The Total Money Makeover
A Proven Plan
The Total Money Makeover is a step-by-step plan to achieve financial peace, focusing on behavior change and common sense principles. The plan is simple, yet inspiring, and has been successfully implemented by millions of people. It involves a series of 'baby steps' that help individuals and families get out of debt, build wealth, and achieve financial stability.
- Personal finance is 80% behavior and 20% head knowledge.
- The math of wealth building is not rocket science, but it requires action.
- Common sense is not always common, but it is essential for achieving financial peace.
- Save $1,000 FastThe first step in the Total Money Makeover plan is to save $1,000 as quickly as possible. This provides a foundation for further financial progress and helps individuals and families build momentum.Pro tipConsider selling items you no longer need or taking on a part-time job to accelerate your savings.WarningAvoid using credit cards or taking on debt to achieve this step.
- The Debt SnowballThe debt snowball involves paying off debts one by one, starting with the smallest balance first. This approach helps build momentum and provides a sense of accomplishment as each debt is eliminated.Pro tipConsider consolidating debts into a single, lower-interest loan or balance transfer credit card.WarningAvoid accumulating new debt while paying off existing debts.
- Finish the Emergency FundThe goal of this step is to save 3-6 months' worth of expenses in a easily accessible savings account. This provides a cushion against unexpected expenses and helps individuals and families avoid going further into debt.Pro tipConsider setting up automatic transfers from your checking account to your savings account.WarningAvoid using your emergency fund for non-essential expenses.
- Maximize Retirement InvestingThis step involves contributing to tax-advantaged retirement accounts, such as 401(k) or IRA, to build wealth over time.Pro tipConsider taking advantage of employer matching contributions to maximize your retirement savings.WarningAvoid withdrawing from your retirement accounts for non-essential expenses.
- College FundingThis step involves saving for your children's college education using tax-advantaged accounts, such as 529 plans.Pro tipConsider setting up automatic transfers from your checking account to your college savings account.WarningAvoid using your retirement accounts to fund your children's college education.
- Pay Off the Home MortgageThe goal of this step is to pay off your home mortgage, which can free up a significant amount of money in your budget.Pro tipConsider refinancing your mortgage to a lower interest rate or making extra payments to accelerate payoff.WarningAvoid using your home equity to fund non-essential expenses.
- Build Wealth Like CrazyThis final step involves building wealth through investing and other means, such as starting a business or investing in real estate.Pro tipConsider working with a financial advisor to develop a personalized investment plan.WarningAvoid taking on too much risk or investing in things you don't understand.
Dave Ramsey and his wife, Sharon, followed the Total Money Makeover plan and achieved financial peace. They paid off debt, built wealth, and are now helping others achieve financial stability.
An entrepreneur followed the Total Money Makeover plan and was able to pay off debt, build wealth, and start a successful business.
Dave Ramsey developed the Total Money Makeover plan based on his own experiences with financial struggles and his observations of millions of people who have followed his advice. He has packaged time-honored information into a doable process that has inspired millions to take action.