Financial Peace v2

A few weeks ago, I wrote an introductory post about the Financial Peace University class we'd been involved with since January and what we had learned. Our last class is next Saturday and I have to say, it's a little bittersweet. As things begin to wrap up, however, I wanted to share how we've been applying the advice of our personal finance guru, Dave Ramsey.

1. Discipline is hard

This is the first lesson we've learned. Dave says that personal finance is 20% head knowledge and 80% behavior and boy, is he right! Owning up to your splurging and unnecessary spending is no walk in the park. But Hubby and I have committed ourselves to getting out of debt and we work every day to get one step closer to that reality.

We've gotten much better at passing up the opportunity to order a pizza when we have cupboards full of food that need eaten, and have been saving up money for the trips we have planned for the spring and summer, so that we aren't taking a hit in the "gas" category of our budget when the time comes.

2. Emergency Fund

Dave's very first Baby Step is to put aside $1,000 for an emergency fund. We're not there yet, but expect to be in one or two more paychecks. This will ensure that if something unexpected happens, we won't be completely screwed.

3. Our Debt Snowball

So although it's a little embarrassing sharing the extent of our debt, I wanted to give an honest of portrayal of our current situation and how we're tackling it. I know there's a lot of people in the Blogger world who are in a similarly tight financial place, so I hope we can serve as inspiration!

Using Dave Ramsey's FPU software, I plugged in all of our current debts (most of which are student loans). These are outstanding debts, but this does not include regular bills, gas, rent, etc. 

This shows all of our debts, ordered least to greatest, along with the minimum payments for each. The trick of the debt snowball is not to pay off debts with the highest interest rate, but to focus on tackling the smaller debts first and then applying that minimum payment toward the next largest debt...creating a snowball!

This graph illustrates what our debts will look like as they're paid off and gives us a time frame of when we can expect to be debt-free.

Lastly, this cute little illustration shows when we can expect to pay off specific debts using the Debt Snowball method and the exact month and day we'll be debt free!!!

These figures are based on the calculations if we were to use the Debt Snowball method, and don't include any extra money. So, as our incomes increase we'll be able to apply any extra funds toward our debt and hopefully pay it off even sooner!

4. Tax Refund

As I previously mentioned, unfortunately about half of our tax refund went toward car repairs, but I'm just thankful we had the money! The remaining funds went toward paying off our smallest debt in full- my Mom's credit card! We used this to pay off the remaining balance of our honeymoon, and I'm so glad it's one less thing to worry about!

5. Planning for our Future

Because of Dave's lesson on Real Estate & Mortgages, we came away with a much more realistic idea of when we can start growing our family and buying a house. Dave suggests the following before investing in a home: 

1. Have zero debt, 
2. Have 3-6 months worth of expenses saved, 
3. Have enough money saved for a 20% down payment. 

So although our my baby fever is running rampant and we'd love to have four walls to call our own, we've accepted that we have about 10 more years before we can expect to buy a house. It's a little discouraging, but it's also really helpful to have a timeline in place for our future. No babies for us any time soon!

I hope this was helpful to anyone in similar financial standing. If you're interested in getting a better grasp on your personal finances, I would highly, highly recommend Dave's class.

Go HERE to find a class near you!

All images courtesy of DaveRamsey.com


  1. Love this post!

    The emergency fund is the best thing ever! EVER!!

    We did the no debt, 6 month emergency fund, 20% down before buying a house. It took some years and everyone else seemed to be buying houses in the meantime. And everyone was asking us why we were still renting... nine years after we got married. The answer is because we weren't ready to buy yet... we didn't have our 20% down. Did renting get old sometimes... yep. Was it worth it? Absolutely! And the crazy thing is that we most likely owe less on our house than most of those people who bought years ago. I can't wait to be out of debt again!

    BUT... you don't have to have all those things before having babies. :) We added two babies along the way. Does it change things? Yes. Did it make it a little harder? Yes. But it didn't make it impossible.

    So excited for you guys! You are on such a great track! I think I mentioned it before but I know some really great financial guys that would go to your area. SUPER helpful. Push nothing on you. Free assessment and advice. Follow Ramsey's teachings. They helped us get sorted with mutual funds, retirement and life insurance. I'd be happy to hook you up with them if you want.

  2. Thank you for this post! I think I told you before, but I'm reading Dave's Total Money Makeover book, which I'm pretty sure he published after his Financial Peace book. So it has all the same info plus a little more. I haven't taken his classes yet but I've already learned so much! I love this software, I should probably buy it so I don't have to use a pen and paper to make our monthly budgets! Although we are not 0% debt free, we are in the process of buying a house. Our debt is pretty low because neither of us went to a university and both of our cars are paid off. We don't have 20% down and we won't be doing the 15-year mortgage he recommends. We'll be doing the typical 30-year. Part of the reason we didn't want to wait was because interest rates are at an all-time low right now (3.25%) and they are slowly creeping back up. My Mom told me when she bought her first house, interest rates were at 12%!! That might be something to consider, I'm not sure if there's a way to predict what interest rates may look like in 10 years but I'm really curious what Dave has to say about that! Also another tip I recently read (not from Dave) is that if you pay one extra mortgage payment a year, it can take years off your loan. Good luck!!!

  3. Great job! So exciting!

    Yeah, we want a house SO bad & hubby really wants to have debt paid off first. We only owe 9k, but our income is just really really low. We are barely making enough to save extra! But we're doing it! I can't wait to pay off the trailer we live in, so we can move! We just paid off student loans & it felt AWESOME!

    I'd love to have a house before a baby, but I'm already SO late to the baby game! Am more than ready for kids!! :)

  4. I LOVE FPU! My hubby and I paid off over 7000 dollars during the course of the class. I'd like to go through it again since it's been a few years.

    BTW, did you get my email about your sponsorship write-up?

  5. I so wish I could take this class!

  6. My parents are following his advice, and I'm using his college stuff right now :) Good luck!

  7. love this post! we too are following dave ramsey's methods and have managed to get our student debt down to $35K (started off at $43K). we have a long road ahead of us but hope to have it paid off soon. hope you post more about your progress - i love reading about how other couples handle money and work to be debt free! :)

    p.s. if you wanted to check out our pay-off journey... http://mrcandmeblog.wordpress.com/lets-talk-money-series/