Book Club: Total Money Makeover


Show Notes

Today we review that classic personal finance book, Dave Ramsey's Total Money Makeover. Credit cards, sustainable journeys, Murphy repellant, budgeting, and behavior.‍

  • (00:00) - Credit cards
  • (02:20) - Total Money Makeover
  • (07:02) - 20% knowledge, 80% behavior
  • (12:18) - Making the journey sustainable
  • (17:47) - Emergency funds
  • (21:40) - 12% returns?
  • (24:14) - Living on the financial edge with credit cards
  • (29:05) - Murphy repellant
  • (29:49) - The role of a budget
  • (32:29) - The heart of a teacher


Book Club: Total Money Makeover

[00:00:00] Tyler: Do you use a credit card? Steve?

[00:00:04] Steve: I do. Yes.

[00:00:06] Tyler: Do you use more than one credit card?

[00:00:08] Steve: Uh, Let me think. We have, I don't know, four or five that we use semi-regularly. Most everything goes on one, but then I've got, we've got a couple others and then I have one for the business and I don't know. What about you?

[00:00:23] Tyler: Cool. Yeah, I do use credit cards. I've got nine. I only use a few of 'em regularly, but there was a time in my life where I did not use credit cards. I only had a debit card.

And that was interesting. It's a different feeling, honestly. And this, this is coming from someone, like I said, who has nine credit cards.

[00:00:43] Steve: uhhuh.

[00:00:44] Tyler: not saying that 'cause I'm proud of it, it's just it is what it is. But when you're spending cash only, I really do think it feels different. it's a lot less complicated because the, the the distance in time between when you buy something and you pay for it is zero.

[00:01:00] Steve: The money's gotta be there.

[00:01:01] Tyler: be 1, 2, 3 months right before you experience the financial consequences, if you will, of, of making the purchase.

So psychologically I think there is a big difference. Mm-hmm.

[00:01:10] Steve: Yeah, I agree. Even within YNAB, which does I think the best job I've ever seen of software a, as far as simulating a credit card, acting like cash. But even there, there's the, the psychological safety net of, oh, it's actually, it's a credit card. So if I don't actually have the money in that category in the budget, then I can sort that out tomorrow or next week or next month before the bill comes due, and it will all be okay.

[00:01:38] Tyler: Yeah. In fact, YNAB will not allow you to overspend cash. But it will allow you to overspend on a credit card for the simple reason that that reflects reality, right? Like you literally cannot spend more cash than you have, but you can spend on credit more than you have

[00:01:54] Steve: Mm-hmm.

[00:01:55] Tyler: So I think that's, yeah, that's a good point.

It's interesting. So

[00:01:57] Steve: Hello there. Dear listener, I am Steve.

[00:02:06] Tyler: and I am Tyler, and this of course is, It's Not About The Money where we discuss a wide range of topics related to creating and running small businesses.

[00:02:14] Steve: Tyler and I are small business owners ourselves, just trying to make sense of the world, one podcast at a time.

[00:02:22] Tyler: Today we're doing another episode dedicated to our book club, and we're talking about the book, the Total Money Makeover, by Dave Ramsey, a legendary book in the personal finance space.

[00:02:34] Steve: This is, this is the second time I've read it. I think I read it the first time 10 years ago or so, maybe longer. And it was transformative to me at the time because I was just like it. It felt like just coming into being an adult, I. Where I have like real money coming in and I've got to figure out how it works.

[00:02:57] Tyler: Yeah, that's a real thing. Can I ask, you know before we dive into the book, What exposure, if any, did you have to Dave Ramsey and his company and his ideas?

[00:03:06] Steve: I don't think I had any before I read the book the first time, and even since then, I've only maybe once or twice listened to any portion of his radio show. And I don't follow anything else that he does. So I'm,

[00:03:22] Tyler: Okay.

[00:03:22] Steve: I know he is like opinionated and can be extremely straightforward in his radio show. And well, and he is in the book too, frankly.

But that's about all I know of him personally.

[00:03:36] Tyler: I have to say you're missing out on a good time. I, I sort of grew up on Dave Ramsey indirectly. It was on talk radio on a station that my dad listened to, driving around growing up. Just one of the shows that was kind of on in the background. And so I think I was influenced by it as a kid, even without really knowing it, if that makes sense.

But it wasn't until later in, when I was in college, That a friend of mine was attending Dave Ramsey's Financial Peace University course, which is for, to, you know, to help people get out of debt and get their finances in order. And he invited me to be, I guess, his accountability buddy. I'm not sure if that's what they call it.

But anyway, I attended the class with him 'cause he was struggling with some debt and trying to get out of it and he wanted some support and so that was kind of like, I got really exposed to it was by attending the Financial Peace University as I guess like a accountability partner to my friend. Um, And this is actually the first time I've ever read the book this last week, although I'm familiar with the, you know, the principles from listening to the show and going to the class and stuff.


[00:04:40] Steve: What was your impression of the book then, with that background knowledge of Dave Ramsey and his philosophy? I.

[00:04:49] Tyler: If I, if you can say anything about Dave Ramsey is, he's consistent. So the things that he talks about in his book, of course, are like the fundamental principles that he bases his whole brand on and his teaching. And, you know, for what my opinion is worth, they seem to be solid foundational principles.

And he talks about them over and over and over again on his radio show. Even some of like the little dave Ramsey isms and like examples and idioms that he uses. You know, in the book he says 'em all the time on the air. So, yeah. He's very consistent in his message, which I think is part of why his message can be so powerful for so many people.

It's simple, it's clear, it's consistent.

[00:05:30] Steve: I agree with that. For me, the, this being, the second time I've read the book, I came into it sort of with a grain of salt of like, okay, I know this guy's, he gets on his soapbox and so I'll, you know, I'll read it. It's gonna be interesting. But then the further along I got, I was like, oh, this is exciting.

Like, I want to, I wanna have a total money makeover again. You know, even though I've, I mostly do the things he's teaching now, but sort of having the refresher. And the kind of lighting the fire under me again was it was a fun ride. And I like what, and as you say he, his principles, his teachings are, are pretty, yeah. good solid advice.

[00:06:12] Tyler: yeah, and I think, I think that's something that we should, that, that we should distinguish between, which is a principle and like a tactic or an application of the principle, right? So, and this is where a lot of people disagree with Dave Ramsey, and I know we'll get into some of the more particular points as we go on here, but although everything that he says I believe is founded on true principles, some of the things that he says to do to apply those principles are things that I have tried and don't do, although I feel like I'm still following many of the principles, if that makes sense.

So in my mind, there's a difference between the principle, which is like a principle should be applicable to a wide range of situations. Whereas he's also very prescriptive and like, no, here's exactly what to do, how to apply it. So I think there's, in my opinion, there's some give and take there.

[00:07:02] Steve: Mm-hmm. And he's presenting it as the, this is a proven plan that, well, the, like the subtitle of the book is a Proven Plan for Financial Fitness. So like if you follow this to the letter, it will work for you, is his proposition. But that doesn't mean that following generally the principles, you'll still get maybe to the same endpoint.

Like the principles can still be useful even if you don't follow everything he says to the letter.

[00:07:30] Tyler: I think the way he kind of sets it up is like, this is the fastest way to get from point A to

[00:07:35] Steve: Mm-hmm.

[00:07:36] Tyler: mathematically. Like if you, you know, which I think actually is a little bit of a contradiction because he also says that personal finance is 20% knowledge and 80% behavior, right? So the math I would put into the knowledge part, and I think the behavior is where it gets dicey, where it's hard.

Okay, you can set a budget, sure, but are you gonna follow it?

[00:07:57] Steve: Right. That's the tricky part.

[00:07:59] Tyler: Right. And so, so yeah. So long story short, and it may actually, let's just, let's just dive into that, that behavioral concept, if that's okay. I, one of the things that because I think it's really some of the strengths of this book and Dave Ramsey in general is his emphasis on personal responsibility.

And he's fond of saying, if I can control the guy in the mirror, I can be both skinny and rich.

[00:08:23] Steve: Mm-hmm.

[00:08:24] Tyler: I think gets us at what we were just saying. Right. Easier said than done.

[00:08:28] Steve: Right. Uh, He says another thing. Uh, If you're the one who got yourself into this mess, you're the one who can get yourself out of it. Just the same principle, I think.

[00:08:40] Tyler: Yeah.

[00:08:41] Steve: And I do like that focus on personal responsibility. Because like, yes, your circumstances will depend on your socioeconomic status and how your family was raising you and what kind of a job path you went into. Like, yes, there's all of that. There's this environmental stuff and you may or may not be able to do anything about that.

But the thing you can control is what is going on inside your head, what you are going to do with your circumstances and the resources that you have. So I, if you're going to have a book that's teaching people what to do with it, that's the place you have to start.

[00:09:23] Tyler: Yeah, it's almost like, you know, you can't control the circumstances of your past and you can't control your past. It's what's done is done,

[00:09:34] Steve: Mm-hmm.

[00:09:34] Tyler: what you can control is today, right now, and one of the things I love about Dave Ramsey's method, which is the seven baby steps, is that really, I think anybody could do it. I mean, it's, you know, you don't have to make a lot of money or a certain amount of money to follow these principles. There's obviously gonna be a huge variation in how challenging it is based on your income and things. But, but it's but again, as a set of principles, it's applicable to everyone.

I think. Well, you know, whenever you say every, that's like a dangerous thing to do. But, but, you know, most people is maybe a better way, way to say it,

[00:10:10] Steve: Uhhuh.

[00:10:11] Tyler: Another thing that stuck out to me is the concept, the repeated concept of sacrifice. That's one of those principles. I think that's just true. And of course how you apply it, well, it may vary by your individual circumstances, but in general it's like what are you gonna give up right now? Whether it's comfort, whether it's something you want so that you can have something better later.

And the little Dave Ramsey ism that he has about this is. Live like no one else right now, so that you can live like no one else later. Meaning you might have to sacrifice right now and scrimp and save and you know, not buy things that you wanna buy now so that later you can kind of buy whatever you want because your finances are in order. I kind of, can I just say I, I have to say an example of how this applies to me in my life, this concept of sacrifice financially. 'cause, you know, I, I will be the first to say I love personal finance. I love budgeting. That's like a huge part of the reason why I'm here doing this podcast with you. But man, that doesn't mean I'm always making, making good choices, right?

So I had about $70,000 of student loans at a certain point in my life, which was right after school.

[00:11:23] Steve: Mm-hmm.

[00:11:24] Tyler: And I was making like right around $50,000, I think. And so that just seemed like paying those off just seemed like such a daunting task, right? Like minimum 10 years if I kept up on all my payments and then, you know, paying rent, commuting to work, all this stuff.

Like there wasn't like a ton of money to go around to like make extra payments.

[00:11:44] Steve: Yeah.

[00:11:46] Tyler: face to face with this concept of sacrifice. It's like, ah, I want to go on vacation. Ah, I want to like buy this fun stereo system. Ah, like whatever it was. Right? And every single time one of those situations came up, I made a different choice.

Sometimes I made the, the fiscally responsible choice and like put the extra money to my student loans. Other times I was like, Nope. You know, I'm going for vacation. And so, you know I, I think that's like. When the rubber meets the road, this is like a tough, tough thing like in all actuality.

[00:12:18] Steve: It is. And you have to find the balance for you and your family specifically of how do we get to where we're going as quickly as we can, but also make it sustainable. 'cause you don't wanna go. Too far, too hard into it, and then you burn out and just go back to your old habits and now you're worse off than you were before.

You need to make it sustainable so you can actually get to the goal. So sometimes, sometimes you have to buy fun things so that you

[00:12:52] Tyler: not what Dave Ramsey says though, just to be clear, if we're doing the book review, the book says No. Gazelle intensity on the debt until it's gone. Right. But yeah, that, that's a good,

[00:13:03] Steve: It does well. I seem to recall him saying something. I'm not gonna be able to find it now though,

when he is talking about fun


[00:13:12] Tyler: This is actually one way that the Dave Ramsey method is different from the YNAB method, if I may say so. So whereas Dave Ramsey recommends, you know, baby step one is having a thousand dollars emergency emergency fund,

[00:13:29] Steve: Yeah.

[00:13:30] Tyler: after you have a thousand dollars emergency fund, all of your extra money goes toward paying off the debt until it's gone.

Right? Now the YNAB method is much more flexible than that, but tends to encourage some additional saving beyond the a thousand dollars for what they would call true expenses.

[00:13:46] Steve: Mm-hmm.

[00:13:47] Tyler: so they have a more, I guess gentle, still still focused, but a more gentle approach to paying off debt and their methodology built in, which I think is kind of interesting to contrast.

[00:13:59] Steve: Right, and, and that would be even before the debts are paid off, you're embracing the true expenses such as like the car is going to need an oil change two months from now, or Christmas is coming up, or those kind of like, let's plan those in. Now while we're still trying to pay off the debts,

[00:14:21] Tyler: Right.

[00:14:22] Steve: Because it's that that stuff's going to happen whether we're prepared for it or not, so we might as well prepare for it.

[00:14:27] Tyler: We might as well prepare for it. Right. And it, and the thinking there is that it's more important to avoid more debt than to pay off existing debt. Like if you had to rank those in order of priority

[00:14:40] Steve: Mm-hmm.

[00:14:41] Tyler: it's much more important to avoid new debt than, you know, to continue to maintain your current debt, which is, you know, maybe that doesn't feel right to some people, and I can understand that, but that's, that's the thinking behind it

[00:14:52] Steve: Right, and I think Dave Ramsey and the YNAB method agree on that principle there. They just apply it slightly differently.

[00:14:59] Tyler: exactly. Yeah.

[00:15:00] Steve: I found the, the spot about fun.

[00:15:03] Tyler: Okay, let's

[00:15:04] Steve: So this is uh, What chapter it is, page 193 in my copy, but. "There are only three uses for money. Fun, investing and giving." Let's see. Blah, blah, blah.

"As I said earlier, you should be doing some of each as you go through the steps. Giving something, even if it's just giving your time by serving soup to the homeless, should be, should start from baby step one. Fun also begins there, although it has to be inexpensive fun in the beginning. The fund gets bigger and better as we get higher in the steps." And then investing also begins at Baby step four. So, yeah, I, I think you're still right that

[00:15:40] Tyler: well, we can both be right. Conservative fun, you know.

[00:15:45] Steve: Yeah.

[00:15:45] Tyler: no, it's true. I mean, like I like your point. You said sustainable, right? It has to be sustainable because if you're crashing and burning and binging on your spending because you've been living too lean, you're gonna end up right back where you were.

Plus you'll be demotivated and depressed potentially and, and in some kind of shame cycle or

[00:16:08] Steve: Mm-hmm.

[00:16:08] Tyler: I, yeah, I agree. I agree. Thank you for helping me justify my past decisions. I

[00:16:13] Steve: There you go. Well, and, and if you think of it in the, from the lens of like physical health, if you're trying to go on a diet and you, you go super hard into it and you can do it for two weeks, and then you're like, ah, this is too hard. I, I give up. And then you backtrack and maybe you're worse off than you were.

You didn't get to your goals, where if you can make it a sustainable thing, even if it's just very slowly, you're getting towards your goal, but you'll eventually get there and it's sustainable and you can do it for years and years and, and you'll get there eventually. Like that, that's a, seems to me a better path to choose.

[00:16:51] Tyler: Yes, and the sustaining it for years and years I think is one of the hardest parts of this also. Right? Which I think is another powerful element of the Dave Ramsey program. You know, the seven baby steps, if you had to summarize it, I would say it's focus. are seven steps. Focus on one at a time, just one at a time.

And if you can focus on one at a time, then you're much more likely to gain momentum and succeed. And maybe it won't be as many years as you thought it would be. And I can relate to this too actually. So I'm actually, you said that when you read this book again, it kind of reinvigorated you and kind of made you want to have a total money makeover

[00:17:30] Steve: it it did. Like he spends the first half of the book. We don't even get to the baby steps until chapter six. So the first half of the book is just like motivating you, getting you in the right mindset, dispelling the myths that you might have about it so that you're ready to then say, okay, let's jump in.

What are the baby steps? Let's talk about them.

[00:17:47] Tyler: Yeah. And it's funny you said that 'cause I experienced the same thing. In fact, I went directly from reading the book, I like put the book down and went into my budget and I was like, hmm. Like what changes am I gonna make? Because I read this and the, the conflict that I'm having lately, and I always go back and forth on this, it comes to how to handle an emergency fund.

Because, you know, conventional wisdom slash the Dave Ramsey method would say start with a thousand dollars emergency fund. Pay off all your debt, then build up an emergency, an emergency fund of three to six months of expenses, you know, as much as you feel comfortable with. But that's kind of the conventional wisdom.

Right? Well, what's fascinating to me about that is, again, jumping back to the YNAB method, they, they encourage you to embrace your true expenses so that you really don't have emergencies anymore. And so it's kind of con like, I'm trying to reconcile this in my mind, right, because if I was doing. the past, I've kind of been budgeting ahead a few months in YNAB and calling that and not having a dedicated emergency fund.

Just like, oh, I'm putting the money towards future months. Like literally I have those months prepaid for right? And I realized this is just semantics and it's just, you know, different ways of doing the same thing with your money, I guess. But then I was like, oh, maybe I just want to have a budget category called emergency fund and put three to six months worth of expenses in there. And just keep it there and not budget ahead. So anyway, I don't know why I felt like I needed to go off on that right now, but it's a, it's a way that the book impacted me and now I'm like, I actually since I'm not quite to six months of emergency fund, which is what I want I actually stopped some investing.

Controversial maybe, but to focus on getting my emergency fund where I want it so that then I can just focus on investing, which is like one of the next steps. Right. So essentially this book caused me to have an existential crisis and rethink my finances and it's great.

[00:19:39] Steve: Uhhuh. Yeah, I mean, I, I think there's more than one way to do it. Uh, And if that works for you, like the money's all there, it's just whether it's in a separate account labeled emergency fund, or whether it's in a, a budget line that's labeled emergency fund or whether it's two months ahead. And then if you do have an emergency, you have to go into to two months from now and pull that money out and reallocate it to this month and that, you know, whatever it, it works for you.

[00:20:08] Tyler: So what I'm getting outta this is I enjoy this way too much. I just do this kind of stuff for fun. I just move money around. Yeah. Okay. Well,

[00:20:16] Steve: Yeah. Well, it's, yeah. Mm-hmm. And I've, I've even started thinking in, because YNAB has the, we're talking about YNAB a lot, and this is supposed to be about Dave Ramsey's book. I don't know how he feels about YNAB 'cause he's got his own budgeting software. But whatever

[00:20:30] Tyler: Yeah.

[00:20:31] Steve: we love, YNAB. Um, Has the uh, that that age of money thing up in the corner and it tells you how old your money is. And I, and I still want to uh, I, I liked the, the YNAB four, before they went to a web app, and you could allocate a paycheck to a future month. Like it wouldn't go into ready to assign and then be available in that month. It would, it would not even show up until whichever month you picked uh, which is kind of what you're describing doing.

You can still do that. It's just not quite as, Smooth as it used to be, but uh,

[00:21:07] Tyler: Yeah, they won't. They won't, and they won't let you assign the money before you actually get it. Is that, was that true in YNAB four as well?

[00:21:13] Steve: yeah. Mm-hmm.

[00:21:15] Tyler: Yeah. Well, if you want to do that, Steve, there's a great budgeting app called Every Dollar Built by the Ramsey Solutions Company, and they allow you to put in your paychecks in the future and budget them.

So look at me not being only a YNAB loyalists

[00:21:33] Steve: There you go. There's more than one way to do it.

[00:21:36] Tyler: Yes, yes.

[00:21:40] Steve: All right. Let's see. Something that I got hung up on for a while while I was reading it is he, he quotes the stock market rate of return is 12% over and over and over again. And I was like, is that actually true? And well, and I went and looked it up and yeah, basically, It is still basically true, but that

[00:22:02] Tyler: I know he gets a lot of heat for that, and

[00:22:04] Steve: he does

[00:22:05] Tyler: number, but.

[00:22:06] Steve: or right.

And he wrote the book. I don't know, when did he write it originally? This, this copy I have was copyright 2013, but I think he, the first edition was like 2003 or something.

Yeah, 2003, 2007, 2009, 2013 are the copyright dates in this edition. And so that was before the 2008 financial crisis where you'd had a long run of stocks going up and then a big crash. And even with that, if I look at 2022's numbers, they still average out to 11 something percent. I think. So like if you, if you have that long of a timescale, 50 years or so, then that's basically correct still.

But the, you know, if, if you're, if the money is something that you need to use five or 10 years from now, you can't count on a 12%.

[00:23:04] Tyler: Right

[00:23:04] Steve: like obviously you can't count on any pa past uh, performance is no guarantee of future results,

[00:23:10] Tyler: Right.

[00:23:11] Steve: uh, In any case, but, Anyway, so I guess what I'm getting at is I still think it's a useful rule of thumb investing is eventually going to get you a good rate of return, whether it's 12% or not, I don't know.

But that'll, that'll all depend. But it's probably a better use than just stuffing it under your mattress or holding debt and paying money to have spent it before you earned it kind of thing.

[00:23:42] Tyler: Yeah, that's interesting. I, I, I've kind of wondered about those numbers, but not really cared to look into it because looking at the stock market and my investments is like, I gotta just remind myself 30 more years, 30 more years, don't worry about it.

You know? And you know, overall over the, gosh, I don't even know, 10 plus years that I've been in the stock market net, it's definitely up

[00:24:05] Steve: Mm-hmm.

[00:24:05] Tyler: about, about that, believe it or not. That's interesting. Despite the scary times, right

[00:24:11] Steve: Right.

[00:24:14] Tyler: One of the things you mentioned that the book spends quite a bit of time, five or six chapters, setting the stage for what his plan will be. Part of that sitting the stage is outlining the problem that faces so many people in today's world. And one of the points that he made that really resonated with me based on my work as a personal finance coach is that in particularly in our country and and probably many places in the world, our systems are structured in such a way that we can live on the financial edge without realizing it. And he said, it's possible to not realize that you're in financial trouble until it's too late. And I find that concept fascinating. It almost feels like the, it's on purpose, right? Like the systems were set up that way. And I don't know if that's true or not, but it almost feels that way because we are enabled to consume, right? And our economy loves consumption and loves buying things. And so we're enabled to do that to such a high level through credit and debt that it's almost like you can be quite heavily in debt and still have a normal life. You know what I mean?

[00:25:27] Steve: Yeah.

[00:25:28] Tyler: your minimum, minimum payments on your credit cards, even if you're carrying a large balance, you might not feel like you're in trouble and you might not experience actual trouble until the first domino falls, right?

Like maybe you lose a job or you miss one payment. Then things really start to get outta control. I just find that concept fascinating, and I've seen that over and over again with my clients. You know, they're making great money, they have comfortable lives. They're not showing outward signals of like financial distress or anything, but when you dive into the books, look at their bank accounts, look at their statements and everything, it's like, oh, I can see why they're wanting to work with me.

Right? Because uh, they actually are not in a good financial situation. Uh, Good is an interesting word I should say. If they're in a high risk financial

[00:26:16] Steve: Mm-hmm.

[00:26:17] Tyler: it wouldn't, it wouldn't take much to go from where they are to like total destruction. Right. And a lifetime of, of debt, of never being able to pay it off.

Anyway, I just think that's fascinating.

[00:26:27] Steve: Yeah, that is fascinating. That I don't, and I don't think I would've realized that either. But you've got kind of an inside view on that, working with so many clients.

[00:26:38] Tyler: And, an especially insidious way that this looks like is someone who's like, oh, I'm fine. I pay off my credit cards in full every month. The statement balance. That, that sounds really good, right? And it can be really good, but there's a really easy test to find out if you're actually in more debt than you, or in more trouble than you think you are.

And it's really easy. You just look at your total balance on all of your credit cards. Not just what's due, not just your statement balance, but like all of your spending up to today, right? Your total balance, and then you look at the balance in your bank account, and if the balance on your credit cards is more than the cash that you have on hand, then you're in debt and you're actually potentially in trouble.

You're in this risky situation that we're talking about. If you don't have enough cash to fully pay off all your balances, including stuff that's in your current billing period, so that's.

[00:27:31] Steve: Yeah, you're riding on this float, but you may not even realize it.

[00:27:35] Tyler: Yeah. Yeah,

[00:27:37] Steve: Mm-hmm. That is really interesting and that's happened to me before in the

[00:27:43] Tyler: me too.

[00:27:44] Steve: where I've been like, oh, you know what, actually I thought we were okay, but if I had to pay these off today, I would not have enough cash to cover it all, or I would, but I'd have to pull it from somewhere that I don't want to.


[00:27:57] Tyler: Right. It's interesting. It's actually that exact phenomenon that got me into budgeting seven or eight years ago, whenever it was, because I had, I, it was an intuit intuitive thing, like I didn't realize that's what was happening. I just couldn't figure out why I was, I would wanna make a purchase. And I look at my bank account balance, I look at my credit card balance, and I'm like, I could buy this right now, but I will need my next paycheck to pay off the credit card. And that was so frustrating to me. I couldn't figure out why I couldn't, you know, I was a lot dumber back then than I'm now. I'm working on it guys, but, but like, I couldn't figure it out. I could not figure it out. And, and finally I discovered YNAB actually, and they taught me about credit card float and this exact thing that we're talking about.

And I was like, oh, it's 'cause I'm a month and a half behind. If I lost my income today, I would have no way to pay off this debt.

[00:28:51] Steve: Mm. Yeah.

[00:28:53] Tyler: Then I, I got scared and then I got into budgeting and it's been great ever since.

[00:28:57] Steve: Mm-hmm.

[00:28:58] Tyler: sorry. I'm really passionate about a lot of these things I can't help, but,

[00:29:01] Steve: No, that's good. That's what makes you good at your job. Mm-hmm.

[00:29:05] Tyler: okay. What other, was there anything else, what else stood out to you? Like, were there any like little sayings or principles that, that caught your attention?

[00:29:12] Steve: Um, Emergence, the, the emergency fund acts as Murphy repellent. You know, Murphy's Law, anything that can go wrong will go wrong. And the, as you get more of an emergency fund or as you embrace your true expenses in YNAB terms those emergencies happen less frequently or the things will still. Uh, Come up, you know, the car needs a repair, needs a new set of tires, and it's not a big deal because it's in the budget already that we were expecting, sometime in the next two years, we're gonna need new tires for the car. And so it's just there. We can handle it. It's not an emergency like it would've been. So

[00:29:49] Tyler: Yeah. I'll just say one more of mine. One, one more thing that I really a little phrase that stuck out to me. And it's how he talks about what the role of a budget is, and he just says, A budget is telling your money what to do instead of wondering where it went.

[00:30:06] Steve: I like that.

[00:30:07] Tyler: Yeah, I like that too. I think that's another common question I, I get all, all the time is like, I just, you know, I, I don't, I don't know where all my money goes. The month is over and I, I don't have any money left. You know, I, you know, obviously I went somewhere and all those were choices that were made along the way, but unconsciously, or, or, you know, without much thought or planning,

[00:30:29] Steve: And I think this is that's maybe a good way of thinking about the difference between budgeting as making a plan and then sticking to it, versus just tracking your expenses. 'cause that's more just like after the fact, oh, well here's where all the money went. Like at least you know, you have the clarity.

But this, this comes back to the 20% knowledge, 80% behavior thing where if you, you made the plan and then you stuck to it, then you were, you're the one in charge of the money instead of the decisions are just happening, and then at the end of the month you figure out, oh, well we, we overspent on eating out again, again, like the last six months. Right?

[00:31:09] Tyler: Oh, don't say that I feel attacked

[00:31:11] Steve: Oh, no, I'm talking about myself.

[00:31:13] Tyler: just Oh, okay. Both guilty.

[00:31:16] Steve: Yeah.

[00:31:17] Tyler: No, and this is like a fundamental, this is, it comes back to the per personal responsibility that we mentioned it towards the beginning of this episode, right?

It's like, are you gonna think about this as life is just happening to you, or are you gonna happen to life?

[00:31:32] Steve: yeah, I like

[00:31:33] Tyler: You

[00:31:33] Steve: Mm-hmm.

[00:31:35] Tyler: like if you're looking back and wondering, Hey, where did my money go? That's a totally different experience than being like, I have got an exciting, I've got a plan for this money that kind of excites me because I know it's gonna get me closer to my life goals and not all of my life goals are about the money.

I can't help it. Name the podcast, but like really, right? Like you wanna go on vacation, you wanna spend time with your family, you wanna retire? Like yeah, money enables all of these things, but you know, just. Having the money isn't necessarily the point. Right.

[00:32:04] Steve: Right,

[00:32:04] Tyler: You wanna use it to do stuff that you wanna do.

[00:32:07] Steve: and even the like having a pile of money as a, giving you a sense of security. It's not about the pile of money, it's about the sense of security.

[00:32:15] Tyler: Yeah. Yeah. What is that peace of mind worth? And I guess you can kind of

[00:32:20] Steve: oh, yeah. Yeah.

[00:32:22] Tyler: and then that's the size of your emergency fund potentially,

[00:32:25] Steve: Right. Mm-hmm.

[00:32:27] Tyler: Yeah.

[00:32:30] Steve: There's another little bit that I'll mention as we're wrapping up here. Near the end of the book, he's talking about investing and he says, you should always manage your own money uh, rather than outsourcing that.

[00:32:45] Tyler: Mm-hmm.

[00:32:46] Steve: his way of doing that is surround yourself with the team of people smarter than you.

And I like the way he described how you know if they're smarter than you: if they can explain complex issues in ways you can understand. So like if they just say, because they say so, then that's not

[00:33:03] Tyler: It, it doesn't demonstrate expertise.

[00:33:07] Steve: Right. Yeah. The next paragraph, he says something about uh, finding people that have the heart of a teacher, not the heart of a salesman or the heart of an expert. And he says "the salesman is always chasing a commission and thinking short term, and the expert can't help being condescending, which is humorous because they likely have less money than you."

Well, okay, so there's his, there's his his characteristic snark, but, but the finding someone with the heart of a teacher, I like that way of looking at it.

[00:33:39] Tyler: Yeah,

[00:33:40] Steve: They can explain complicated things in simple ways, but accurately. They're not just dumbing it down. They're, they're, they're actually good. They, they understand it well enough that they can convey the essence of it to someone who doesn't understand it as well as they do.

[00:33:58] Tyler: Yeah. It's a great book. There's a reason it's a classic in the personal finance space. I really do think everyone should read it at some point in their life, even if they're not gonna subscribe wholeheartedly to the Dave Ramsey method. The principles are solid. They'll get you far. And if you follow 'em, I think you're gonna be in a lot better shape than if you don't.

[00:34:21] Steve: I agree with that. It was worth reading again. Even having read it, just to refresh my memory

[00:34:27] Tyler: so, yeah, let us know what you think of these book club episodes. There's a lot of books on personal finance. We like reading them and discussing them.

[00:34:35] Steve: Indeed, we've got a whole bunch already in the queue. I have one sitting here on my desk, which I got from the library today, which is Jesse Mecham's book about YNAB the YNAB Method

[00:34:46] Tyler: Oh, nice.

[00:34:47] Steve: So I'm excited to read that one. We'll have to do that one eventually.

[00:34:50] Tyler: Yeah.

[00:34:51] Steve: If you have suggestions for books you want us to read you can send them to or if you have questions or anything like that.

We're happy to read them.

[00:35:04] Tyler: Or if you have a book on personal finance or business that you really love and you wanna talk about it, come on the podcast, let us know. We'd love to have you as a guest

[00:35:13] Steve: Absolutely. I.

[00:35:15] Tyler: and we'll see you next time on another episode of, It's Not About the Money.

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