50 pages • 1 hour read
Dave RamseyThe Total Money Makeover: A Proven Plan for Financial Fitness
Nonfiction | Book | Adult | Published in 1994A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Chapters 6-11Chapter Summaries & Analyses
Chapter 6 Summary: “Save $1,000 Fast: Walk Before You Run”
Chapter 6 introduces the Total Money Makeover plan. The plan involves seven “Baby Steps,” taken in a fixed order, one at a time. It advocates for achieving small goals individually because incremental, observable progress boosts confidence: “The power of focus is what causes our Baby Steps to work. When you try to do everything at once, progress can be very slow […] If you feel that nothing is getting done, you will soon lose energy for the task of money management altogether” (94). The Baby Steps are specifically ordered to ensure success.
Ramsey makes three preliminary observations before discussing Baby Step One. First, he insists that having a written budget is essential. Second, he emphasizes the importance of agreement between couples in pursuing financial goals. Third, he points out that passion and perseverance are required for victory.
Baby Step One is an emergency fund of $1,000. Ramsey stresses that this “rainy-day” fund is only for emergencies—car repairs and grown kids moving back home, not an attractive sale on a TV. He also stresses getting the money quick. He then urges readers to keep this money hidden (to prevent impulse spending) but also accessible as “liquid, available cash” (107). He acknowledges that many readers with some savings will finish Baby Step One instantly, but he also tells the story of Lily, a struggling single mother for whom Baby Step One was a profound emotional and financial turning point.
Chapter 7 Summary: “The Debt Snowball: Lose Weight Fast, Really”
Chapter 7 presents the “toughest” Baby Step: becoming debt-free (except for the house). The reasoning is simple: “[I]t is easy to become wealthy if you don’t have any payments” (109). Ramsey encourages what he calls the “Debt Snowball” method—listing and paying off all debts “in order of smallest payoff to largest” (114). He promotes this method because the immediate reward of paying off the little debts motivates continued effort and because it builds momentum: Once the smaller debts are paid, the money that they formerly drained is applied to the larger debts, paying them off faster. Ramsey uses the metaphor of a snowball accumulating speed and size as it rolls downhill. He reiterates that focus and intensity are essential, referencing Proverbs 6:1 and 5, which advocates for escaping debt through the metaphor of a bird or gazelle fleeing a hunter. Ramsey wants his readers to become “gazelle intense,” ready to run for their financial safety.
Ramsey discusses selling things and increasing income through extra work as options for accelerating debt elimination, emphasizing that “extreme situations require extreme solutions” (127). He tells two stories of individuals who worked oppressive hours but “smile because they have caught the vision” (128). He discourages readers from investing in retirement during this baby step, forbids the obvious backward step of acquiring new debt, and discusses exceptions such as second mortgages, business debt, and rental property debt. He concludes by estimating that most people can finish Baby Step Two in a little under two years with real effort.
Chapter 8 Summary: “Finish the Emergency Fund: Kick Murphy Out”
Baby Step Three expands on Baby Step One: Contribute to the emergency fund until it “covers three to six months of expenses” (133). Ramsey reiterates that emergencies will occur sooner or later and reclarifies what emergencies are and what they are not. “Murphy” in the chapter’s title refers to Murphy’s Law, the idea that if something bad can happen, it will. He again advises keeping the fund accessible, meaning not locking it away in investments or Certificates of Deposit. He discusses how big the fund should be, demands an all-in attitude from individuals and families, and explains that the emergency fund means more to women than men, encouraging husbands to consider their wives’ peace of mind a “great return on investment” (144). He encourages readers with the observation that as they continue in their Total Money Makeover, “What used to be a huge, life-altering event will become a mere inconvenience” (146). He briefly considers cases in which Baby Step Three should precede Baby Step Two, discourages buying a home before completing Baby Step Three, and urges readers on with the promise that now they can finally begin accumulating wealth.
Chapter 9 Summary: “Maximize Retirement Investing: Be Financially Healthy for Life”
In this chapter, Ramsey talks about Baby Step Four: “Invest 15 percent of before-tax gross income annually toward retirement” (155). Ramsey begins by defining retirement as security and the freedom to pursue passion projects rather than the mere ability to quit an awful job. He stresses the importance of investing in retirement early with depressing statistics from USA Today: “[O]ut of one hundred people aged sixty-five, ninety-seven of them can’t write a check for $600, fifty-four are still working, and three are financially secure” (154).
Ramsey proceeds to justify his 15% rule and summarize his preferred investment strategy. He recommends growth-stock mutual funds with positive long-term records and encourages taking advantage of matching and tax benefits available in 401(k) plans and individual retirement accounts (IRAs) like Roth IRAs. He provides a simple metric for determining when one has saved enough to retire: If a person can live comfortably on 8% of their total investments each year, they are in the clear. Ramsey does the math with an average American household income and shows that retiring with millions is possible, even easy. He therefore urges everyone to invest, especially young readers, because investing is a long-term process in which beginning early allows compound interest to boost progress exponentially. Ramsey knows this is exciting stuff: “Your life is changing! This is fun!” (167), he cheers.
Chapter 10 Summary: “College Funding: Make Sure the Kids Are Fit Too”
Baby Step Five is simply helping the kids through college. Ramsey states that college is important, but he takes pains to dispel the illusion that going to college guarantees a job and wealth because he believes that illusion encourages many bad financial decisions. College is a luxury, he claims, not a necessity, and “certainly not […] a reason to go into debt” (170). Ramsey encourages readers to do their research on various schools and compare costs. Insisting in unambiguous words that “student loans are cancer” (170), he proceeds to provide readers with an alternative: “reasonable, attainable goals for saving for college” (172).
Ramsey reports that because college tuition rises faster than inflation, merely saving money isn’t good. He dismisses Baby life insurance, savings bonds, and even prepaid college tuition, which only breaks even with tuition inflation. Ramsey discusses and recommends Educational Savings Accounts (ESAs) and 529 plans. For those with less time he recommends strategies such as work-study programs, attending cheaper schools, military service for educational benefits, summer sales jobs, and, of course, applying for scholarships.
Chapter 11 Summary: “Pay Off the Home Mortgage: Be Ultrafit”
Baby Step Six of the Total Money Makeover is knocking out the only debt left: the mortgage. Ramsey urges his readers not to become complacent once they reach this step. He inspires them to imagine what they could do with their income if they had no payments: “[Y]ou’d be a debt-free millionaire before long” (186).
The chapter tackles six mortgage myths. Ramsey denies that the tax advantages of mortgages outweigh the costs in interest. Due to taxes and risk, taking on a low-interest-rate mortgage to invest more money ultimately isn’t beneficial. He condemns taking on a 30-year mortgage instead of a 15-year mortgage: “Thirty-year mortgages are for people who enjoy slavery so much they want to extend it for fifteen more years and pay thousands of dollars more for the privilege” (191). He warns against Adjustable Rate Mortgages (ARMs), balloon mortgages, and home equity loans because they confer risk to mortgagers. Finally, he insists that paying cash for a home—no mortgage at all—is possible, though it requires sacrifice. He remarks that it takes most people seven years to complete this baby step after beginning the Total Money Makeover plan. He motivates readers by assuring them thousands have reached this point and that “the grass will feel different under your feet when you own it” (201).
Chapters 6-11 Analysis
Chapters 6 to 11 describe the solution to financial ignorance, completing the Total Money Makeover plan. The “Baby Steps” that constitute the Total Money Makeover are conceptually simple, though they might take years to complete. This emphasizes the theme of Plain, Practical, Proven Principles. The Total Money Makeover plan is not an innovative scheme for quick wealth, but an ordinary, logical, non-miraculous progression. Ramsey writes at his most systematic, practical, and informative in describing these steps, but the major emotional themes and ideas of the book still suffuse his words.
Chapter 6 significantly opens with an explanation of the “Baby Steps” that foregrounds the idea that Motivation Matters More Than Knowledge. Ramsey finally transfers all the anxiety and fear he generated in earlier chapters into energy to run toward a solution. He begins with a goal he consider small, saving $1,000, because he wants readers to experience an immediate victory. He assumes many readers can finish the chapter and pat themselves on the back for already having completed Baby Step One. An anecdote in the form of Lily’s story gives powerful emotional resonance to this first victory—Ramsey is cleverly showing that all the credit cards, all the fancy cars, all the purchases in the world, cannot bring financial peace, but a little money saved, just the beginning of the Total Money Makeover plan, can be a “spiritual and emotional” (107) turning-point.
He uses the same strategy in Chapter 7 by encouraging readers to pay off smaller debts before larger ones—the easy victories are prioritized to motivate more success. Ramsey’s emphasis on motivation reaches its zenith in this chapter with the metaphor of the gazelles. Ramsey also relies on metaphor in his explanation of Baby Step Two as the “Debt Snowball” method. The use of the gazelle metaphor exemplifies Ramsey’s willingness to introduce spiritual arguments into his persuasive strategy—he elevates getting out of debt to biblical proportions by referencing the Bible and referring to the transformative power of taking control of one’s finances.
In Chapter 8, Ramsey supports the establishment of an emergency fund primarily by emphasizing the emotions of peace and security readers will feel having one. This highlights the theme that Financial Improvement Is Self-Improvement. Though this chapter is full of the factual details, Ramsey keeps readers engaged with an emotional anchor: “[T]he mission statement for the emergency fund is to protect you against storms, give you peace of mind, and keep the next problem from becoming debt” (139). His conviction that money impacts everything manifests in his personal testimony about how his dedication to having an emergency fund gives his wife peace of mind and, by extension, improves their relationship. The emergency fund is simply money saved for emergencies because emergencies happen: this simple principle doesn’t need to be defended with complex calculations or expert rationalizations. The pro is all the motivation readers need.
In Chapter 9 Ramsey tells readers to invest 15% of their gross annual income. The principle is simple. He makes some broad recommendations about what to invest in and provides a practical metric for determining how much one needs to retire, but once again the driving force of the chapter is motivation, not calculation. As he does across the whole book, so too in this chapter Ramsey constructs an emotional narrative arc from fear to resolve to hope. He quotes the depressing statistics about the financial circumstances of the elderly to produce anxiety, he exhorts readers to invest to secure their resolve, and he helps readers dream about the millions they can make to give them hope.
Chapter 10 is heavy on financial details. Ramsey discusses saving to pay for kids’ college expenses so they don’t have to take on loans and recommends practical strategies for doing so. Ramsey sprinkles some anecdotes into the chapter to maintain tonal balance; he tells one humorous story about a friend of his who made more money through a summer sales job while a student than his marketing professor. Ramsey’s emphasis that a college degree is not a free ticket to wealth illustrates his belief that knowledge matters less than behavior (perseverance, work ethic, making short-term sacrifices, etc.).
In Chapter 11 Ramsey tells readers to pay off their home mortgages, framing it as yet another simple idea. Ramsey metaphorically compares readers who have made it so far through the Total Money Makeover plan to super-fit marathon runners. He senses that people might become complacent before completely escaping debt, so he falls back on his narrative strategy of inculcating fear and then inspiring hope. Ramsey also returns to his myth-busting argumentative method. He does this because he is again aware that his idea of paying off home mortgages is countercultural, and the myths are his device for representing cultural norms as fiction rather than fact. Because the advice goes against traditional financial and cultural wisdom, anecdotes that prove Ramsey’s methods feature prominently in this chapter. One of the few stories with an unhappy ending included in the book discourages readers from balloon mortgages, but some of most inspiring stories are found here too.
Ramsey also uses hyperbole to spark enthusiasm, as when he encourages readers “to change your financial destiny for the rest of your life!” (199). He overinflates the ease of the steps of the Total Money Makeover plan; few people would consider paying off a 15- or 30-year mortgage a “Baby Step”; rather, for many people, this is a lifelong goal. His rhetorical objective is to motivate readers to give nothing less than total effort. However, this strategy may seem disingenuous, as those struggling with debt, college loans, and mortgage payments may have more obstacles to financial success than ignorance and the desire to impress others.
