CHAPTER 1

The Total Money Makeover Challenge

"As lost as a ball in tall weeds!" That is exactly how I felt. Although itwas decades ago, I can still taste the emotion as if it were yesterday. Outof control, lost, no sense of power, I felt dread creep across the room likethe afternoon shadows on a cold winter's day. Sitting again at the kitchentable with too much month left at the end of the money, I was not havingfun. This "adult" stuff where a wife looks to you to provide and kidsexpect to be fed and kept warm was not exactly working. I didn't feel likesome powerful adult; instead, there was a little boy inside me who wasvery afraid—afraid of this month's bills, afraid of this month's mortgage,and absolutely terrified when I considered the future. How was I to sendkids to college, retire, enjoy life, and not live at the edge of money worries?

The "Normal" American Family

It seemed every month I sat at that same table with the same worries,fears, and problems. I had too much debt, too little savings, and no senseof control over my life. No matter how hard I worked, it seemed I couldn'twin. I was to forever be a slave to some banker, to the government, and tothe "needs" of my family. When Sharon and I "talked" about money, weended up in a fight, leaving her feeling afraid and me feeling inadequate.The next car purchase, the next house, the kids' college—our entire futureseemed out of reach.

I didn't need a get-rich-quick guy to pump me up or tell me to bepositive. I didn't need a secret formula to riches. I wasn't afraid of hardwork or sacrifice. I didn't want to "feel" my way into being "positive."I was positive of only one thing: I was sick and tired of being sick andtired. I was tired of sitting down to "do the bills" and having a heavinesscome over me. The hopelessness was overwhelming. I felt like a gerbil ina wheel—run, run, run, no traction, no ground covered; maybe life wasjust a financial illusion. All the money came in, all the money went out,and only the names were changed to protect the innocent. I owe, I owe,so off to work I go. You know the drill and all the clichés that go withthe drill.

Oh, some months everything seemed to work, and I thought maybe wewere going to be okay. I could tell myself then, "Oh well, this is how everyonelives." Those times offered enough wiggle room that I could continueto lie to myself that we were making headway, but deep down, I knew weweren't.

I Did It My Way, and My Way Wasn't Working

ENOUGH! THIS STINKS! I finally decided that this nonplan wasn'tworking. If you have ever had any of those feelings, you are going tolove this book, and, more important, you will love your Total MoneyMakeover.

Back in our late twenties, my wife, Sharon, and I went broke. We losteverything due to my stupidity in handling money, or not handling it, asthe case may be. Hitting bottom and hitting it hard was the worst thingthat ever happened to me and the best thing that ever happened to me.

We started with nothing, but by the time I was twenty-six years old,we held real estate worth over $4 million. I was good at real estate, but Iwas better at borrowing money. Even though I had become a millionaire,I had built a house of cards. The short version of the story is that wewent through financial hell and lost everything over a three-year periodof time. We were sued, foreclosed on, and, finally, with a brand-newbaby and a toddler, we were bankrupt. Scared doesn't begin to coverit. Crushed comes close, but we held on to each other and decided weneeded a change.

So after losing everything, I went on a quest, a quest to find out howmoney really works, how I could get control of it, and how I could haveconfidence in handling it. I read everything I could get my hands on. Iinterviewed older rich people, people who made money and kept it. Thatquest led me to a really, really uncomfortable place—my mirror. I came torealize that my money problems, worries, and shortages largely began andended with the person in my mirror. I realized also that if I could learn tomanage the character I shaved with every morning, I could win at money.That quest, the one that ended with me staring at myself in the mirror,led me on a new journey: the journey of helping others, literally millionsof others, take that same quest to the mirror. Live Events, Financial PeaceUniversity, The Dave Ramsey Show, and the New York Times bestsellersFinancial Peace, More Than Enough, The Total Money Makeover, andEntreLeadership have enabled me to tell millions of Americans what Ihave learned—the hard way—about money.

The Big Challenge: Find a Mirror

I have a challenge for you. Are you ready to take on the guy or gal inyour mirror? If you are, you are ready to win. I rediscovered God's andGrandma's simple way of handling money. Wealth building isn't rocketscience, which is a good thing for me (and probably you). Winning atmoney is 80 percent behavior and 20 percent head knowledge. What todo isn't the problem; doing it is. Most of us know what to do, but we justdon't do it. If I can control the guy in the mirror, I can be skinny and rich.We will let other books work on the skinny, and I will help you with therich part. No, there are no secrets, and yes, this will be very hard. Hey, ifit were easy, every moron walking would be wealthy.

So my Total Money Makeover begins with a challenge. The challengeis you. You are the problem with your money. The financial channel orsome late-night infomercial gimmick aren't your answer; you are. You arethe king of your future, and I have a plan. The Total Money Makeoverplan isn't theory. It works every single time. It works because it is simple.It works because it gets to the heart of your money problems: you. It isbased on a series of prices that must be paid to win. All winners pay aprice to win. Some losers pay a price and never win, and that is usuallybecause they didn't have the benefit of a proven plan for financial fitness.

Ordinary People

Tens of thousands of ordinary people have used the system in this bookto get out of debt, regain control, and build wealth. I've scattered theirstories throughout the book. If at any point during your makeover you aretempted to quit or you just need a little encouragement, read one of thesestories. These people have sacrificed for a short period of time so they willnever have to sacrifice again.

If you are looking for a road map to get you home, you've found it. Ifyou are looking for something easy or fast, you have the wrong book. Ifyou are looking for a book to help you pass your CPA exam in the areaof financial knowledge, you have the wrong book. If you are looking fora writer who has intricate academic theories (that don't work in the realworld), you've got the wrong guy. I have many of the academic pedigrees,but I ended up broke. I have actually twice become a millionaire fromnothing. The first time I was in my twenties, the money was in real estate,and I lost that due to my stupidity; the second time I was not yet forty, butI did the money thing right that time, and I am debt-free.

I often hear about broke finance professors who bemoan that I amway too simple, or as an e-mailer told me on The Dave Ramsey Showone day, "You are a one-trick pony." To those of you who say you havegreat but unexecuted plans, I say, "Prove it. I have." I like the way I'vebuilt wealth better than the way you haven't. You will meet people, educatedand uneducated, throughout this book who have won, or begunto win, with money for the first time in their lives. The Total MoneyMakeover works!

The Total Money Makeover Motto

This plan works, but it will cost you. It will teach you to say new words,like no. In short, your Total Money Makeover will be a personal moneymakeover where you learn this motto: IF YOU WILL LIVE LIKE NOONE ELSE, LATER YOU CAN LIVE LIKE NO ONE ELSE. This isthe motto of your Total Money Makeover. It's my way of reminding youthat if you will make the sacrifices now that most people aren't willingto make, later on you will be able to live as those folks will never be ableto live. You will notice the motto all through the book, even across thebottom of the pages. I'm sorry there isn't an easier path to feature in themotto, but the good thing about this one is that it works. You can repeatthe motto to yourself as you pass up a purchase in order to hit your goals.When you work late and are tired, you can say the motto to yourself. Ofcourse, this isn't a magic formula; I'm not into that. But it does remind youthat you will win, and the payoff will be worth the cost.

Some of you are so immature that you are unwilling to delay pleasurefor a greater result. I will show you exactly how to get the result you want,so the price you pay will not be in vain. I don't want to walk across hotcoals because it is fun, but if I can be shown how a short, painful walk willdo away with the lifetime of worry, frustration, stress, and fear that beingconstantly broke brings me, then bring on the hot coals.

Early on in our marriage, wedecided that Kari would stayhome with our children ratherthan working outside the home.This decision has perhaps disadvantagedus financially at times,but it has been the best choice forour family in many other regards.

Financially, we have made some mistakes such as keeping our studentloans around because of the "low interest" and even leasing a carat one point. To us, credit cards were a status symbol, and we had a few.Our debt peaked at about $375,000 (including the mortgage). That's notthe smartest situation to get yourself into when you have four kids andone salary. By the time we got on Dave's plan, we were ready to workwith gazelle intensity to get rid of our debt! During one six-month periodwe paid off $57,000 and gave $7,000 to our church. That really encouragedus and kept us going! It was also great going to Atlantis with Daveand Sharon as finalists in The Total Money Makeover Challenge!

Now we are debt-free and helping our daughter through her firstyear of college. We are also saving for retirement at a good rate andbuilding a new house. We enjoy earning interest now, rather than payingit. We couldn't have done it without Dave. We pay cash for everything,and we tell our money where to go. We can't even tell you the peace andfreedom this has brought our entire family!

The first months were the most painful as we went from credit tocash. But it's so nice not to be paying for today and yesterday anymore!By following Dave's Total Money Makeover plan, you will gain peace ofmind as you get control of your money. Just remember to stay focused.

The key to our success was both of us getting on the same page at thesame time. We now work together to plan our spending rather than racingto outspend each other. We are each other's source of strength duringweak moments when spending sounds fun again. We have learned tohave FUN talking about money and financial goals. It's no longer a contentioussubject.

Our advice: Honestly assess your earning capacity and live belowyour means. Be in control of your own destiny and your own happiness!

Mark and
Kari Stolworthy (both age 43)
CPA/Systems Consultant;
Stay-at-Home Mom

My Promise to You

My promise to you is this: if you will follow the guidelines of this provensystem of sacrifice and discipline, you can be debt-free, begin saving, andgive as you've never given before. You will build wealth. I will also promiseyou that it is totally up to you. The Total Money Makeover isn't a magicformula to wealth. This system will not work unless you do, and then onlyto the degree of your intensity in implementing it. In the following pages,you will meet many individuals and families who have won many moneyvictories, but not one of them won until they won the battle with the guyin the mirror. Your situation isn't your spouse's fault (well, maybe, butwe'll talk later), it isn't your parents' fault, it isn't your children's fault, andit isn't your friends' fault. IT IS YOUR FAULT!

But guess what? That means that if you're the one who got you intothis mess, you're the one who can get you out. No law, regulation, or mandatewill fix you. No politician's promises or government handout will fixyou. No dream job or sky-high salary will fix you. Some of those thingsmay help, but none of them will do a thing unless you take charge of yourown life. This is your life, your call, your future. This is 100 percent yourdecision. If you're ready to move, then let's get going. Right now. I'll leadthe way. But I won't push you across the starting line, and I can't drag youacross the finish line. This whole journeyfrom start to finish is up to you.

My financial life began turningaround when I took responsibility forit. People all across America have usedthese steps to become free, regain asense of confidence and control, andbuild a future for their families. Please join me on a journey away from theyoung man I was, the one I described earlier who was racked with worry,fear, and guilt over money. Take this journey with me to your own TotalMoney Makeover, but remember, the first part of the quest is confrontingthe man in the mirror. That man in the mirror is your Total MoneyMakeover Challenge.

CHAPTER 2

Denial: I'm Not That Out of Shape

Several years ago I realized I had let my body dissolve into flab. I hadworked so hard for so many years that I had abandoned the care of myphysical condition. The first step to getting into shape was to realize Ineeded to change my ways, but the second and equally important step wasto identify the obstacles to getting there. What would stop me from gettinginto shape? Once I understood those obstacles, I began a process tolose weight, grow muscle, and become fitter. Your Total Money Makeoveris the same. You need to realize there's a problem, but you must also seewhat could hinder your move toward financial fitness. The next few chapterswill identify some major obstacles to YOUR Total Money Makeover.

Look in the mirror. Take a long look. What do you see? Suck in that gut;hold up your chest, and really look at yourself. It doesn't matter how manyangles or poses you take; the mirror is cruel. "Well, I'm really not that fat,maybe just a little flabby." My dad used to say that 90 percent of solving aproblem is realizing there is one. Focused intensity, life-or-death intensity,is required for you to reset your money-spending patterns, and one of yourbiggest obstacles is DENIAL. The sad thing is that you can be financiallymediocre in this country, financially flabby, and still be average. And if thetruth be known, being average, normal, and financially flabby is pretty muchokay by most folks' standards. This, however, is not a book for the wimpyamong us. This is a book about winning, about really having something.

We started out our marriage with absolutelyno debt. We lived on a single income,the cars were paid for, and we even hada small amount of savings. However,we eventually made the misguided decisionto move into a much larger housethat stretched us financially. After a fewyears, I changed jobs and we increasedour annual income—giving us the illusionthat we could increase our standard of living. That is when the debt reallystarted accumulating. We financed two NEW cars to replace our old ones.We started buying everything on credit. We even got a home equity loan.Before we realized it, we were buried in debt!