Total Money Makeover: An Interview with Dave Ramsey
By Chris Carpenter
CBN.com -- Immensely popular
radio talk show host, nationally syndicated newspaper columnist, and personal
finance expert Dave Ramsey is very familiar with financial peace or lack
thereof. A true riches to rags to riches story, the Tennessee native
seemingly had it all by the tender age of 26. He had successfully built
a four million dollar real estate portfolio, only to lose it all within
four years. Forced to claim bankruptcy, Ramsey didnt give up as many
people do when they begin to flounder financially. Instead, through a
great deal perseverance he slowly rebuilt his finances to the point where
today he can now call himself a millionaire again.
Ramsey has devoted his
post bankruptcy life to helping ordinary, everyday people, understand
the root of their financial woes while pointing them toward a series of
steps to rebuild their personal finances. He does so with advice that
is centered on fundamentally sound financial, emotional, and spiritual
In his latest book, The
Total Money Makeover: A Proven Plan for Financial Fitness from Thomas
Nelson Publishers, Ramsey teaches others to be financially responsible
in a Biblically-based manner. The books sole purpose is to advise its
readers on practical steps they can take to acquire enough wealth to take
care of themselves, live prosperously into old age and give freely of
their wealth to others.
CBN.com Producer Chris
Carpenter had the opportunity to sit down with Ramsey recently to discuss
some of the pitfalls that many people face regarding their personal finances,
how to overcome them, and ultimately how to grow wealth.
CHRIS CARPENTER: Right off the bat, what was the inspiration for writing
your new book "The Total Money Makeover"?
DAVE RAMSEY: We had a New York Times bestseller called "Financial
Peace" that sold over a million copies. The team from Thomas
Nelson came to us and said "Financial Peace" is what to do but
you have these people calling your radio show every day and saying 'I'm
debt free!". So, I wanted to know how they did it, not the concepts
but exactly how they applied them. They said, 'you teach these baby steps
and we need to do a "how to" step by step process manual and
we need to put some of these people's stories in there. So, "Financial
Peace" was what to do and "Total
Money Makeover" is how people have done it with 50 stories of
those who did it. So, there is some inspiration mixed in.
CARPENTER: Now, you obviously have your own interesting story to
tell in your own right. In doing research for this interview, I read
that you lost $4 million dollars in real estate dealings. So, you have
been at the top and you have certainly been at the bottom of the personal
finance heap. What happened? Can you tell our viewers about your own
personal financial journey?
RAMSEY: I have done stupid with a lot of zero's on the end of
it. I know what it looks like. My wife Sharon and I started with nothing
when we got married. I was driving a 1902 Pinto and eating off a card
table. We started buying and selling real estate, and you are right,
we became wealthy, at least by a kid from Antioch, Tennessee standards.
We ended up with about $4 million dollars worth of real estate and then
the banks all changed. They all got sold. The short version of my story
is that our notes got called and it took about two and a half years for
us to lose everything we owned. We hit bottom. That was a little over
15 years ago. We have scratched, clawed, and fought our way back using
common sense biblical financial principles. Along the way, we started
teaching other people to do that.
CARPENTER: That is truly a great journey to have come all that way.
RAMSEY: It's amazing.
CARPENTER: I say your story is a great journey because so many people
never do make a financial comeback. They go down; they bottom out, and
remain that way for the rest of their lives.
RAMSEY: I was being interviewed by a reporter on my book tour
recently and he asked me (in a big radio talk show host voice) "and
how did you bounce back?" I said when you fall that far down you
really don't bounce. You just kind of thud. But we did. After sitting
around whining and crying for a little while, we finally decided we were
going to do what it took to turn it around and make some lemonade out
of our lemons. It has not been easy, building wealth never is but it
is better than the alternative.
CARPENTER: If I were to ask you what are some practical, solid,
basic fundamentals for good personal finance practices, what would you
share with our viewers?
RAMSEY: The thing I have discovered about working with personal
finance is that the good news is that it is not rocket science. Personal
finance is about 80 percent behavior. It is only about 20 percent head
knowledge. The problem with money is this idiot that I shave with (points
toward himself). If I can get this boy in the mirror to straighten up
we can be skinny and rich. But he is a problem child and he struggles
with these things. It is a behavior oriented thing. I say this because
we all pretty much know what to do. I mean anyone can answer the question
you just asked. You do a budget duh. You have got to have a plan.
You have to live on less than you make hello? You can't be in debt
and win. It doesn't work. This is not really hard stuff but it is hard
CARPENTER: Why then do so many people struggle?
RAMSEY: They struggle because of the person who is looking back
at them in the mirror. We struggle because managing behavior on a daily
basis for an outside overall goal is tough for anyone. The guy who wrote
this book is no exception. As a matter of fact, I think that God makes
me teach this every day because I struggle with it. My name is Dave and
I like stuff. It is really not hard to understand but it is hard to do
because it is about me. And I have to manage me to win. When I can do
that I can save money. I can give; I can get on a plan. I just have
to spend more time doing a budget than I do figuring out who got thrown
off the island (on Survivor).
CARPENTER: This book is filled with people's stories; journeys people
have been on regarding their finances. What is the most common personal
finance question or situation that you hear about on your radio show,
speaking around the country, through workshops, and everyday life?
RAMSEY: The common theme that has run through people who have
won if you talk to the people who win, the thing I kept discovering
is this unbelievable sense of focused intensity. Les Brown, the great
motivator says, "People change their lives when they say 'I've had
it!' for whatever reason. You can just be making a lot of money and not
have anything to show for it. That can be an "I've had it."
You can be deeply in debt and almost bankrupt and losing your health over
the stress and say "I've had it." You can lose your marriage
over money and say "I've had it." It doesn't have to be traumatic
or tragic. It can just be the conscious realization of 'what I am doing
is not working. I have to change what I am doing.' They get this change
in their voice almost. There is this "Rrrrrrr" (makes growling
noise) that is focused intensity that comes out.
CARPENTER: I think I heard my wife do that one time in relation
to me spending our money.
RAMSEY: (Laughs) I can remember with my Mom growing up. She
would say, "I've had it." I guess it is an old southern saying.
I never did figure out what it meant but she would say, "Boy, the
worm has turned." I don't know what happened but when the worm turned
we were all in for it. (Laughs) But you have to reach that point. And
when you do, then you are ready to change. People do it with their health,
they do it with their weight, they do it with their relationships, and
they do it their money. Those people have all had that "I've had
it" experience in common.
CARPENTER: And it is different for each individual to find where
that "I've had it" threshold is.
RAMSEY: And different things will activate it. But when you
get sick and tired of being sick and tired you are willing to change.
As far as I am concerned, none of us like change. We are all like a bunch
of little toddlers sitting in our messy diaper. You know it smells bad
but it is warm and it is mine so I am going to sit here.
CARPENTER: On your radio show, what is the most interesting personal
finance story that you have heard lately? I am sure you have dozens but
if you could pinpoint a couple to share.
RAMSEY: We occasionally hear some very, very tragic stories.
I had a lady call me this week in tears. She had left her husband because
he had not only abused her and beaten her to no end but had threatened
to kill her. And so the restraining order and the children were pulled
and she is in a domestic violence shelter. She wanted to know what to
do about her truck payment, her $400 dollar truck payment. It is just
life showing up in her checkbook and she was concerned about her financial
situation. I said to her, 'you know what I would do if I had a truck
payment of $447 dollars in your situation? I wouldn't worry about it.
This is way down the list of things in your life to sweat right now
way down the list! We get those types of interesting stories and we get
interesting stories of people who are willing to do what it takes to win.
Those people are heroes as far as I'm concerned. They look like they
are average but they have something down inside that gets their motor
started and they won't quit. Those types of people are inspiring.
CARPENTER: So, you are speaking about those who fall down but are
willing to stand back up, dust themselves off, and keep moving forward.
RAMSEY: Everybody falls, everybody. I have met with people over
the last day who are empire builders. But every one of them is a failure.
They just didnt quit. So, now people call them a success. They just
made a bigger mess than someone else. These people kept falling down;
they kept making ridiculous mistakes, crazy mistakes, but just never made
them again. Just dont make the same mistake twice and dont quit whatever
you are doing. Sometimes people say about their money, I have tried
this budget stuff and it doesnt work. It does work. You have got to
do it but you are going to mess up. On a pro football team, if a quarterback
drops back and throws a pass and it is intercepted, what if he just threw
up his hands, walked off the field, and went home? He would never be
in a Super Bowl. Everybody who has ever been a quarterback in the Super
Bowl has thrown an interception. Everybody. The difference is you say
that one is gone. Next. Lets do it again. You learn from that one.
You dont want to throw it that way again. The same thing is true with
money. Everybody over the age of 12 has made financial mistakes. The
weird thing about money in our culture is that we worship it. So, we
think Ken and Barbie are rich. I know Ken and Barbie, they are broke.
I know them personally. (Laughs)
CARPENTER: In the same vein of some compelling stories you have
heard about on your show, what are some weird or bizarre stories you could
RAMSEY: Today, because of the exposure and the size of the stuff
that we are doing, we get so much of it, it isnt even bizarre anymore.
It is a freak show sometimes because there are so many whacked out things
people do out there that I thought me going broke and losing four million
dollars in my twenties was some sort of weird thing. But some of the
stuff these people do is just . half a million dollars in credit card
debt in our office the other day for counseling.
CARPENTER: How much?
RAMSEY: $500,000 dollars on plastic! Wow! At what point did
you look up and say, You know, this isnt working. I wanted to stop
somewhere around $50,000. $500,000 dollars. That is a new record, $511,000
dollars. We have a lot of people come to us with over $100,000 over the
years but this person took the cake.
CARPENTER: I cant even begin to imagine how you could do something
like that but obviously it is possible.
RAMSEY: It is pretty easy. All you have to be is breathing for
the credit card companies to send you a piece of plastic. My dog got
two offers last year so it is easy to get plastic. But at some point
you need to look at your plan and say, you know, this plan just isnt
CARPENTER: I wanted to discuss your Financial
Peace University. It is a very intriguing, interesting concept.
Could you just comment on what it is and how people can use it to their
RAMSEY: As I have said, personal finance is 80 percent behavior.
So, what we discovered was we couldnt only teach people, we had to kind
of develop an easy going 12 step program. My name is Dave and I like
stuff. And so the small group accountability and encouragement (environment)
is the most powerful behavior modification tool on the planet. The Bible
study, the discipleship group, the Promise Keepers mens group, the Financial
Peace University, you watch a video of me once a week for 13 weeks and
you have a small group discussion afterwards. You are held accountable
for being on a budget. You know what I found out about Weight Watchers?
It doesnt work because their food is fancy. It works because I know
if I go to Haagen-Daaz and I go there (Weight Watchers) next week I have
to step up on a scale. That knowing that I have to look at another person
and say, Ha, ha, I kind of goofed up. That accountability changes people.
I dont care if you have a masters degree in psychology, it will change
you. Instead of deciding I am going to do this in a vacuum, me and Jesus
got a thing going on, that doesnt work. You have got to have other people
rubbing up against you. This 13 week series will have about 100,000 families
go through it this year. It is pretty cool. It is exciting.
CARPENTER: Many of us have had financial planners over the course
of time including me. And a test I always give them when I walk through
their door for the first time is this. I ask them If I were to tell
you I had $5,000 dollars sitting under a mattress in my home, what would
you tell me to do with it. I use this question to determine whether
this financial planner legitimately wants to help me or whether they are
only looking out for their own bottom line and how they can make money
off of me. I want to ask you that same question. How would you advise
RAMSEY: My answer would depend on what the other parts of your
financial situation looked like. I would walk you with the money through
the baby steps we teach in The Total Money Makeover. Baby step one,
is a beginner emergency fund. A thousand dollars cash in the bank. So,
lets get a thousand of it right now and put it in the bank. We are going
to call that our Beginner/Starter Emergency Fund. Step two is lets
pay off all of our debts except the home. List them smallest to largest.
Make minimum payments on everything and attack the little ones with a
vengeance with an I have had it attitude until they are gone. If you
had under $5,000 dollars in debt we would attack your debts in the smallest
to largest order. If you had a little bit left on your car or a little
bit left on your student loan that has been around so long that you think
it is a pet, lets knock that thing out. If you didnt have any debt or
we had money left over then we would go on to step three. Step three is
a fully funded finished emergency fund of three to six months of expenses.
That is probably going to eat up our five grand if we hadnt already done
that. But maybe you already had those three steps done. Then what would
we do? We would put 15 percent of your income into retirement, and then
do the kids college. If all of that was done and you found that under
your mattress, we would pay it on the house. If the house was already
paid off, we would just use it to invest in good mutual funds to build
wealth and give a bunch of it away.
CARPENTER: Good stuff. Changing gears, you are a talk show host,
an author, you do public speaking; which one do you enjoy the most?
RAMSEY: I like all of it, different parts of it. I also run
a business with about 100 team members. So, leadership is a blast and
working with our team. I like all of it in different doses. If I dont
do my three hour talk show every day I get a little bit woozy. After
about a week of vacation, I am ready to come home. It is part of the
rhythm of my life now. I just thoroughly enjoy that on a day and day
out basis. I love speaking too. I dont like being gone. I dont like
to travel. But I like to do public speaking. We do about 16 live events
per year that will run between two and 5,000 people and I love those.
I come off the stage soaking wet and I am loving it. Im all fired up.
But I dont want to do it every night. After awhile, if you eat enough
lobster it begins to taste like soap. As far as writing, I am not a very
good writer. I have had three New York Times bestsellers but it
had nothing to do with my writing ability. It had to do with we had something
to say. Nothing we have ever done is a literary piece. I am an editors
nightmare because I am not very good at it. I just have a message, a
crusade, and an attitude. It does translate into written form but its
not critics always trash my stuff and they are right. Im not after
any major award; Im just for helping people. If I do a whole bunch of
that I dont really care what anybody else thinks. Out of those three
things, writing is the one I least enjoy because I am really not as good
CARPENTER: What is the one thing that you want people to take with
them when they read The
Total Money Makeover?
RAMSEY: Read it in spite of my picture. (laughs) Golly, what
an ego. Look at that face on the front. (Jokingly) Go with me, Im
Dave Ramsey. I will help you. That was the publishers idea. They
thought we should do that because I am well known. It still freaks me
out when I see it in the bookstore. The one thing I want you to take
away from reading this book is that anyone can do it. Anyone can do it.
At risk of sounding like a positive thinking guy, I tell you what, with
money stuff, 98 percent of your problem is you. And trying to go too
fast. If you will just say, five years from today I am going to be a
completely different person financially you can be. Incrementally, step
by step, by degrees, frustratingly slow, but that is how you win. If
you work your butt off for 15 years you will be a success.
CARPENTER: Well said. Thanks so much for your time.
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