Going Old School: What To Expect When You Take Financial Peace University

At the beginning of each spring and fall, you can expect a number of churches across the country to begin promoting Dave Ramsey’s Financial Peace University (FPU). Personally, I am a huge advocate of FPU for the simple fact that I have seen the program help change lives.

My spouse and I will begin facilitating our third set of FPU classes within the next few weeks. When we originally purchased the FPU Kit at a Dave Ramsey Live Event in the spring of 2010, we sat the kit down, looked through the contents, and passively looked for a class in the fall of 2010. Unfortunately, we could not find classes that fit our schedule close to home. We waited a few more months, and finally found one that was definitely worth the wait in the spring of 2011. We had a great coordinator and facilitator who cared about our progress.

We could not have imagined what the classes would do for us financially, emotionally, and spiritually. We attempted to pay down debt on our own, but FPU really helped us to get Gazelle Intense. Additionally, it was great to know that there were others, like us, who were simply sick and tired of making payments each month with so much of it going to interest. Saturday Night Live has even poked fun at the topic of credit and consumerism with the following skit:

Saturday Night Live – Don’t Buy Stuff

So, what can you expect when you take Financial Peace University? You can expect to go old school by paying for purchases using only cash or your debit card. You’ll also learn to:

• Build a budget,
• Start saving money for your emergency fund,
• Eliminate debt with the Debt Snowball,
• Retire with dignity,
• Pay off your home early,
• Save for a college education,
• Accumulate wealth, and
• Give like no one else!

Personally, I have given away a few of Dave Ramsey’s books and an FPU kit, and I am grateful I can help others get a jump start towards changing their family trees. The cost to attend FPU is roughly $100 for all of the study materials, but it is well worth the investment. Since the kit comes with a Lifetime Membership, you could attend refresher classes later at no cost to you at any site that offers FPU.

This weekend, I spoke to a number of people who were very happy to have gone through the program. These people are just like you and me. They are:

• single, married, divorced, or widowed;
• mothers, fathers, sisters, brothers, daughters, sons, grandparents, and pet parents;
• uneducated and educated with G.E.D.’s to Ph.D.’s; and
• unemployed or working, earning low incomes and high incomes.

On a final note, Financial Peace University is not the only program out there. Gail Vaz-Oxlade, Suze Orman, Clark Howard, and a number of other financial gurus have similar programs to help you pay down debt and save money. I encourage you to take a look at various programs and find one that works for you and your situation.

Will FPU work for everyone? By all means, no. If you follow the Baby Steps diligently, you will start pay down debt and grow wealth. It won’t be easy, but it was worth the sacrifice to my family and the students in our FPU classes. On the other hand, if you continue to use money as you do, then I can pretty much guarantee that things will not change, and may even get worse regardless of whose plan you choose to follow. Unfortunately, not everyone is ready to stop using credits cards, stop taking out student loans, stop financing new vehicles, and stop buying into the current trends. It’s harder to hear this when people admit that they are broke, but refuse to change their lifestyle.

As for my family, and me, we’re done keeping up with the Jones.

Saving for a Rainy Day: Building Your Emergency Fund

Deciding to say, “No” to credit can mean that substantial changes must occur in your life. Your savings, spending, and shopping habits will need to be evaluated.

You should determine how much of a safety net you need for living expenses. My grandparents called this “The Rainy Day Fund.”

What do the experts say about the Emergency Fund? Let’s see what they recommend:

• Dave Ramsey: In Baby Step 1, Dave says should save $1,000 as quickly as you can. If you earn less than $20,000, shoot for saving $500. After you have paid off all of your debt, except the house, you should maintain an Emergency Fund of 3-6 months based on your living expenses.
• Suze Orman: In the past, Suze would encourage people to save six months of living expenses. Now, she recommends saving eight months of your living expenses.
• Gail Vaz-Oxlade: Gail encourages people to have an Emergency Fund amounting to six months of living expenses. If this seems overwhelming, she encourages saving $500 to start your Emergency Fund.

So one thing is clear, we need about six months of living expenses in our back pocket at all times. (On a serious note, keep your money in a savings account at a credit union or bank. I have had heartbreaking conversations with people whose relatives saved their money in places such as a mattress and had it stolen or lost it in a fire.)

This is why my spouse and I decided that we needed an Emergency Fund:

• We own (correction) owe on a home. Since we pay a mortgage each month, we are 100 percent responsible for everything that occurs on our property lot – like it or not.
• People, pets, and possessions will get sick. If we need to go to the doctor, take a pet to the vet, or take a vehicle to the mechanic, we don’t want that expense to come home with us.
• We need to protect our dependents: When you have children, move-in a relative, or adopt a pet, you have indirectly told them that they can trust you, and you are looking out for their best interest. Keeping your finances in check is part of that commitment.
• We needed protection in case of a lay off. My spouse had already survived two rounds of lay-offs. We wanted to make sure that we could weather the storm, if needed.

In the end, we have been able to build an Emergency Fund of three months. In order to do it, we worked on our budget, trimmed our expenses, and stopped borrowing. We aimed to keep our living expenses at 80 percent of our income or less. The next 10 percent of our income was dedicated to the Emergency Fund. Each time we got paid, we transferred funds. The last 10 percent went towards debt by paying the minimums. If we didn’t have enough for all of the creditors, we didn’t pay all of them. Those creditors below the line just had to wait, especially when we helped a relative purchase an inexpensive used vehicle with cash.

Sacrificing our time was the one step that helped us do this quickly. My spouse and I both taught in the evenings for nearly six months straight in early 2011. Generally, we worked from 8 a.m. to 10 p.m. most days of the week. It was a great way to pump up the Emergency Fund quickly, but seriously consider whether you have the time and the resources to take on two jobs temporarily. It is a rewarding, yet exhausting venture.