Book Review: The Total Money Makeover by Dave Ramsey

I owe all of the credit in the world to Dave Ramsey and The The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness for changing my view on personal finance forever. It truly helped me to become financially conscious of how I was spending my money and the several easy changes that I could make in order to better my financial position. The main focus of the book is to eliminate all debt from your lives and, in turn, take the money that you were spending on credit bills and invest the money to have it work for you and better your future. Dave Ramsey outlines a “Total Money Makeover” that can be scaled to work for anyone’s unique financial situation regardless of income or amount of debt.

There are many important areas to The Total Money Makeover that will help to transform people’s finances and their lives. From outlining how to effectively invest for retirement and establish an emergency fund to the dozens of real life examples of people who have benefitted from The Total Money Makeover, readers are walked through step-by-step on how to change their financial position. The one area of The Makeover that made the largest impact on me personally is Ramsey’s “Debt Snowball”. This strategy helps to manage your personal debt and create an effective method to pay it off over time, and a lot sooner than you may think. The main premise of it is to pay off your debts systematically one at a time, starting with your smallest debt. Each time you finish paying off a debt, you are eliminating one more monthly payment that you have to make and can then take the money you save and pay it right back into the next largest debt. By visualizing your debts disappearing one by one it really does motivate you to keep it going, thus creating a “Debt Snowball” and changing your personal finances forever.

“The Debt Snowball”

  1. List all of your debts in order of smallest balance to the largest, regardless of interest rate, including all debts from loans from medical bills, credit cards, car payments, student loans or any other form of debt that you may owe
  2. Pay the minimum payment on each debt to stay current except for the smallest debt
  3. Adjust your budget in any way possible to put any extra dollar into that smallest debt until it is paid off
  4. Add the payment of the previous debt to the payment of the current smallest debt including any extra money generated from budgeting your money until that second debt is paid off as well
  5. Add the payments you were making on the first two sources of debt along with any extra money to debt number three until it is paid off
  6. Continue this cycle up the list until you are able to pay off all of your outstanding debt

This is just one of the many tips and strategies outlined in The Total Money Makeover that can help you to change your personal finances. It won’t be easy and it certainly won’t happen over night, but if you read the book and can truly and honestly commit yourself to changing your lifestyle to get out of debt then it can certainly happen.

How We Handle Our Joint And Personal Finances

One of the largest challenges couples will face when they get married or move in together is how to handle the finances that they both become responsible for. When my wife and myself first moved in together while we were still dating, we created a specific way to handle both our joint finances and our separate personal finances at the same time. There are a number of ways to handle finances as a couple and the way that we handle it has worked greatly over the last four years and it is a way that we will continue to use. It is important to note, however, that this method is only useful if both people have a regular stream of income and can afford to pay half of all finances that will be used fairly equally by both people (i.e. rent, utilities, food, etc). Situations in which one person makes a large amount more than the other person, or if the other person has no form of income, would not benefit from this form of finance handling.

First, all joint finances as mentioned above must be calculated on a monthly basis. On categories such as food, an average monthly budget would have to be calculated and factored into the total amount. Once the total of all joint finances is calculated then each person must contribute half of that amount on a monthly basis (i.e. $2000/month total for joint finances). If each person gets paid on a bi-weekly basis, it may be easier to calculate a “per paycheck” amount that would be automatically contributed to cover the joint finances. Once that amount has been separated from each person’s income, the remaining amount each month is then used for their personal finances (i.e. car loan payments, student loan payments, gas, etc).


What Should Be Done With The Money For Joint Finances?


After you divide your joint money from your personal money you both have to decide how to keep this money separated. In our situation, we decided to open up a “Joint Checking Account” along with a “Joint Savings Account” that would hold the money that we each contributed to each month (part of our monthly joint finances also contained a savings contribution for future large purchases). Having a joint checking account makes paying joint finances a breeze because you can pay all joint bills from just one count without worrying who will pay for what. Each person will have their name attached to the account and receive a debit card in their name to access the funds on the account. The joint account option is only for situations where each person has 100% trust in each other to honor their agreement to use the joint account solely for joint purchases.


Again, this option is a great option for couples who want to live together and can each afford to contribute equally to joint finances, but it is not a one size fits all plan. We have had great success with this method and having the separation of joint and personal finances has led to zero arguments over finances because we are each contributing to the monthly bills in a fair and equal matter. The money that we each have left over can be spent however we want , again, as long as the joint account is funded first.




What Is A Credit Score?

Aside from your Social Security Number, your credit score may be the most important number to know in order to help you get any form of loan. Your credit score tells banks and other lenders your creditworthiness and whether or not you are likely to repay your debts based on your previous payment history, along with your current lines of credit and the usage of these accounts. The higher your credit score is, the more likely you are to be granted your applied loan, and generally for a lower interest rate.

Though the factors that determine your credit score are rather complex, the main factors that determine your score are on-time payment history, amount of current debt, length of credit history, forms of credit, and credit inquiries. Any derogatory marks on your credit history (bankruptcy, foreclosure, etc) will have a profound impact on your report for many years to come.

Welcome To Financial Millennial

Hello and welcome to Financial Millennial!!

The main goal of Financial Millennial is to provide financial resources to all of the proud members of Generation Y(oung). There are millions of places to get financial tools and resources, but a majority of these are geared towards those in the latter half of their life and are closer to the end of their working careers than the beginning. Millennials are generally new to the workforce and therefor new to all of the savings and spendings that come with it. With everything from creating and managing a budget to saving to buy a car or even a house, Financial Millennial aims to be your number one resource for how to set and reach all of your financial goals.