Financial Peace {Part 1}

Our church, Trinity United Methodist Church, is currently offering Dave Ramsey’s Financial Peace University.  This is an eight week program that is designed to help people eliminate their debt, develop savings, focus on retirement and investing, and be purposeful and mindful about their finances.  The timing seemed perfect for Bradley and I given our recent marriage and merging of bank accounts.

Our first class was on September 14, and I was relieved to see that it was a small group.  I was so impressed with how honest and forthcoming people were about their financial situations.  There are about four other couples in the class and each one seemed to have their strengths and weaknesses.  It felt like a safe place to have real conversations about how we treat money now and how we should treat it moving forward.  I was also surprised to find that Bradley was fairly talkative!  I appreciate that he is taking this seriously despite the fact that this adventure has “Britney” written all over it.  We are building a life together and his contribution is vital.  While it may not be his most favorite thing to do, he does it for me.  I couldn’t ask for more.

FPUIt wouldn’t be a life-changing workshop without a cheesy packet of goodies.

 

Overview of Financial Peace University

Dave Ramsey offers seven “Baby Steps” toward building financial peace:

  • Baby Step 1 – Immediately set aside $1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball method, with the exception of home mortgage
  • Baby Step 3 – 3 to 6 months of expenses in savings
  • Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
  • Baby Step 5 – College funding for children
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth and give!
FPU2.jpgOur workshop packet came with a workbook, a copy of (one of) his book(s), and a blue envelope that we haven’t learned about yet.

Our first class focused on savings, particularly steps 1 and 3.  An emergency fund of $1,000 gives you some peace of mind and makes it harder to use the credit card when unexpected expenses occur.  This fund isn’t meant to be the final step toward emergency preparedness – that is what step 3 is for.  The $1,000 just gets you started.  Step 3 is where you get real with your savings and set yourself up to be able to pay for those big emergencies – like a new roof or a new transmission – without the stress and worry that being financially unprepared creates.  

shop.jpgThe real reason for wanting financial security – so that we can enjoy life’s pleasures without feeling ill-equipped for life’s hardships.

And that was my biggest takeaway.  Being financially stable gives us one less thing that we have to worry about.  If the car breaks down, we don’t have to struggle to come up with the money or begrudgingly put it on a credit card with sky high interest.  We simply pay for it.  And maybe the punch to our savings account hurts a bit but that is what those funds are for.  Dave Ramsey encourages you to set up those funds in a money market account with check writing privileges so that the money is fluid.  Sure, you could invest it and make more money off of it, but that is not the purpose of that money.  That money is available for emergencies.  And emergencies typically don’t offer the luxury of waiting 3-4 business days for investments to be cashed out.  So you save the money, you pay for the big expenses that life hurls at you, and you move forward.  You don’t stay up late from stress.  You don’t snap at your spouse because you are worried about making ends meet.  And you give yourself the freedom to gracefully accept life’s obstacles because you planned ahead.  If taking this class means we have fewer worries and arguments in our marriage, then sign me up.  Too late:  I already signed myself up.

budget.jpgMy beautifully color-coated budget that was made better with an ice-cold Cheerwine.

The hardest part of this week was sitting down and developing a budget.  We finally created a joint checking account the night after the first class and started the process of moving our direct deposits and changing over automatic withdrawals.  The numbers weren’t the hard part.  The hard part was figuring out the details of our budget.  How much play money should we have and what is considered play?  (This one is still being debated.  We may seek the advice of the other couples in our class.)  Who has been paying what bills and when are they due each month?  What is our total amount of debt and which would we like to pay off first?  Thank goodness for Cheerwine and a good-spirited husband.

flower closeup

For those interested in the course, I will say that Dave Ramsey incorporates Christian values and scripture readings into his courses.  There isn’t a lot of it but it is present.  Regardless of your faith or personal beliefs, I can’t find much wrong with the attitude that, even while trying to be conservative with your money, you cannot abandon the thought of living a charitable life.  I also appreciate the idea that by eliminating my debts, I give my money more of an opportunity to be of service to others.  What if our own financial freedom allows Bradley and I to help a friend or family member in need?  What if our money could be donated to help our community during a time of crisis?  How much richer would our lives be if we had the ability to help others financially?

“If you do the things you need to do when you need to do them, you can do the things you want to do when you want to do them.”  Zig Ziglar

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