Dave Ramsey - Dave Ramseys Complete Guide to Money

DAVE RAMSEYS

COMPLETE GUIDE TO MONEY

The Handbook of Financial Peace University

Peace

Philippians 4:7

2011 Lampo Licensing, LLC

Published by Ramsey Press, The Lampo Group, Inc.

Brentwood, Tennessee 37027

All rights reserved. No portion of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any meanselectronic, mechanical, photocopy, recording, scanning, or otherexcept for brief quotations in critical reviews or articles, without the prior written permission of the publisher.

The Dave Ramsey Show, Total Money Makeover, Financial Peace, Financial Peace University, and Dave Ramsey are all registered trademarks of Lampo Licensing, LLC. All rights reserved.

Scripture quotations noted nkjv are from the New King James Version. 1982 by Thomas Nelson, Inc., Publishers. Used by permission. All rights reserved.

Scripture quotations noted niv 1984 are from the HOLY BIBLE, NEW INTERNATIONAL VERSION. 1984 Biblica. Used by permission of Zondervan. All rights reserved.

Scripture quotations noted niv 2011 are from the HOLY BIBLE, NEW INTERNATIONAL VERSION. 2011 Biblica, Inc. Used by permission. All rights reserved worldwide.

Scripture quotations noted nrsv are from the New Revised Standard Version Bible. 1989 National Council of the Churches of Christ in the United States of America. Used by permission. All rights reserved.

Scripture quotations noted cev are from the Contemporary English Version. 1995 by the American Bible Society. Used by permission. All rights reserved.

Scripture quotations noted The Message are from The Message. 2002. Used by permission of NavPress Publishing Group.

This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering financial, accounting, or other professional advice. If financial advice or other expert assistance is required, the services of a competent professional should be sought.

Editors: Allen Harris, Jennifer Gingerich, Darcie Clemen

Cover design: Chris Sandlin

Interior design: Thinkpen Design, Inc., www.thinkpendesign.com

ISBN: 978-1-937077-75-4 (Kindle)

DEDICATION

To the millions of men and women across the country who have sat face to face and knee to knee with other families in Financial Peace University classes since 1994. Your passion, enthusiasm, and incredible successes are taking the message of Financial Peace to new heights, changing behaviors, breaking generational trends, and restoring hope for our nations economy.

To Louis Falzetti, executive vice president of Financial Peace University, who stayed late after class one night to help me stack chairs and hasnt left my side in the sixteen years since. Your vision for what FPU could become turned my small, local class into a household name. Millions of families thank youand so do I.

ACKNOWLEDGMENTS

Writing a book is a huge endeavor that goes far beyond the name of the guy on the cover. Id like to thank the following people for leading the charge to make this book possible:

Allen Harris, my editor for this book, for helping me turn twenty years worth of teaching, experience, and stories into a manual that anyone can use to win with money.

Darcie Clemen, Grace Clausing, Blair Moore, and Jennifer Gingerich for providing editorial and project management support.

Daniel Bell and Chris Sandlin for overseeing all graphics and cover art.

Louis Falzetti, Debbie LoCurto, Paul Boyd, Beth Tallent,

Oksana Ballard, Brian Beaman, Russ Carroll, Jack Galloway, Heath Hartzog, Darrell Moore, and Brent Spicer for reviewing early drafts of this book to let me know what workedand what didnt.

CONTENTS

INTRODUCTION

For the past couple of decades, Ive been known as that money guy on the radio, but if you had met me back in the late 1980s, you would have met a much different Dave Ramsey. At that time, I was climbing out of a huge financial hole, caused by some stupid, risky mistakes I had made in my real estate business. If that guy were to call in to The Dave Ramsey Show today, Id chew him out for being so stupid with his money! But hey, weve got to start somewhere, right? I started at the bottom of a huge money pit.

As I got my life back on track, I went on a crusade to figure out how money works. I read everything I could get my hands on, talked to a ton of successful people, and discovered a new passionmy lifes calling, really. In 1990, I started counseling people one on one, helping them sort through their own financial messes and sharing what I was learning through my own struggles. But within just a few years, I had become incredibly frustrated. I would run into people I had counseled a few months earlier, and theyd tell me they were in the middle of filing for bankruptcy. Id say, What? But we figured it out! We had a plan to get you back on track! What happened?

And theyd say something like, I know, Dave, but it just didnt work, or The budget seemed okay, but we just couldnt stick to it, or Yeah, but once we left your office, we just felt overwhelmed again and bankruptcy seemed easier. After this happened several times, a lightbulb went off in my head. In my early years of counseling, I had just been focusing on the math, but the math wasnt the problem. I realized that the real issue was peoples behaviors around money, and thats something math alone cant fix.

I enjoyed one-on-one counseling, and I believed there was a place for that, but the truth is, broke people cant afford to pay for ongoing counseling as they clean up their messes. And beyond that, sitting with a counselor a couple of times a month didnt do much to address the behavior issues at the heart of the problem. So I started looking at other areas, to see how other places were doing it. I researched twelve-step programs, and then I really started looking at Weight Watchers as a model. You want to know a secret? Weight Watchers doesnt sell magic food. People lose weight because they know theyve got to go to the group meeting and step on the scale on Tuesday night. Thats the motivation that helps them walk past the donuts in the grocery store. The accountability of a group environment causes people to change their behaviors. It worked for weight loss, and I became convinced that it would work with money.

With that model of half-teaching, half-support group in mind, I got to work on a few lessons targeted at people considering bankruptcy. We called it Life After Debt , and I had high hopes. The first night, I set up one hundred chairs, expecting a big crowd. I had my overhead projector ready, and I was standing at the door in my bad suit and tie, waiting to greet the masses and change peoples lives. Four people showed up. Only three of those four actually paid for the class. It was a humble start, but it was still a start.

A few more people showed up the next week, and a few more the week after that. As we grew and got to know the audience, we realized that this really wasnt just a class for people considering bankruptcy; it was a class for everyone . I pulled back and adjusted my perspective. Its great to help someone on the verge of bankruptcy, but wouldnt it be better if we helped people change their behaviors way before bankruptcy even became a thought? So we swapped out some of the bankruptcy material for investing and insurance lessons, and attendance kept going up. Then we added more nights and more classes, and even more people showed up. In time, I was teaching this class several nights a week, and we changed its name to something that better represented what we wanted to accomplish. Life After Debt was gone, and Financial Peace University was born. Within a few years, we outgrew what I was able to teach live and in person, so we put it on video. Now, almost twenty years later, more than one million families have gone through the class around the country.