The Total Money Makeover Workbook: Classic Edition: The Essential Companion for Applying the Book’s Principles

The Total Money Makeover Workbook: Classic Edition: The Essential Companion for Applying the Book’s Principles

by Dave Ramsey

ISBN: 9781400206506

Publisher Thomas Nelson

Published in Business & Investing/Personal Finance, Religion & Spirituality

Are you an AUTHOR? Click here to include your books on

Sample Chapter

The Total Money Makeover Challenge

Key Concept #1

No Money ... Is No Fun

I remember the feelings vividly. For several years in my twenties, I faced the end of every month with dread. I had too much month left at the end of my money. I was not having fun.

I wasn't afraid of hard work and sacrifice. I didn't need a secret formula for making money. I didn't need a positive-thinking guru to pump me up and tell me to have a positive attitude. I was simply sick and tired of being sick and tired when it came time to "do the bills." I felt hopeless, as if I were running a financial race with no traction and no ground covered. Money came in and money went out, with nothing real to show for my effort or income.

What About You?

Do you feel as if you have full control over your money ... or are your bills controlling you? The amount of control you have over financial matters is often reflected in how you feel about money matters in general.

The same thing is true, of course, when it comes to any area of your life in which a "makeover" might be needed.

If you are in very bad health — or your physician tells you that certain numbers in your lab reports and exams are "abnormal" — you may become highly motivated to undertake a new exercise, diet, or better-health plan. If your spouse tells you the end of your marriage is on the horizon, you may become highly motivated to seek out a counselor to help you revamp the way you relate to your spouse and to improve your marriage. There's a feeling that hits the pit of your stomach when you finally wake up and say to yourself, "Something's got to change! I can't continue to live this way ... the fact is, to continue this way isn't really living. It's just existing, enduring, putting in the time and the miles and hoping I end up somewhere I like."

Before you are truly willing to embark on a Total Money Makeover, you need to face up to how you feel about your current financial situation. That will tell you how motivated you are to do something about changing your financial situation.

Plain and simple, if you like your current financial situation, you probably feel pretty good about money matters, and you don't need a makeover.

On the other hand, if you don't like your current financial situation, you probably feel pretty lousy about your finances. A makeover is for you!

Key Concept #2

If You Don't Know How Money Works ... What Future Is There in Working for Money?

When I was in my late twenties, my wife and I went broke. We lost everything due to my stupidity in handling money, or not handling it. We hit bottom hard and lost everything. It was then that I began a serious quest to learn how money works. I came to realize:

1. It's up to me. My money problems, worries, and shortages largely began and ended in my mirror — nobody "made" me poor or a bad money manager. I had to take full responsibility for my own stupidity.

2. God's and Grandma's way of handling money works. Wealth building isn't rocket science. The principles are simple, time-proven, and effective. In a nutshell, "spend less and invest more" is a five-word financial strategy that every person over the age of five can comprehend!

3. Winning at money is 80 percent behavior and 20 percent head knowledge. It's not enough to know good financial principles — it's acting on those principles that's important.

What About You?

One of the first things a fitness adviser will ask a person is this: What are you looking to achieve? To answer this question, the adviser might suggest that you stand in front of a mirror to take a long, hard look at yourself or to reflect on what workout strategies you've done in the past. Do you like the place where you are physically? If not, are you willing to own up to the fact that you are the person who is in charge of your body and your health? Are you willing to own up to the fact that the three basic principles of fitness aren't all that difficult to comprehend? Eat less, eat the right foods, and exercise more are concepts even a child can understand.

Are you willing to own up to the fact that it doesn't matter how much you know about diet plans, good nutrition, or exercise unless you are willing to put what you know into high gear? You won't get fit unless you actually eat right, eat less, and exercise more.

These are givens in achieving physical fitness.

The same is true for financial fitness.

Key Concept #3

Take a Short, Painful Walk into a Lifetime of Success

This Total Money Makeover Workbook is based on one very simple motto:

If you will live like no one else now ... later you can live like no one else.

Living like no one else now means living a sacrificial, highly focused, purposeful life when it comes to your money.

Living like no one else later means living without the worry, frustration, stress, or fear that comes from constantly being on the brink of financial disaster. It means living later with feelings of confidence, hope, and joy related to money.

What About You?

Are you willing to change you? Honestly?

According to a survey by the marketing research company Mintel, 43 percent of Americans say our modern lifestyle makes it much harder to be healthy, and 80 percent acknowledge that "being healthy requires sacrifices." Many people who want to be healthier would say, "Yes, I need to change. I'd like to change." But when it comes right down to changing, they don't change. Why? The foremost reason is because they don't like change — period. They don't want to alter any aspect of their lives. They see change as difficult to impossible or, at the very least, uncomfortable.

I agree. Change always has an element of sacrifice to it. It always has an element of self-denial. Any change that truly results in growth or improvement has an element of pain associated with it.

So let me ask again: Are you willing to change you?


I'm Not That Out of Shape: DENIAL

Key Concept #1

Most People Are Not as Well Off as They Think They Are

For years I've conducted live financial seminars in which I've relayed this shocking fact:

Seventy percent of Americans live paycheck to paycheck.

This statistic, of course, means that only 30 percent of Americans don't live paycheck to paycheck. Fewer than one out of three of us have something set aside to allow us not to face a money problem if we miss one paycheck.

It amazes me when I ask an audience at the start of a seminar, "Are you in the 70 percent group or the 30 percent group?" ... and the majority of the people say they are in the 30 percent group. By the end of the day, the vast majority are willing to admit the truth: they are in the 70 percent group.

What About You?

The mirror very rarely lies when it comes to physical fitness and health. Many physical problems are evident — if not immediately, eventually. Even if a person isn't visibly overweight, he or she still can be "unfit," which will show up in skin tone, the condition of hair and nails, stooped-over posture, dark circles under the eyes, a pale or "in pain" countenance, and so forth. Poor health can be hard to camouflage, even with expensive makeup.

On the other hand, good physical fitness is evident. The physically fit person has a sparkle in his eyes, a bounce in his step, a glow to his face, a relaxed demeanor that is, at the same time, ready to burst with energy.

Sadly, financial fitness is far less evident. Many people have fooled themselves into thinking they are much more fit than they actually are.

Case Study: Sara and John

Sara and John had a combined family income of $75,000 a year. They had the so-called normal debts of many couples in their age and income ranges: a small student loan, a car loan, and about $5,000 on a credit card. They had virtually no savings — just a few hundred dollars in a second interest-bearing checking account that they called a "savings account." Nonetheless, Sara and John told themselves they were doing well — in fact, they told themselves they were really on top of things financially. So they decided to build a new house.

Both John and Sara later admitted to having a few uneasy feelings about building a new and larger house, but they figured they were experiencing normal jitters, and they forged ahead. They moved into their new house in May, and then in September, Sara was called into a meeting with her boss. She was expecting a promotion and raise for the good work she had done. Instead, she learned that her company was downsizing, and she was out of a job!

In one day, the family income went from $75,000 to $30,000. By the end of the day, not only was Sara reeling from feelings of rejection and wounded pride, she was feeling the tentacles of financial failure creeping toward her and her family. She and John sat down with their budget, and they didn't like what they saw as a new bottom line. They went to bed that night aware that foreclosure on their new house might be a reality in the near future.

Sara told me, "We took a long, hard look in the financial mirror, and we saw 'fat' people who were terribly out of shape financially. We knew we had to cut back dramatically and immediately if we were going to survive for even a few weeks without my income."

Motivated to a great extent by feelings of sheer panic, Sara shifted into high gear in her search for a new job, and fortunately, she was able to find a position and embark on an entirely new career path in about a month. She said, "I knew I was one of the lucky ones. Some of the others who were downsized didn't find jobs for four, six, even nine months."

The feelings of panic for Sara didn't disappear with the new job. She and John talked at length about their financial goals, and Sara admitted to John that she never wanted to feel such panic and dread again. She said, "I didn't feel the least bit exhilarated at the risk of not having a job. I felt more vulnerable and nervous than ever in my life. I told John I didn't ever want to have those feelings again. I feel very fortunate that John understood my feelings and didn't criticize me for them. I told him I was willing to make any sacrifices we had to make in the next several years if it meant achieving some level of financial security."

The most important change for Sara and John came when they decided that they would seek to live at a financial level that required only one income, not two. They mutually agreed to cut back their spending and work at paying off their loans. Their goal was to need only half of their combined family income for basic living expenses. They decided the other half would be money they would invest in retirement or use for an occasional trip or luxury. They also decided they would live on a cash basis, without credit cards or loans other than the house mortgage.

It took Sara and John a little over two years to get to the point where they had paid off the school loan, the credit cards, and the car loan, and they had put some money away in an emergency fund. They decided the emergency fund needed to include an amount of money that reflected three months of their expenses. Their reasoning was that surely the person who had lost a job would be able to find another job in three months.

Sara and John currently have only their house mortgage as an outstanding debt. Overall, their monthly bills have been reduced by about 40 percent. Meanwhile, John has received a raise, and so has Sara. They are paying down the principal of their mortgage to reduce their monthly payments. As they stand right now, they are within a year of having their monthly bills balanced against their income so they could live on HALF their combined family income.

Are Sara and John excited about their progress? Absolutely. Sara said with a great deal of confidence, "We know where we are, we know where we are going, and we know how we are going to get there. We are no longer living in denial about where we are financially. We know. We are no longer living the lie we were living when I lost my job — the lie that 'everything is just fine.' Today when I say, 'Things are fine,' they really are fine. And they are fine because we faced reality, made some drastic decisions, and worked very hard to change our financial situation so we are at a level that is both comfortable and realistic."

Key Concept #2

If You Don't Do Anything ... Things Will Get Worse!

Many people think that if they don't do anything about their current money situation, magically and mystically and miraculously, things will get better. They are wrong. Things will get worse.

The old story goes that if you drop a frog into boiling water, he will sense the pain and immediately jump out. But if you put a frog in room-temperature water, he will happily swim around in it. You can gradually turn up the water to the boiling point, and the frog won't sense the change or react to it ... and in the end, he will boil to death.

That's where millions of Americans are when it comes to their financial state. They are unfit financially but believe deep down inside that fitness will occur without any effort on their part. They aren't aware that the "temperature" of their debt is just getting warmer and warmer.

What About You?

Are you truly better off financially today than you were last year, or last decade? I challenge you to do the next exercise!

Key Concept #3

Denial Is Not the Same as Being Uninformed

There are some people who are uninformed about their finances. They have never really stopped to evaluate their financial situation. They don't know how to make a budget and, therefore, have never made one or attempted to live by one. They simply "don't know" about assets and liabilities.

In some cases, this ignorance comes about because one spouse allows another spouse — or a parent allows a child, or a grown child allows a parent — to make all the financial decisions and conduct all the financial transactions. These people are willfully ignorant. They don't think they need to know about money and, therefore, they don't learn about their own finances.

Living in denial is a very different case. Denial is knowing the numbers related to your financial condition but choosing to ignore them and to live as if you didn't know them.

It's not good to be either financially uninformed or financially in denial. I strongly encourage you to become both smart and wise — smart in knowing where you stand financially, and wise in facing the fact that you may be standing in financial quicksand.

What About You?

Are you financially smart — informed about where your money is, how much you actually have, and what you actually need on a monthly or an annual basis?

Are you financially wise — realistic, facing the facts, living in the reality that the financial decisions of today will greatly impact your financial well-being tomorrow?

Case Study: Jim

Jim graduated from college at the age of twenty-two and felt ready to take on the world. He got a good entry-level job working for a respectable business in his community — at a starting salary of $28,000 a year — and felt that he was on his way.

He was shocked when the bills started pouring in. While in college, Jim had lived in the dorm and eaten most of his meals in the college cafeteria — both of which had been paid for by his parents and school loans. He had worked part-time, which had provided money for gasoline for his truck, a couple of pizzas every week, and an occasional date. His part-time income also allowed him to pay "the minimum" on several credit cards.

Out of college, Jim soon discovered that he had not only apartment rent and grocery bills to pay, but also utility bills, cable TV and phone bills, and within a few months, school loans to repay. To compound his problem, he had charged several hundred dollars on both existing and newly issued credit cards to purchase items he felt he needed to start out life in an apartment of his own.

After six months of being in an apartment alone, Jim was having serious difficulty making ends meet. He felt angry that he no longer seemed to be as "well off" as he had been in the dorm — there wasn't even enough money for the pizzas and dates he had once enjoyed!


Excerpted from "The Total Money Makeover Workbook: Classic Edition: The Essential Companion for Applying the Book’s Principles" by Dave Ramsey. Copyright © 2013 by Dave Ramsey. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
Thanks for reading!

Join BookDaily now and receive featured titles to sample for free by email.
Reading a book excerpt is the best way to evaluate it before you spend your time or money.

Just enter your email address and password below to get started:


Your email address is safe with us. Privacy policy
By clicking ”Get Started“ you agree to the Terms of Use. All fields are required

Instant Bonus: Get immediate access to a daily updated listing of free ebooks from Amazon when you confirm your account!

Author Profile

Dave Ramsey

Dave Ramsey

Dave Ramsey is a personal money management expert, an extremely popular national radio personality and best-selling author of The Total Money Makeover. In his latest book, a follow-up of his enormously successful New York Times best-sellers Financial Peace and More Than Enough, Ramsey exemplifies his life’s work of teaching others how to be financially responsible, so they can acquire enough wealth to take care of loved ones, live prosperously into old age, and give generously to others.

Ramsey knows first-hand what financial peace means in his own life – living a true rags-to-riches-to-rags-to-riches story. By age twenty-six he had established a four-million-dollar real estate portfolio, only to lose it by age thirty. He has since rebuilt his financial life and now devotes himself full-time to helping ordinary people understand the forces behind their financial distress and how to set things right – financially, emotionally, and spiritually.

Ramsey offers life-changing financial advice as host of a nationally syndicated radio program, “The Dave Ramsey Show,” which is heard by nearly 4.5 million listeners each week, on more than 450 radio stations throughout the United States.

Ramsey is the creator of Financial Peace University (FPU), a thirteen-week program that helps people dump their debt, get control of their money, and learn new behaviors around money that are founded on commitment and accountability. More than 750,000 families have attended FPU classes at their workplace, church, military base, local nonprofit organization, community group or Spanish speaking organization. The average family pays off $5,300 in debt and saves $2,700 in the first 91 days after beginning FPU and is completely out of debt, except for the mortgage, in 18 to 24 months.

Ramsey created a group of products in an effort to teach children about money before they have a chance to make mistakes. Financial Peace Jr. is an instructional kit designed to help parents teach their young children about working, saving and giving their own money. Through Ramsey’s entertaining children’s book series, The Super Red Racer, Careless at the Carnival, The Big Birthday Surprise, My Fantastic Fieldtrip, A Special Thank You, and Battle of the Chores, children learn about working, saving, giving, budgeting, integrity, and debt.

On Oct. 15, 2007, Ramsey added television host to his title when “The Dave Ramsey Show” on Fox Business Network debuted nationally.

Ramsey earned his B.S. degree in Finance and Real Estate from the University of Tennessee. A frequent speaker around the country at large-scale live events, Ramsey is a passionate and inspiring presenter who is at ease on both sides of the mike. More than 650,000 people have attended Ramsey’s LIVE events.

Biography Courtesy of Dave Ramsey

View full Profile of Dave Ramsey

Amazon Reviews