The Total Money Makeover Summary – Dave Ramsey’s Best Personal Finance Book

Dave Ramsey, the host of the Ramsey Show, is known worldwide as one of the most impactful personal finance gurus in this space. Any of Ramsey’s books offer extreme value to the reader, and more so on his blog and website.

Books that not only contain helpful information but give you a direct link to the author and their materials will always provide much more value than what you paid for.

Here is a summary of The Total Money Makeover: A Proven Plan for Financial Fitness highlighting the best concepts and ideas we have got from reading it and we are also going to tell you whether it is worth reading the complete book.

The Total Money Makeover Book Summary

Written in 2003, when personal finance was not as well known due to a generally positive economy, The Total Money Makeover started rapidly rising to fame during the 2008 financial crisis and has sold 5 million copies since its publication. The real value that comes from Dave Ramsey’s book is that this is a guide for people that are starting from less than nothing.

Total Money Makeover Summary - Dave Ramsey's best book
Other popular financial books will show you a path to becoming a millionaire, as this is societal popularity, however, most people need help just understanding the basics and getting their life together before becoming wealthy. As a general rule, due to a very scarce curriculum in the schooling system regarding financial literacy, chances are most readers will be irresponsible with money before reading any materials.

The Total Money Makeover can be broken down into three pieces of advice, which you can track as milestones to your success. As you go through these points, remember that some exact numbers may be out of date as this was almost 20 years ago, but the guide is timeless.

Save $1,000 in a fund for emergencies

Before beginning any journey towards becoming a millionaire or a rapid financial success, readers are introduced to the most basic of advice: putting money away. The average person right now, and at the time of printing, would not be able to afford a small emergency such as having your vehicle break down. In most cases, having the $1000 would get your car up and running again. Most people would need to put this expense on their credit cards so that they can continue working and getting between places.

It is more than likely that around 80% of people will experience at least one major negative event in a given 10 year period of life. This is why the first step is to save $1000. It teaches you two different things:

  1. $1000 is not enough to fix all your problems, but it is enough to pay for a small emergency. It also teaches you an important life lesson, you do not need to repair your entire life in an instant, take it to step by step. Even if an emergency ends up costing $2000, you already have half of it ready!
  2. Saving $1000 is a great money psychology trick as it is a significant sum for those that have no savings or are in extreme debt. When debt is large, most find saving pointless as they believe that money will fly out of the window as soon as it’s earned. Anyone with any situation can and should be able to put away $1000 in a given period.

Debt Compounding: Magic Working Against You

Albert Einstein was quoted that he called compounding “The 8th wonder of the world”. Those in the financial industry describe compounding as magic. This magic can be benevolent when working for you, and malicious when working against you.

Humans have a hard time grasping the power of an exponential increase as we are biologically programmed to think linearly. A 10% rate of return can yield upwards of 400k in 30 years with only 200/month invested, but credit card debt of 20% for 30 years would cripple you financially.

With all this being said, most authors would write that paying off your high-interest debt first is the best way to tackle your finances when you’ve saved a small emergency fund. Dave Ramsey posits the second school of thought and was made popular by this book. You now can tackle this two ways:

  1. Pay off all high-interest debt (credit cards, payday loans, etc.)
  2. Pay off the smallest debt first as quickly as possible, regardless of the loan rate.

When first reading the second point, you may think that logically this does not make any sense. The best and smartest approach would be to maximize your earnings by paying down debts that are as high as possible and only stop paying down debts when they are smaller than your rate of return on investments and employment.

Humans are again, biologically wired, more emotional than logical. It is a useful tool as it has gotten the human race out of many situations in the past by trusting your gut and preparing yourself mentally.

This “debt snowball” approach may not be efficient, but it is effective. Paying off your smallest loans first, whether it was $20 from a friend with no interest, or a $200 payday loan may be more impactful on your financial situation than immediately chipping away at a $200,000 student debt loan.

Eliminating debt will show you that you have control over your finances quicker, and this snowball effect will increase your savings, earning potential, and investing habits shortly.

Keep Growing Your Emergency Fund to Cover Dire Emergency Situations

Before investing, having an emergency fund for truly extreme situations will give you the peace of mind you need to eventually begin investing and eliminate bad debt to kick start your future.

Ramsey suggests three months of expenses, but as we have seen with recent events, the recommendation from this book has grown to be between 6 and 12 months of expenses. If you lost your job tomorrow and could not pay for shelter and food for the next six months, alarm bells would be ringing.

When doing this exercise, remember that these expenses need to cover basic living costs and not cover your current lifestyle if it’s lush with entertainment and spontaneous purchases. For most family households, this would be around $3000 a month.

This means that an emergency fund should be $9000 on the low end and 18,000 at the mid-point.

The Total Money Makeover review & should you read the complete book?

This book can be recommended to absolutely anyone that is old enough to start thinking about credit cards and school debt. It is also for working professionals that seem to have a handle on their career, while their lifestyle just keeps getting worse and cannot enjoy their life. A 16-year old that reads this before getting their first credit card in a few years will avoid mistakes, and a 40-year-old may finally be able to take control of their finances and enjoy a vacation or two.

Critics of this book have had words to say about the “debt snowball” effect, but as mentioned above, if this is looked at from a psychological point of view, it may be more beneficial to your circumstance. Try both methods and see how they work!


Debt will always be a very ugly thing in life if it gets the better of you, and is an expense and seems to never end. If you are always paying interest payments, they will never go away and the loan originator will just keep getting richer.

Establish a small emergency fund and start paying off debt in their entirety right away, and for the larger sums make sure to pay more than just interest and call the bank or loan company to negotiate a lower rate. No matter where you are in life, you can always have a total money makeover.

Marilyn Nissen
Written by Marilyn Nissen

Marilyn Nissen is the founder of, a highly reputable book summary and reviews website. With over a decade of experience in summarizing and reviewing books, Marilyn is a trusted authority in the book industry.