Jeff and I started Dave Ramsey’s FPU yesterday at our church. Financial Peace University is a 91-day (13 week) program to help get you back on track financially. I have already read Financial Peace Revisited and The Total Money Makeover. We’ve been using Dave’s strategies for over a year and paid off about $13,000 in debt last year. In the last 30 days we’ve paid off one credit card and one student loan. We decided to do the program to help jump start our budget and really get things moving. Our goal is to get everything, except the house paid off in the next two years before we start a family.
The sessions work like this: each Sunday, we meet for two hours. For the first hour, we all meet together and watch the video for that lesson. Then we meet in small groups to discuss the lesson and our own personal situation. Everyone agrees that whatever is said in the small groups is confidential. Doing that really helps people to open up and share. We have a large number of people taking it at our church. Over 60 people signed up. There are people in all age groups. There are people in all different situations. For me, I think it’s great to have the small group discussions so you can get feedback and support from other people. It keeps me motivated to keep going.
The first week is about saving and the introduction of the baby steps. The first baby step is to save $1,000 in an emergency savings account. We have already done this, since we’ve been following the plan. He wants you to do this in the first month of the program. If you household income is less than $20,000, he suggests you put $500 away. He then jumps to step 3 to discuss having three to six months of expenses in savings. While we are on savings, we should discuss savings, right? The part that bothered me was that there was no discussion of how to get there. I thought maybe it would come in the discussions. It didn’t. I thought maybe it would come in the reading from the book (as part of the homework, you were supposed to read a couple of chapters from Financial Peace Revisited), which I reread last night. It wasn’t in those chapters either. I went through the CD’s and the online resources. Still no suggestions. I haven’t checked out the message boards yet. I’m sure there are probably suggestions and discussions there.
The one message I did really like from this week: Look at your emergency savings as insurance, not an investment. This is your insurance plan in case your furnace stops working or your car breaks down. The one change we are going to make is to open an Electric Orange Checking account so that if we do have an emergency, I can write a check from that account to pay the bill. That way, I don’t have to put the emergency on a credit card while waiting for the Orange savings account to transfer the funds to my regular checking account. It would be too easy to carry a balance and use that transferred money for something else.
My fear is that some people will look at the first baby step and think that this just can’t be done. If you had to save $1,000 in 30 days, how would you do it? Where would you cut back or how would you increase your income?