A Review of the Dave Ramsey Money Makeover Course

I recently read this book, not because I need it, but because I think giving it away to people who are lacking in financial management skills would benefit. However, I wanted to read it first to be sure I wasn't passing on poor information. Here's what I found.The basic principals are sound. He believes in having an emergency fund, paying off your debt, investing and generally having enough cushion to weather the storms of life. There were a couple of points I didn't really agree with.1. In calculating your potential net worth from investing he assumes a 12% average rate of return. That would be nice, but I don't know anything doing that consistently. The average investor is going to pull in 7-8% if they're lucky, so that 12% figure is misleading. On the other hand, if it motivates people to actually save and invest there's not too much harm in it. Neither Dave not anyone else can predict the future and the recent recession shows us that market returns are highly volatile at
times. Maybe you'll get 12%, maybe not. The point is to start saving and investing and keep it going. Develop the habit.2. He really wants everyone to pay off their house. I don't entirely support this because sometimes you can do better by saving and investing that money instead of paying off the mortgage. In our case our house payment is only $370/month with a 5.5% interest rate. Sure, we'd save money to pay it off, but we'd only gain a cash flow of $370 and that interest rate is pretty low. In better years we could make more than that by investing. If your interest rate is super high, or your payment is really large then paying off the house is definitely a good idea. Just be sure to evaluate your own situation first.Overall his plan requires discipline. He does seem to like the cash envelope budgeting system, and that's maybe a good thing for people who have no will power when it comes to spending. As someone with tremendous control over money habits the cash system is t
oo hard because it's too hard to track in a program like quicken. But if you need to practice self control then by all means use that method.Overall I do agree with the bulk of his theories and he has tremendous motivational power to get people interested in managing their money, something I admire. I do like the book, recommend that everyone read it (those who need it) and hope to begin giving them out to friends and family soon.

View this post on my blog: http://www.yourgamebook.com/a-review-of-the-dave-ramsey-money-makeover-course.html