Best 7 Steps Total Money Makeover Book Summary

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Best 7 Steps Total Money Makeover Book Summary

First published in, with over a million copies sold in the United States only, “Total Money Makeover” by Dave Ramsey is already considered a financial classic. Simple, straightforward, and sagacious – the book dispels the most dangerous money myths in circulation and offers a seven-step plan to you gain(or regain) that oh-so-coveted financial freedom.

Who is The Total Money Makeover book for?

Best suited for people in debt and those who want to avoid going into debt – as well as for anyone who’d appreciate some professional help managing their money. Best 7 Steps Total Money Makeover Book Summary.

The Total Money Makeover by Dave Ramsey | Financial Wealth-Building Audiobook Book Summary

In “Total Money Makeover” you’ll learn:

Why financial freedom is 20% math and 80% behavior modification.
Why you should start paying off your smallest debts first.
Why you should invest no more or less than 15% of your income in retirement.

Dave Ramsey’s biography

The commonsense financial guru of millions of Americans, Dave Ramsey is a successful businessman and bestselling author, best known as the host of the eponymous self-syndicated “Dave Ramsey Show”, the fifth most-listened-to radio program in the U.S. He has so far authored five ew York Times bestsellers: “The Total Money Makeover”, “EntreLeadership”, “Financial Peace”, “More Than Enough”, and “Smart Money Smart Kids”.

What is the total money makeover book by Dave Ramsey?

The Total Money Makeover, A Proven Plan for Financial Fitness 

According to J.D. Roth and his influential book ‘Get Rich Slowly’ and his podcast ‘Financial Peace University’, Dave Ramsey changed his life: ‘In the fall of 2004 I had over $35k in consumer debt. I made a decent living, but my money habits were terrible. I couldn’t see the future, I just knew there was nothing but toil ahead if I continued down this path. Then a friend lent me a copy of Dave Ramsey’s book ‘Total Money Makeover’ and I read every word.’

Dave Ramsey’s book grabs you right away because you can immediately relate to the dread of living paycheck-to-paycheck with mouths to feed. You also learn about his success, which includes losing everything, and the utter resignation to not knowing how to fix your financial situation. He gives you some straight talk, but you’re still curious to learn more.

Ramsey says he wants to help his readers achieve financial freedom. He believes that if you start saving early, you’ll end up living like a millionaire. If you’re willing to put in the time and effort, you’ll eventually reach your goal. But it takes sacrifice. You need to be willing to give up the things you enjoy today in exchange for something bigger tomorrow.

What are the 7 baby steps?

Dave Ramsey’s 7 Baby Steps will show you how to save for emergencies, pay off all your debt for good, and build wealth. It’s not a fairy tale. It works every single time!

  1. Baby Step 1: Save $1,000 for your starter emergency fund.
  2. Baby Step 2: Pay off all debt (except the house) using the debt snowball.
  3. Baby Step 3: Save 3–6 months of expenses in a fully funded emergency fund.
  4. Baby Step 4: Invest 15% of your household income in retirement.
  5. Baby Step 5: Save for your children’s college fund.
  6. Baby Step 6: Pay off your home early.
  7. Baby Step 7: Build wealth and give.
The Total Money Makeover - 7 Baby Steps By Dave Ramsey
The Total Money Makeover – 7 Baby Steps By Dave Ramsey

Ramsey’s 7 baby steps to financial freedom

Ramsey’s 7 baby steps to financial freedom are simple, yet effective. By following them in order, you’ll eventually reach your goal of financial independence. You won’t get rich quickly, though. Instead, you’ll get there through small, manageable steps. And if you miss a step? Don’t worry! Just start again at Step 1.

Step 1: Save $1K in an Emergency Fund. Before you spend any other money, says Ramsey, you need to save a $1k emergency fund. This money should only be spent on emergencies — car repair, health issues, etc. You may think you can avoid this step because your current expenses will cover all of your needs. However, if something goes wrong, you’ll end up deeper in debt. A cash cushion can help you get back on track more easily.

Step 2: Pay Off Your Highest Interest Debt First. Once you have your emergency fund saved, pay off your highest interest rate debts first. This way, you’ll free up extra money each month to save or invest. It’s important to note that paying off high interest rates doesn’t necessarily mean you should take out loans with lower interest rates. In fact, many credit cards offer 0% APR introductory offers.

Step 3: Get Out of Debt. After you’ve paid off your highest interest rate debt, use the leftover funds to pay off your next highest interest rate debt. Repeat until you’re debt-free.

Step 4: Start Investing. Now that you have no debt, you can begin investing in stocks and bonds. To do so, you must contribute 10 percent of your income into retirement accounts (like 401(k) plans).

Step 5: Build Credit. Use your investments to build good credit. The sooner you establish a positive credit history, the better.

Step 6: Open Up More Accounts. As your credit score improves, open up new savings and checking accounts. Also consider opening up a home equity line of credit. These types of accounts allow you to borrow against the value of your house.

Step 7: Live Below Your Means. Finally, once you’ve reached financial freedom, live below your means. Ramsey suggests that you keep spending around 30 percent of your gross monthly income. Anything left over after that amount is yours to save or invest.

Get on top of your financial house with Dave Ramsey

The seven baby steps explained, summary of the book The Money Makeover by Dave Ramsey.