The Ragged Diary is a diary that belongs to Ghost T. Ghost T. was previously a passenger on the Excess Express. He later passed away in his cabin and is tied to it by his fear of someone ever reading his diary, which was still on the luggage car of the Excess Express.
When Mario and his Partners come to his room (Cabin 4), he asks Mario to find his lost diary. Ghost T. specifically warns him to not read it. When Mario finds the diary in the baggage car, he is given the option to either read it or put it away. If he chooses to read it, he will be asked many more times if he is sure. If he confirms all of the questions, he will read this:
Month X Day X Cloudy I got on a train today, And on that train...
After reading very little into the Ragged Diary, Ghost T. will appear in the baggage room, yell at Mario and company, and curse him with an automatic Game Over. If Mario does not read it, he will return it to Ghost T. and receive the Blanket.