Other Books from Dave Ramsey

The Total Money Makeover Workbook

The Total Money Makeover Journal

The Total Money Makeover Spanish Edition

(La Transformación Total de su Dinero)

EntreLeadership

Dave Ramsey’s Complete Guide to Money

Smart Money Smart Kids

(with Rachel Cruze)

Foundations in Personal Finance

(K-12, College, and Homeschool)

Tranquilidad Financiera

(Spanish Edition of Financial Peace)

More Than Enough

The Legacy Journey

Junior’s Adventures

(Children’s Series)

Baby Steps Millionaires

Copyright

The Total Money Makeover: A Proven Plan for Financial Peace, Expanded and Updated Edition

© 2003, 2007, 2009, 2013, 2024 by David L. Ramsey III

All rights reserved. No portion of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopy, recording, scanning, or other—except for brief quotations in critical reviews or articles, without the prior written permission of the publisher.

Published in Nashville, Tennessee, by Nelson Books, an imprint of Thomas Nelson. Nelson Books and Thomas Nelson are registered trademarks of HarperCollins Christian Publishing, Inc.

Thomas Nelson titles may be purchased in bulk for educational, business, fund-raising, or sales promotional use. For information, please email SpecialMarkets@ThomasNelson.com.

Scripture quotations marked NKJV are taken from the New King James Version®. Copyright © 1982 by Thomas Nelson. Used by permission. All rights reserved.

Scripture quotations marked CEV are taken from the Contemporary English Version. Copyright © 1991, 1992, 1995 by American Bible Society. Used by permission.

Scripture quotations marked NIV are taken from the Holy Bible, New International Version®, NIV®. Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™ Used by permission of Zondervan. All rights reserved worldwide. www.Zondervan.com. The NIV and New International Version are trademarks registered in the United States Patent and Trademark Office by Biblica, Inc.®

ISBN 978-1-4003-4252-5 (hardcover)

ISBN 978-1-4003-4255-6 (eBook)

ISBN 978-1-4003-4254-9 (audio)

Epub Edition MAY 2024 9781400342556

The Library of Congress has cataloged the earlier edition as follows:

Ramsey, Dave.

The total money makeover : a proven plan for financial fitness / Dave Ramsey.

p. cm.

ISBN 978-0-7852-8908-1 (2007 edition)

1. Finance, Personal. 2. Debt. I. Title.

HG179.R31563 2003

332.024'02—dc21

2003014115

Information about External Hyperlinks in this ebook

Please note that the endnotes in this ebook may contain hyperlinks to external websites as part of bibliographic citations. These hyperlinks have not been activated by the publisher, who cannot verify the accuracy of these links beyond the date of publication.

To my beautiful wife, Sharon, who walked arm in arm with me through a Total Money Makeover—I love you, honey.

To the superstars all across America who have had the courage to face the person in the mirror, the culture, their family, and even their coworkers as they lived like no one else so later they could live like no one else. You who have courageously had a Total Money Makeover of the heart and wallet are the real superstars.

To the Ramsey Solutions team and the Thomas Nelson team for tireless hours on this project to make this material available to everyone across this great land.

Contents

Cover

Title Page

Copyright

Introduction

What This Book Is NOT

Flying Turkeys and Skinny-Dipping

1. The Total Money Makeover Challenge

2. Denial: I’m Not That Out of Shape

3. Debt Myths: Debt Is (Not) a Tool

4. Money Myths: The (Non)Secrets of the Rich

5. Two More Hurdles: Ignorance and Keeping Up with the Joneses

6. Save $1,000 Fast: Walk Before You Run

7. The Debt Snowball: Lose Weight Fast, Really

8. Finish the Emergency Fund: Kick Murphy Out

9. Maximize Retirement Investing: Be Financially Healthy for Life

10. College Funding: Make Sure the Kids Are Fit Too

11. Pay Off the Home Mortgage: Be Ultra-Fit

12. Build Wealth Like Crazy: Become the Mr. Universe of Money

13. Live Like No One Else

Start Your Total Money Makeover Here

About the Author

Total Money Makeover Worksheets

Index

Introduction

Read the stories of the lives changed by this book! As a matter of fact, I recommend you skip through the book, reading all the stories first. They will inspire you to read all the way through and actually do the Proven Plan to Financial Fitness.

Many years ago I was given a calling: to show people the truth about debt and money and to give them the hope and tools necessary to set themselves free financially. First, I did that with a few speaking engagements and a small self-published book titled Financial Peace. Later Financial Peace was published by a New York publisher and became our first New York Times bestseller. I began doing a small local radio show that’s now carried by hundreds of stations across the nation, as well as on podcast platforms like YouTube and Spotify. All that adds up to millions of listeners and viewers who tune in weekly. Thirty years ago, we started teaching a class called Financial Peace University, which millions of families have now attended. Then came The Total Money Makeover.

I am positive that personal finance is 80 percent behavior and only 20 percent head knowledge. Our concentration on behavior—realizing that most folks have a good idea of what to do with money but not how to do it—has led us to a different view of personal finance. Most financial people make the mistake of trying to show you the numbers, thinking that you just don’t get the math. I am sure that the problem with my money is the guy in my mirror. If he will behave, he can make the money thing work. The math of wealth building is not rocket science; it is simple—but you have to DO IT!

So the proven Total Money Makeover plan I teach has become very successful not because I have found the secrets of the rich. Not because I had some revelation that no one else has ever had about credit cards. Not because I am the only one with a debt snowball plan. Instead, this proven plan is having a national impact because I have realized that to change your money thing, you have to change. You have to change your life. When you change your life, you will get out of debt, give, and invest at an unbelievable rate. When you read the stories in this book, you will read not about mathematics or magic systems, but about changed lives. You will read about transformed marriages and relationships. Because when you change your life, you really change your life.

So when Mike Hyatt, then the president and CEO of Thomas Nelson Publishers, brought me the concept for a Total Money Makeover book, I became very excited. I became excited because I knew this book would inspire readers to take immediate action through a simple, step-by-step process that could only lead to life-changing results. Hope—the light at the end of the tunnel that is not an oncoming train—is a very powerful force.

As excited as I was, though, I had no idea at the time what we were starting. I thought this stuff was common sense, but it turns out common sense isn’t that common anymore. This book hit the market like a lightning bolt—it just blew up! And it wasn’t because I was some genius; it was because the country was ready for a financial wake-up call. It was because American families—hard-working men and women who were sick and tired of being sick and tired financially—were ready to change their lives. Looking back now, over a decade later, I’m blown away at what these people have accomplished, and I’m humbled to have played a small part in them turning their lives around.

Over all these years, The Total Money Makeover has given HOPE to millions of families. This book has given them hope to win, and that hope has caused them to take action and claim ultimate victory over their financial struggles and worries—and to actually win! The number of people I meet across this nation who tell me this is the first book of any kind they have read in ten years is staggering. The Total Money Makeover is a book for everyone. It is for high-income earners, as I am. And it is for someone beginning at the bottom, which is where I once was.

You are about to read about a process, a proven plan, to win. You will find the plan to be very simple yet very inspiring. The principles are not mine. I stole them all from God and your grandmother. The principles are common sense, which, again, isn’t so common anymore. The plan is mine—and I’m no genius—created by simply observing millions of lives with whom I have interacted through radio, TV, books, classes, the Internet, email, podcasts, and our Live Events. I have successfully bottled common sense about money into a plan that anyone can do. And millions are!

When I first started talking about these principles years ago, I knew they had helped my wife, Sharon, and me survive going broke and begin to prosper. The first hundred times I spoke on money, I wasn’t as confident of the principles as I am now. Nowadays I look into the eyes of a gazillion people who have followed this plan and experienced, as we did, excitement, hope, and gratitude. I am so thankful that I have not only given them a proven plan but have also inspired them to change their family tree.

I am so confident in The Total Money Makeover principles and this process that I cannot stand it when someone doesn’t get it. Because I am so convinced my plan will work for everyone, my answers to the same questions will never change. By recognizing and identifying some basic truths and everyday common sense, I have convinced millions of people to change their lives—to have a Total Money Makeover. Are you next?

What This Book Is NOT

I know it may be hard for you to believe, but I get a lot of hate mail and criticism. This book and what I have or have not said in it have generated a lot of negativity and name-calling. That is fun. Not fun because I set out to offend or because I love reading the nasty things people often say. It is fun because the negativity means two things: one, for some people, we are touching a nerve that needs to be touched in order for them to change their lives, and two, I am actively and passionately pursuing the truth. Aristotle once said, To avoid criticism say nothing, do nothing, and be nothing. I can’t help millions of people change their lives by saying nothing, doing nothing, and being nothing. So I take the anger, the criticism, and even the hate mail as encouragement.

My publisher suggested I answer my critics. I will pass. My grandmother used to say, Those convinced against their will are of the same opinion still. However, I do not want you, dear reader, to be misled. So it is appropriate that I tell you what this book is NOT. That way you can decide whether or not to spend your hard-earned money on it.

This Book Is NOT Sophisticated or Complicated

If you are looking for a detailed, in-depth guide to investing, you have not found it. If you are looking for boring academic chirping that will put you to sleep using words only to support the author’s ego, you have not found it. What I have discovered is that some of the most profound and life-changing truths you will ever discover are very simple.

In our culture we worship the complicated and the sophisticated. If you know what all the buttons on your remote control do, you may not have a good one. In the financial world we have been taught to be arrogant snobs. Some believe that simple ideas are not profound, that instead, simple ideas are for the little people. That is a false and arrogant notion. I have met with thousands of millionaires, and in almost every case they keep their investing and money philosophies very uncomplicated. Just this week I was discussing investing and business structure with a friend of mine whose net worth is over twenty million dollars, and his words to me were, I always keep it simple and clean. Only the financial goobers like to complicate things for the sake of justifying their existence or justifying how much they paid for their education. Please do not look here for a detailed guide to set up an estate plan or a deep theory on investing. That is not what I do. What I do is help people understand and act on time-honored truths about money that will truly change their whole lives.

This Book Is NOT Something That Has Never Been Said

There are many great money authors out there today, and there are even more in our past. Very little that you read in this book will be something that someone else has not written or said. We often say on our radio show that we give the same financial advice your grandmother would, only we keep our teeth in. I suggest you read a lot of different people, as I do. I have invented very little in this area of money. What I have done is packaged the time-honored information into a process that is doable and has inspired millions of people to act on it. Most of us know what to do; we just have trouble doing it. How do you lose weight? Exercise more and eat less. I know that, and yet I bought and read a couple of books on the subject while I took action, and I lost thirty pounds. Did the authors of those books tell me big ideas that were groundbreaking? No, they simply gave me an action plan and some supporting details to what I already knew had to be done. Welcome to my world.

This Book Is NOT Going to Mislead You on Investment Returns

There are several people in our country today who are ignorant on the returns offered by investing well. Ignorance is not lack of intelligence; it is simply not knowing. Sadly, many intelligent but ignorant people seem to think that making a 12 percent rate of return on their money in a long-term investment is impossible. And that if I state that there is a 12 percent rate of return available, then I have lied to them or misled them.

I recommend good growth-stock mutual funds in this book as a long-term investment and dare to state that you should make 12 percent on your money over time. The supporting data for that bold statement can be found by looking at the historical averages of the Standard & Poor’s 500 index. Widely regarded as the best single gauge of the US equities market, the S&P 500 is an index with five hundred of the largest companies in leading industries of the US economy. The S&P 500 has averaged 11.59 percent per year for the last ninety-plus years, as of this writing. This includes some pretty significant recession periods.

Does that mean you can expect to see 11–12 percent growth every year? Of course not. That’s not how this thing works. The market goes up and down all the time, and sometimes it’s a pretty wild ride. Just looking back over the past few years as of this writing, it looks like a roller coaster. In 2020, the market’s annual return was 18.02 percent. In 2021, it was 28.47 percent. In 2022, it was actually down for the year at -18.01 percent. But true long-term investors don’t worry too much about the year-to-year returns. They look at the history over the long haul, knowing that some years it’ll be up, and some years it’ll be down.

Most experts and anyone who has had even one finance class agree that the S&P 500 is a great statistical measure of stock market returns. This is such a standard, or bellwether, that virtually every stock fund will show you its returns in comparison to the S&P 500. And again, the lifetime average of the S&P 500 is just under 12 percent. That’s why I use it in my examples. It’s not a magic number. It’s just part of the conversation about investing.

I purchased a growth and income stock mutual fund many years ago that I still invest in, and it has averaged 12.03 percent per year since 1934, as of this writing. I bought another last week that has averaged over 13.9 percent per year since 1973, as of this writing. And yet another with average annual returns of 12.01 percent since 1984, and another averaging 12.39 percent since 1973, and yet another averaging 11.72 percent since 1952. Any decent broker with the heart of a teacher can, in his or her sleep, lead you to funds with long track records averaging over 12 percent. So don’t let anyone tell you that you can’t predict a 12 percent rate when you are considering investments for ten years or longer.

This Book Is NOT Just About Math, Statistics, Facts, and Figures

This book is about life. I’ve already said that personal finance is only 20 percent head knowledge. The other 80 percent—the bulk of the issue—is all about behavior. There’s no magic number that will change your life, no interest rate or rate of return that will suddenly turn everything around. That’s why I teach concepts, not mathematical formulas. The economic numbers, averages, and percentages may change over time, but the concepts and principles in this book won’t.

This Book Is NOT Written by Someone with No Academic Credentials

I seldom list my formal academic credentials because, honestly, I don’t think they are important. I have met so many broke people with financial credentials that I almost think it discredits me to have had formal training. Yes, I have a degree in finance. Yes, I have been or am licensed in real estate, insurance, and investments. Yes, I do have many of the stupid letters to put after my name. But the thing that qualifies me most to teach about money is that I have done stupid things with zeros on the end. I have been there, done that. I have a PhD in D-U-M-B. So I know what it is like to be scared and scarred. I know what it is like to have my marriage hanging by a thread because of financial stress. I know what it is like to have my hopes and dreams crushed by my own stupid decisions. That qualifies me uniquely to teach and to love hurting people. The other huge qualifier is that I used the principles I teach to personally build wealth. My wife and I have truly lived this book. The things we teach are not theory—they work!

But the teaching credentials that I am most sure of and which further qualify me are the hundreds of thousands of stories of people across America being set free by this book. This stuff simply works. So don’t take financial advice from broke people.

This Book Is NOT Politically Correct

I stated earlier that personal finance is 80 percent behavior. To properly view behavior and to understand how to change behavior intelligently, we must consider several things. Behavior intelligently viewed takes into account the emotional, the relational, the family history, the socioeconomic impacts, and the spiritual. To ignore any of these while discussing behavior change about money is incomplete and very naive. So I openly discuss the spiritual in this book. As a Christian, I include some Bible verses. This is not a Christian book, and it for sure isn’t a Bible study on the subject of money. But this is a book about a Proven Plan to Financial Peace that my team and I have developed over several decades, and that plan includes addressing the spiritual issues surrounding money. So I upset both sides—those who don’t like it because I include spiritual thoughts in my teachings and those who don’t believe my writing is spiritual enough. Either way, you have been warned.

This Book Is NOT Wrong

Don’t confuse extreme confidence with arrogance. I am extremely confident that this material works because millions of people have benefited from it. I am not arrogant because I realize I am not personally responsible for any of the lives changed. The stuff I teach is the truth, and those principles are responsible for changing lives. But I always answer the same questions with the same answers even though sometimes folks think their situation may be different. It isn’t different. The principles stand, and they work every time.

This Book Is NOT the Same as My Other Books

When we took on The Total Money Makeover project, we had to answer a question of integrity: Could we honestly go into the market and ask my readers to buy another book that said the same thing? I couldn’t in good conscience do that. Financial Peace has sold millions of copies as of this writing, so did I really need to write another book? I came to the conclusion that there was a distinct difference in the two projects. Financial Peace is what to do with money. It is a great textbook for common-sense money management. So how is The Total Money Makeover different? It is more than a what to do book—it is a how to do it plan. This is a process book. We are aiming at carefully weaving inspiration and information together into a step-by-step plan. Yes, you will find in this book a lot of the same subjects, along with many of the same principles I discuss in my other books, but this book is different in that it is a process-driven work.

If you are looking for a ton of new information because you are someone who only gathers facts and figures, then you will be disappointed. If you are looking to engage this money thing head-on, you will love this book. Many Financial Peace readers have told me that The Total Money Makeover gave legs to the concepts to which they had been introduced, so they were thankful to read it as well. But again, don’t look for some big revelation or chapters of new principles.

This Book Is NOT Getting Any Complaints or Criticism . . .

. . . from people who do it. I have never had someone write to me, saying, I got on a budget, got out of debt, got on the same page with my spouse, built wealth—and I HATE IT. 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!

Flying Turkeys and Skinny-Dipping

When I was a child, my grandmother—a second-grade schoolteacher who also taught drama—used to sit me on her knee and read to me. She read with great enthusiasm and a lot of drama.

One of the children’s stories she read to