Dave Ramsey’s Financial Peace University is on sale until Thursday. The online edition is just $59. You can also get other versions on sale. If you’ve always wanted to attend FPU, there is no longer an excuse.
Jeff and I think the program is great. We attended live at a local church but I think with all the online support, the online version would be good too. If you have any questions about FPU, please post them here.
This is what Financial Peace University (FPU) is all about. It’s a 13-week common sense program to help you get there. Our program actually lasted 15 weeks because we had two holidays during our program.
Before attending the program, I had read two of Dave Ramsey’s books: Financial Peace Revisited and The Total Money Makeover, so I was going into the program with a good working knowledge of his program. Nothing of what Dave talks about is rocket science. He describes his program as “80 percent behavior, 20 percent knowledge”. I would completely agree agree. There was very little new information. The reason that I was interested in the program was to jump start our plan. We had started with our budget and were moving along on our plan, but we thought the program might help motivate us. And it did, but at a very funny point. I’ll get to that in a minute.
Thirteen weeks is a long time. There were many times when we didn’t want to go. Because the classes were on a Sunday afternoon, it was sometimes very difficult to stop what we were doing and get to the church for our class. I always felt better once we got there though. Each class included a video and then a small group discussion. The discussions were probably the most valuable part of the entire class. It was great to sit down with others and support each other through the process. Everyone was in different stages in their lives, but we all had one thing in common: we wanted to do better.
So we went through the program, made our budget each month, and paid off $5,000 worth of debt. We were following Dave’s baby steps which are:
1. $1,000 in an emergency fund ($500 if you make less than $20,000 a year)
2. Pay off all debt except the house
3. Have three to six months expenses in savings
4. Invest 15% of your income into retirement accounts
5. College funding
6. Pay off your house early
7. Build wealth and give
It was during week 13 that we heard about step 7. Week 13’s video was titled “The Great Misunderstanding”. It was all about being able to help those around you once you get to step 7. The stories in that video touched my heart. I want to be one of the people in that video. I want to be able to help people in my community when I hear a story about a family in need. It was that video that made me want to complete the program and get debt free.
Was the program worth it? Yes, I completely think it was. Being there every week made us really focus. Jeff and I are now both involved in our financial future. The financial stress I felt before we started the program is almost completely gone. We have a written plan for our future and I know we are going to get there.
If you have specific questions about FPU, please feel free to post them here. I did not going into a lot of detail about the program since I’m currently rereading The Total Money Makeover in order to review it for the blog and get those ideas refreshed in my head. If you have attended FPU, please post your thoughts here as well. I think it’s a great program that can really change your life.
I’ve posted here about trying to use cash for certain things, like groceries, because Dave Ramsey recommends it in FPU. Well, I’m here to tell you that I have given up on cash. I use my debit card for everything except purchases at small businesses that will accept checks. I write checks to save the business the credit card processing fees and I can write a check pretty fast. I hate using cash. I don’t like having cash on me, it’s slow and it’s more difficult to track. With my debit card, I know I spent $2 on a coffee and $1.50 on a copy of the WSJ. With cash, I only know I spent $3.50 today. With my debit card, I don’t have to count out the money and then hand it to the cashier and wait to get change back. I know that statistics show that people tend to pay more with debit cards, but I’m on a very strict budget and have to stay within that budget. I am very good at sticking to that budget.
So, I tried. The only things I’m going to use cash for are large purchases. That way I can flash the cash to get a better deal. Other than that, it’s debit all the way.
How do you feel about cash? Does it drive you crazy? What’s your favorite way to pay for things?
While I haven’t been talking about it, I am still attending Dave Ramsey’s FPU. I’ve decided to wait until the end of the program to do a full analysis of it. There are some weeks that have been really interesting and some that have not, therefore I want to wait until the end to give you a good impression.
There is one aspect that I want to discuss now since I think it’s worthwhile to many of my readers. The program encourages participants to create a zero-based budget each month. I think this might be the best part of the program so far. At the beginning of May, Jeff and I estimated our income for the month. Since I’m self employed, I use a low-balled figure for my income. It’s an amount that I know I can make each month without a problem. We then sat down and spent it all on paper. Food, housing, transportation, utilities, fun, personal needs, debt payments and donations were all budgeted. We spent every penny on paper.
I can’t tell you how little you worry about money when you have a plan. You don’t find yourself wondering if you are going to have enough money to pay extra on the debt or how you are going to come up with the money for that large auto repair bill in a few months because you’ve already budgeted for it. As you spend money during the month, you need to have a way to compare your actual numbers against your budget. You can use a personal finance program, like Quicken or Money. Dave Ramsey subcribers get access to Gazelle Intensity, which is what I’m currently using to do our budget. You can use Quickbooks if you have a copy of the software and download your banking information into the program. You can use a spreadsheet or paper and pencil. You just need to have some way to know where your money is going.
Last month, there were a couple things were were over budget on (silly me for forgetting to budget for medication when we are in the middle of allergy season), but there were more categories that we were under budget on. All that extra money was rolled into planning accounts for future use. For example, I had about $60 left in my gasoline budget. That $60 is going into my savings account as part of my car replacement fund. Money I budgeted for gifts (including Christmas) will go into the savings account until Thanksgiving and then will be transferred back into checking.
I know this sounds like a lot of work. I won’t lie to you. It is a lot of work the first month you do it. I suggest you do your budget on a spreadsheet or in a program that allows you to copy your budget from month to month. If you do that, your second month should take you about 20 minutes. I just copied May’s budget, changed a few numbers and was done. The tracking should be done each week and will probably take you about 30 minutes depending on how much banking activity you have. I just download everything into QuickBooks from the bank and then review where we are compared to the budget.
I really love the idea of zero-based budgeting. Know where every penny is going before you spend it and then you don’t have to worry about it for the rest of the month. You have a date book or calendar to plan your schedule, right? Why not plan your money the same way?
For week one of Financial Peace University, we had to do a quicky budget. This was a breeze for us since we had just done an updated budget a few weeks before starting FPU. I did slash my grocery budget though. I’m trying to spend $250 a month on food. That’s groceries, eating out, everything. I get $250 every four weeks, although I’m trying to stretch that out to the first of each month, but since I started the budget, I took the first month of grocery money (technically May’s money) April 23th.
I’m also paying for all the food with cash, using Dave Ramsey’s envelope system which came in the FPU package. It’s a pretty nifty little file. It’s got envelopes in it that are held together in a spiral file along with a little zipper pocket for your change and a few loose envelopes. You put each category in an envelope and when you need to spend on that category, you take the money out of the appropriate envelope. There are also lots of lines on each envelope to record inflows and outflows of cash so you know how much you’ve got left. At first I was pretty apprehensive about using cash for anything. It’s slower than using the debt card and I really didn’t think it would change my spending habits much. I have to say that so far, I’m a fan.
This has not been the most frugal week for groceries. My original plan was not to spend anything on groceries until May 1. Well, that went out the window when we had the water problems. We went to Wal-Mart to get drinks, water, cat food (gotta feed them or they get pissy), aluminum foil and parchment paper (we’ve been out for a while). We also got some snacks for lunches and a few things that were marked down. They had hamburger helper double packs for $2, which around here is an awesome deal plus we were out of HH. I had a few coupons and the water and soda were generic. I also got a copy of AllYou Magazine after reading about it on another blog. It had $78 worth of coupons in it for $2. I thought I should check it out. It should more than pay for itself.
We then went to a local produce store that everyone I know has been raving about. We did well there. I bought a head of iceberg, a bag of romaine hearts (2 or 3 in the bag), mushrooms, a pepper, an English cucumber and a bunch of bananas for $10 bucks.
Before hitting Wal-Mart, we were both pretty hungry so we shopped at Wendy’s. Am I the only one that has a heart attack when you get your total at fast food places now? I remember when you could get the Big Mac meal at McDonald’s for 2.99. Now it’s almost $7. Wendy’s cost us $14 but going to Wal-Mart on an empty stomach is a really bad idea. I see the $14 as a coupon really, since we might have spent more than that in additional crap at Wal-Mart. Never go shopping when you are hungry.
I’ve also made two other small trips to the grocery store. I really wanted hamburgers this week and we had dinner at a friend’s house last night and we picked up a few things at the grocery store. I also bought a coffee at a local coffee shop so I could use their WiFi to get some work done between appointments. That cost me $2, but I did bring my travel mug which saved me about 50 cents. Plus, the WiFi was free and I didn’t need to drive all the way home to get work done. Still a food purchase but it saved me time and gas.
I started with $250 in my envelope. I have a balance of $168. I spent $82 on food this week. That is a lot of money for the fact that I was planning to spend nothing this week. Was it worth it? I think so. I spent $7 at the grocery store to get stuff to make hamburgers. Had we gone to Wendy’s it would have cost another $14. I could have eaten something else but it was hot and I really didn’t want to heat up the house. We were on the verge of it being an “order-pizza-quick!” night. That would have cost $20 bucks. Yes, I spent money on food to bring to a friend’s house which was not in the plan, but we don’t get to see them as often as we’d like and it was a lot cheaper than going out. I spent about $10 on groceries and checked for sales on chicken before I left the house. I paid $1.99 a lb for boneless skinless chicken. Much better than the $4.69 or more you normally pay at the stores around here.
The week was not as good as I had hoped. I think spending cash has really helped though. I know that balance off the top of my head and it makes me think twice about adding something to the cart.Plus counting out the cash really makes you think about how much you spending. How many times have you gone to the store and not even looked at the total before swiping the card?
I’ve still got $56 a week if I use the four week plan and only $42 a week if I try to stretch it out until the end of May. I think I can probably make it to the end of May. We’ll see how it goes. If I’m going to do this, I need your best tips to stretch my dollars. We are going into warmer weather so I need good summer tricks. I find we tend to spend more on groceries in the summer since we buy more fruits and veggies and more meat to grill. How do you save on groceries?
I also wanted to mention that Dave Ramsey is having an awesome sale over at his website. If you are interested in his books or any of the other Financial Peace tools, now might be a good time. It’s also a good time to pick up extra books as wedding or graduations gifts.
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?
Next week, I’m starting Dave Ramsey’s Financial Peace University at my church. It’s a 13-week financial course, two hours per week. I’m sure some of you are thinking Kristin, you’re a CPA. Why are you attending a financial course? I’ve read two of Dave’s books: The Total Money Makeover and Financial Peace Revisited. I loved both of them. Jeff and I are currently using Dave’s budget. Plus, there are always new things to learn. I’m still not sold on his cash system (paying for everything with cash, no debit cards). Maybe after the course, I’ll feel differently. I also know some of the couples that are going through the program, so this is like a 13-week support group to get us all jump started.
I am pleased to announce that we paid off our last appliance this week. We purchased all new appliances, one by one, after we moved into our house. They were all old and needed significant repairs. We purchased them all with interest free financing and paid the balances before the 0% period expired. Last night I made the last payment on the washer and dryer. We are also planning to pay off one of our student loans this month. It was a small student loan that I took out my freshman year in order to pay some expenses my other loans didn’t cover. It feels awesome to knock down our debt. I was also able to purchase 2 new computers this month (yes, I said two. That’s a blog topic for another day) with cash and without touching my savings.
I was paying a few bills last night and decided to pay the utility bills and the credit cards so I could determine if we had enough to pay off the student loan. I realized that I could not pay these bills because I had paid them last month as soon as the bills arrived and the new bills have not arrived yet. It feels so good to be that far ahead. I hope you have reached that kind of financial peace. I know we still have a long way to go, but it feels good right now. If you haven’t reached this point, consider picking up one of Dave’s books.
Have you attended FPU? What suggestions do you have for those about to start? Do you need to read Dave’s books before attending? Have you attended other financial workshops that you thought were good?