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What’s Up With America’s Favorite Finance Coach?

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What's Up With America’s Favorite Finance Coach?

Many people had a New Year’s resolution to manage their money more effectively, but have departed from that goal. Dave Ramsey can help you do get back on track – just in time for the second quarter.

Bestselling author of The Total Money Makeover, he is a no-nonsense bloke that has become the Go-To-Guy regarding budgeting as well as helping parents teach their children how to handle their finances. The book, published by Thomas Nelson, has sold close to four million copies.

Working out of Brentwood, Tennessee (near Nashville), he hosts a radio program that reaches 4.5 million listeners per week via over 500 stations. He was named the 2009 Marconi Award winner for Network/Syndicated Personality of the Year, and was inducted into the National Radio Hall of Fame in 2015. His daughter, Rachel Cruze, is also a New York Times bestselling author.

Background & Ideology

He claims that when he was in his 20’s he was “dumber than a rock.” In fact, he says he has a PhD in D-U-M-B. In the ‘80’s he was overinvested in real estate and went bankrupt.

He humbly confesses, “I am sure that the problem with my money is the guy in my mirror.” If this describes you, if you have too much month left at the end of your money, his advice is to “get a mirror.” “That man in the mirror is your Total Money Makeover Challenge,” he proclaims.

Ramsey is not a fan of the word “allowance.” He realizes the power of words and thinks this one has a negative connotation. It makes children who ask for one seem inept, he touts.

Other Endeavors

He has also written (and originally self-published) Financial Peace, along with a planner with the same name. Regarding the difference between The Total Money Makeover and Financial Peace, he writes that the latter is “what to do with money,” while the former is a “how to do it” plan.

In addition, other books he has penned include Foundations in Personal Finance, More Than Enough and Life Lessons With Junior (a children’s series).

He’s obviously a pretty good marketer, too, as he runs a school called Financial Peace University. It integrates video teaching, class discussions and small group activities. The follow up program to it, The Legacy Journey, is a training series for adults, focused on “What’s Next” after getting out of debt. Debt is a bondage he urges his listeners to avoid, except for certain types of home mortgages.

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Advice

He recommends good growth stock-type mutual funds and confidently states that you should make 12 percent on your money over time. The Standard & Poor’s (S&P) 500 stocks, he declares, has averaged a gain of 11.67 percent per year for the last 80+ years – and that even includes the 2008 market. He also suggests that retirees withdraw 8% of their retirement fund each year (as opposed to the conventional recommendation of 4%).

In Total Money Makeover, he tells the story of the typical American making car payments. He says the average car payment is $495 over 64 months. “Most people,” he writes, “get a car payment and keep it throughout their lives. As soon as a car is paid off, they get another payment because they ‘need’ a new car. If you keep a $495 car payment throughout your life,” he astutely points out, “which is ‘normal,’ you miss the opportunity to save that money. If you invested $495 per month from age 25 to age 65, a normal working lifetime, in the average mutual fund (the aforementioned 80 year 12% stock market average), you would have $5,881,799.14 at age sixty five. Hope you like the car!”

His best piece of advice may be, “Don’t even consider keeping up with the Joneses. They’re broke!” That quote, in tandem with the reality that “to change your money thing, you have to change,” is priceless.

Ramsey’s philosophy is that your plan has to work in both good and bad times. He quotes Warren Buffett when he says, “When the tide goes out, you can tell who was skinny-dipping.”

Total Money Makeover has been a bestseller for years. My copy of it boasts “Three Million Copies Sold and Lives Changed.” His goateed visage adorns the cover. The subtitle is A Proven Plan for Financial Fitness. There is a workbook that complements it, too.

And lest you think he is only about hoarding the money he has made, pinching every penny, he is also a strong proponent of giving. He thinks children should have three envelopes: save, spend and give. Besides Benjamins, he believes in giving hope, too.

His motto, written on every page of Total Money Makeover, is “If you will live like no one else, later you can live like no one else.”

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