2.06.2013

Financial Peace


For the past three weeks, Hubby and I have been attending Dave Ramsey's Financial Peace University: A nine-week "Biblically based curriculum that teaches people how to handle money God's ways" at a nearby Church.

When I first posted a Facebook status a few months ago about the state of our student loan debt, the response I received was overwhelming. So many of my friends shared great advice (and empathy) in how to go about ridding ourselves of the $125,000 monkey on our backs. That's right, $125,000. (Is the second job beginning to make a little more sense?)

Several people recommended using FPU as a resource, and after three weeks in class and 7 chapters into his book, Dave Ramsey's Complete Guide to Money, I know why! Everything Dave speaks to is so simple, and yet so very contrary to our debt-ridden consumerist culture.



I know that there are a heck of a lot people my age who are in the same boat, so I wanted to take the opportunity to share a couple things I've learned so far and steps we're preparing to take.

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1. Don't buy on credit.
If you don't have the cash, you can't afford it. This is one of those "simple, yet contrary" principles I was talking about. It makes so much sense and yet, Rent-to-Own and furniture stores continue to make big bucks off of 90-Days-Same-As-Cash plans. From now on, any money we spend to make big purchases will be hard-earned savings and not credit card debt that we'll carry for the next 10 years.



2. The "Debt Snowball."
Dave's method for tackling debt is ingenious. For years, I've been making the mistake of trying to pay as much as I can toward each of my bills in hopes of paying them off sooner. But with Dave's plan, we're going to begin paying only the minimum on all our credit card/student loan bills with the exception of our smallest debt, until the smallest is paid off. Then with the money we've saved in paying off that debt, we'll apply it toward our next biggest debt, creating a sort of snowball effect. This way we can keep the momentum going and pay our debt off faster!

3. Money management is 20% math, 80% behavior.
Oh, how true this is. We can already tell the biggest battle we face is those little seemingly insignificant purchases that add up fast! Buying ad space, iTunes, booze after a long work week. Our goal is to set $20 cash aside each month as personal spending in order to curb these habits.



4. Renter's Insurance.
Up until today, I have never had renter's insurance. Not because I didn't think I needed it. But mostly due to sheer laziness and a lack of desire to create another bill for myself. However, I realize how risky and foolish this is. If, heaven forbid, a fire were to start in our ancient duplex we would lose all of our possessions and our landlord is under no legal obligation to cover our losses. We don't have many valuables, but having to buy all new clothes, furniture and electronics would set us back like crazy if the worst ever did happen.

5. Your credit score is bulhonkey. 
A credit score is not a determination of your income or net worth. It is simply a way of telling creditors how in debt you are and your payment history. Count me out! From now on, no more buying things on credit or signing up for payment plans. We're cash-only from here on out!

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These are just some of the lessons that have stuck with me over the last couple weeks, but Dave has so much more incredibly insight to share. If you could use some help in tackling your debt, learning how to budget or figuring out how to save and invest- Financial Peace University is definitely something worth looking into!

And stay tuned for more money talk to come!

All images courtesy of DaveRamsey.com

10 comments:

  1. 1. Behavior change is so hard but so worth it! Dave is so motivating though and that really helps haha.

    2. The debt snowball is a fantastic way to pay off debt and if you stick with it it will work and your debt will become less and less until it is nothing!

    3. We never did renter's insurance. I had absolutely nothing of value and I figured it I lost everything that the good people we know would step up and be as awesome as they are. I know that's putting a lot of stock in the good in people but that's my way of doing it haha. Not saying it's the RIGHT way. Just the way we did it.

    4. If you need a financial advisor I'd be happy to get you in touch with mine. They do not charge you anything to come to your house and do a financial assessment. They won't sell you something you don't need. They really helped us out a lot with our life insurance (got us a much better deal!) and with our investments. And they follow Dave Ramsey's teachings. Let me know if you are interested! (I get nothing for referring you. I refer them because I believe that they did their job well, pushed nothing on us that we didn't need... actually pushed nothing on us at all... and will help us save loads on taxes on our investments over the years! They were super!)

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  2. Don't feel bad, because mine is over 200K. But good luck with it! Keep the tips coming because I need all the help I can get! :)

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  3. Such a good post!!! I get so worried about student loans. But I hear he is good!

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  4. FPU is the best wake up call ever!! i agree his methods are SO simple. they just take a lot of will power. going to those calls you just get SO fired up about kicking your debt. it's awesome!

    good luck to you guys!!

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  5. I haven't done FPU, but I'm currently reading his Total Money Makeover book, and am amazed at he whole "no credit" concept. Where was this book when I was younger?? Would have saved me a lot of stress!

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  6. LOVE FPU! My husband and I went through the class back in 2011 when we found out we were expecting. We knew we had to change something about our financial situation. It really helped a lot. Though we didn't have near the amount of debt you guys had, we were able to pay of a total of 13,000+ in oh....7 months? Something ridiculous that we didn't even think was possible. It did require we hunker down and not spend on ourselves as much but it's so doable and you feel so free once it's gone! Keep up the good work!

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  7. Love this!! :) :) Love Dave Ramsey! We have paid off my student loans. That was a relief!!! Next we are going to pay off our mortgage (it's not much - we live in a trailer - but hopefully after that we can get a HOUSE!). :)

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  8. This is awesome! The hubby and i are on that road too, praying we will be debt free soon:) And yes i am right there with you with the loans!!!

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  9. LOVE!! I found you through A Brew of Blessings. Was looking for a designer, but I LOVE this!
    I am a big believer in FPU. I believe it should be a graduation requirement. :)

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  10. So glad it's going well for you! I've heard so many testimonials I figured it must be great. I really would love to go through it. Jon's schedule makes it difficult to commit to it, but I really want to do it at some point.

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