Where to get started with Dave Ramsey

I have made frequent references to Dave Ramsey and the 7 Baby Steps in these posts. I’m a huge fan of Dave Ramsey. The things he teaches dramatically changed our lives from a financial standpoint.

There are no magical silver bullets. What Dave teaches is basic common sense for the most part. In fact, I suspect that had he been trying to do this 60 years ago, he would have probably found very little market for his books. The things he teaches were the way people commonly lived. Sadly, common sense isn’t so common anymore and Dave has sold a lot of books that basically just teach what your grandparents would have known.

Probably two of Dave’s most popular books are The Total Money Makeover and Financial Peace Revisited. These two books overlap to some degree and basically present the core of his views on personal finance.

So which one should you read? What is the difference between them?

Financial Peace Revisited

I believe this was Dave’s first book. The original copies were self-published and he sold them out of the back of his car. It was written out of the lessons he learned as his financial life crashed and burned when he was in his 20’s. Dave’s family was in the real estate business and he followed suit. He became a millionaire in his 20’s buying and selling real estate, however he was deeply leveraged in the process. Things came crashing down when the economy hit some bumps and the banks decided to call his loans due. He tried to keep his head above water for a while, but finally declared bankruptcy when one of his lenders notified him that they were planning to repossess the baby furniture in his daughter’s room.

Having hit bottom, he quickly determined that his way of handling money was a disaster and there must be a better way. Christian finance writers like Larry Burkett were a huge influence on him as he worked to rebuild his life.

Financial Peace Revisited reflects those basic philosophies in a variety of areas that grew out of that time of his life. It covers a wide variety of topics including: budgeting, careers, getting out of debt, investing, understanding credit, negotiating and getting good deals, money and relationships, teaching your children about money, and seeking wise counsel.

For me this book is more about the understanding the “why’s” of personal finance. It contains a little bit of how to, but for example it is much more focused on why debt is dangerous than it is about how to get out of debt.

The Total Money Makeover

That brings us to the related book The Total Money Makeover. While Financial Peace discusses why, this is the book that will help you understand the practical how to. This was actually the first book of Dave’s that I read and it was the book that gave me the hope that I could escape the paycheck to paycheck life I was leading. I will never forget the day I was thinking through a few of the things I had read, doing some quick math in my head, and the sudden flash of hope I had that it really was possible. That there really was a way I could get some traction and get myself out of debt. It wouldn’t be easy but it could be done. That was a great feeling.

The Total Money Makeover starts with some chapters about understanding debt and the toll it takes on our lives. It then plunges right into the 7 Baby Steps.

  1. Get $1000 starter emergency fund
  2. The Debt Snowball
  3. Increase your emergency fund to 3-6 months
  4. Begin saving 15% of your income for retirement
  5. College funding if you have children
  6. Pay off your home
  7. Live like no one else and give like no one else.

One of the things I like about this book is in addition to Dave’s teaching at each stage along the way he shares stories of real folks that they have worked with through the years. How they struggled with that particular topic and how they overcame those struggles. Those stories were very encouraging to me as I read the book that first time. I figured if they could do it so could I.

 Both books have a place

The two books have a related message and in some ways cover the same ground. I do think though they come at it from separate angles and they both fill a purpose. If I had to choose only one, I would probably choose the The Total Money Makeover. If you are struggling with debt this is a book that will give you the tools to make a change. Financial Peace Revisited on the other hand will give you a sound base of financial knowledge across a range of topics.

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