are right now financially as a sum total of the decisions you’ve made to this point. If you like where you are, keep it up.

why you are reading a book called The Total Money Makeover.

Don’t wait for a heart attack to show you that you are overweight. Cut the carbs, the fats, and the sugars, and lace up the running shoes now.

The good news about Sara and John was that the financial heart attack they had made them address their financial eating and exercise habits. The layoff was a wake-up call and the end to denial.

Every paycheck became an exciting event because they had a plan. They were financially losing weight and toning up. It wasn’t a quick process, but after following the steps over time, today they are really winning.

The night I met Sara and John, they were two years into their plan—and smiling. They told me they were debt-free except for their house, and they had $12,000 in the bank just for emergencies.

Albert Einstein said, “Great spirits have often encountered violent opposition from weak minds.”

They also realized all they had been doing with money to impress others—but no more.

Sara chuckled as she told me how she used to think: We must be doing well; all these credit-card companies think I’m creditworthy. If I’m getting approvals from all these banks, I must be okay because, otherwise, they wouldn’t want to loan me money. Besides, I pay my credit cards off every month. How could I be in any trouble? I can afford to buy that car or that furniture if I can afford the payment.

As we closed our conversation that night, Sara told me that while she hoped she or John never lost another job unexpectedly, they are ready if they do. “We are no longer living a lie. We know where we are, we know where we are going, and we know how we are going to get there,” she said.

Red-faced and fists clenched, the toddler yells with murder in his voice, “I want it! I want it! I want it!” We have all watched this scene unfold in the grocery store. We may even have watched our own children do this (once). Now that I’m older and more mellow, I sometimes grin a little as a young mom tries without success to stifle the out-of-control screams of a child who is denied something.

It is human nature to want it and want it now; it is also a sign of immaturity. Being willing to delay pleasure for a greater result is a sign of maturity.

However, our culture teaches us to live for the now. “I want it!” we scream, and we can get it if we are willing to go into debt. Debt is a means to obtain ...

We have propaganda in our culture today. I’m not speaking in a political sense, but rather recognizing that there are people out there who want us to think their way, and who will go to great lengths to accomplish that.

The financial and banking industries, in particular, are very good at teaching us their way of handling money, which, of course, leads us to buy their products.

TV spots

Sometimes we don’t even realize what we are doing is stupid because we have been taught that it’s just “the way you do it,” and so we never ask why.

We have been sold debt with such repetition and with such fervor that most folks cannot conceive what it would be like to have no payments. Just as slaves born into slavery can’t visualize freedom, we Americans don’t know what it would be like to wake up to no debt.

Literally billions of credit-card offers hit our mailboxes and in-boxes every year, and we are taking advantage of those offers. Americans currently have around $900 billion in credit-card debt. We can’t do without debt—or can we?

MYTH: Debt is a tool and should be used to create prosperity. TRUTH: Debt adds considerable risk, most often doesn’t bring prosperity, and isn’t used by wealthy people nearly as much as we are led to believe.

I remember a finance professor telling us that debt was a two-edged sword, which could cut for you like a tool but could also cut into you and bring harm.

We are told with sufficient snobbery and noses in the air that sophisticated and disciplined financiers use debt to their advantage.

WAY-too-big house

We spent two and a half years of focused intensity to finally become DEBT-FREE!

Henry Ford thought debt was a lazy man’s method to purchase items, and his philosophy was so ingrained in Ford Motor Company that Ford didn’t offer financing until ten years after General Motors did.

The old joke is that if you loan your brother-in-law $100 and he never speaks to you again, was it worth the investment?

The lender requires a cosigner because there is a very high statistical chance that the applicant won’t pay.

Why do we cosign knowing full well the inherent problems?

MYTH: Cash Advance, Payday Loans, Rent-to-Own, Title Pawning, and Tote-the-Note Car Lots are needed to help lower-income people get ahead. TRUTH: These rip-off examples of predatory lending are designed to take advantage of lower-income people and benefit only the owners of the companies making the loans.

Lower-income people will remain at the bottom of the socioeconomic ladder if they fall for these rip-offs. These “lenders” (or, as I like to call them, “the scum of the scum”) are bottom-feeders and legally make themselves rich on the backs of the poor or those soon to be poor. The lending rates of these types of operations are over 100 percent interest, and if you want to stay on the bottom, keep dealing with these guys. You know why these types of operations are located only at the poor end of town? Because rich people won’t play. That is how they got to be rich people.

Mike called my talk show recently and was caught in a web of Payday Loans. He had not yet had a Total Money Makeover and was still spending like always. He kept adding loan after loan until he couldn’t beat the shell game he had created. Basically, Mike had borrowed from one trash lender to pay another, and by doing this again and again, he had created a cycle of financial death. He was panicked because he was being threatened with criminal charges for writing bad checks by the very places that have a business model based on postdated “bad” checks. The sad thing is that the only way out for Mike is to pop the balloon. He has to stop paying them, close his accounts, and then meet with each lender to work out payment arrangements. That will mean extra jobs and selling things around the house.