Dave Ramsey Update

Jay and I are seven weeks into the 13 week Financial Peace University. We are really enjoying this course. We start with a video and then break into small groups to discuss the night’s topic. We look forward to the class all week. We will probably take it every couple of years just to keep ourselves refreshed. I thought I would share a few things I have learned thus far.

1. It is important to factor in lump sum payments and non-routine bills into my monthly budget. For instance, I now include 1/12 of my car taxes and car insurance in my budget. By annualizing these bills, I am not caught off guard when they come due. I also plan for the children’s clothing, school supplies/activities, my haircuts, auto repairs, medical bills and gifts. The money stays in my checking account, but I keep track of these “funds” in a separate spreadsheet.

2. Eating out was wiping us out. With a family of five (well, four “eaters”), a trip to Chick-Fil-A would cost us about $25, and a casual dining restaurant usually cost $40-60. At that rate, I am too embarrassed to admit how much money we were spending per month just eating out. But I am PROUD to share that we have only spent $133.00 in the month of February. Talk about progress! And it did not even hurt as much as I thought it would. My co-workers and I have begun pitching in on groceries such as bread, lunch meat, fruit, snacks and drinks and keeping them at work. They have become encouraged to watch their expenses as well.

3 Wait overnight to buy anything over $300, and pay for it with cash. Jay and I are both spenders, and can easily talk each other into a purchase. By forcing ourselves discuss it overnight, we will eliminate impulsive decisions. By paying cash, we will be less likely to part with our money, unless the purchase is necessary.

4. Buy term life insurance. Jay and I have 20 year policy, enough to pay our bills and support the family if something were to happen to one of us. It is very inexpensive. According to Dave, there is no need for whole life insurance. If we follow his steps, we will be self-insured in a matter of time, and will not need life insurance. It is essential to have life insurance right now since we have kids and a mortgage payment. But the kids will grow up. The mortgage payment will be eliminated in less than 20 years if we follow his plan. And we will have a substantial amount of money in savings and investments. As a licensed insurance agent (non-practicing), I was never a huge fan of whole life insurance, but I did not realize how worthless it really is, and that NO ONE really needs it. Many agents sell it as a savings plan, but you get a better return on investing the money. With WLI, the cash value is no good for the first 3 years or so anyway, and when you die, the cash value goes to the insurance company.

5. We have learned the importance of teaching our kids about money NOW. We have given each of them 5 nightly chores ranging from cleaning their rooms, to doing the dishes, to folding laundry. If they complete their chores every night, they get $1 per chore at the end of the week. We encourage them to give some of the money to church, to save some for future purchases, and to use the rest on whatever they like. This concept has been very successful. The kids love having their own “purchasing power.” The added bonus is that I have a much cleaner house! What I find interesting is now that they have to use their own money to buy things, they are saving it instead. It seems frivolous to them to waste their hard earned money on junk.

Dave Ramsey’s lessons are not solely about getting out of debt. Financial Peace ensures that you are ready for the unexpected and that you are educated to make smart buying decisions. Financial Peace teaches how to build wealth. And there is nothing wrong with having a lot of money, as long as you use it in good stewardship.

Jay and I have had fun referring to Dave Ramsey as “Dave” in conversation, as if he were a close, personal friend. We also ask each other “What would Dave do?”, and have considered marketing a WWDD bracelet!

Stay tuned to hear what I learn in the second half of our course!