I’ve asked my friend and freelance writer, Les O’Dell, to share experiences as he and his wife, Christine, participated in Financial Peace UniversityTM, a 13-week course from national money talk-show host, Dave Ramsey. This will focus on what FPU is, and his review of the lessons within.
Here’s a quick navigation guide, since this is a (very) comprehensive review of the Financial Peace UniversityTM course.
The 13 Weeks Of Financial Peace UniversityTM
- Week 1: Super Saving
- Week 2: Relating With Money
- Week 3: Cash Flow Planning
- Week 4: Dumping Debt
- Week 5: Credit Sharks in Suits
- Week 6: Buyer Beware
- Week 7: The Role of Insurance
- Week 8: That’s Not Good Enough!
- Week 9: Intro Into Investing
- Week 10: All About Tuition
- Week 11: Working On Your Strengths
- Week 12: Real Estate and Mortgage
- Week 13: The Great Misunderstanding
Our Story: It Begins With A Single Step
Let me start by saying I’ve been a huge fan of Dave Ramsey’s financial teachings for many years.
I first heard his radio show more than ten years ago when it was called The Money Game. Even then, while I enjoyed listening, I was not financially mature enough to really grasp what he was teaching.
I was able to grasp the “head knowledge,” but never convert it to “heart knowledge.”
So, despite knowing better, we continued to make stupid mistakes with our money.
The Man Has a Plan
Over recent years, I’ve gotten smarter.
I’ve listened to what is now called The Dave Ramsey ShowTM whenever possible, and have read most of his books.
In fact, my wife and I have literally given away dozens of copies of his book, The Total Money Makeover, to friends and family members. We’ve even told our kids, and their boyfriends and girlfriends, we’d pay them each $50 for a book report on The Total Money Makeover.
Despite our seeming devotion, one thing we had never done, however, was enroll in Ramsey’s signature product, a 13-week program called Financial Peace UniversityTM.
With two teenagers and busy lives, we just never felt as though we could commit to a two-to-three hour class, one night a week—that is, until this year.
Decisions, Decisions: Making the Commitment
Last fall, I learned the course was going to be offered at a local church in the spring.
I immediately called my wife at work to ask her if she was interested in 13 weeks, every Monday night, from February through the beginning of May.
We had to weigh the decision carefully; we already had one night a week tied up with a small group activity from our church, and she was planning on taking a class on another evening.
After quite a bit of discussion, we decided it was a commitment we were willing to make. I went online and signed up for the class.
Signing up simply meant putting in a reservation for us to take part in this particular class. We still had to get our official Financial Peace UniversityTM kit.
The “kit” is a lifetime membership for each couple (meaning you can take the class multiple times if you wish), as well as class materials. They usually cost $199, but often Ramsey’s website and participating churches have special offers.
This was the case for us, I was able to go over to the church and pick up our kit for just $86. Here’s what we received:
- First, there was a copy of the revised version of Dave’s first book, Financial Peace Revisited.
- Second, was an envelope system/wallet to use in spending cash.
- Third was a collection of CDs—all of the audio from the DVDs we would be watching each week in class.
There were also tip calculator cards and sleeves for debit cards with an imprinted warning:
Danger! Use of this card may be harmful to your budget!
We had everything and were ready to go!
On to the first class!
FPU – Week 1 – Super Saving
On a Monday night earlier this year, we walked into our first Financial Peace UniversityTM class at a local church.
There were about 20 people in the room: people of all colors and ages, and, judging by the cars in the parking lot, of a wide range of financial statuses.
Each session was to be led by a coordinator who, himself, was an FPU ‘graduate’, and it consisted of watching a DVD of Dave Ramsey teach, followed by discussions among our fellow students in the room.
I learned this was to be the format of each week’s class. After a brief introduction, we dove into lesson one—Super Saving.
Save, Save, Save
In the lesson, Ramsey discusses the importance for, as grandma said, “a rainy day” because, as he said, “it is going to rain.”
With the lesson on saving, Ramsey introduces the first and third of what he calls The Baby Steps toward financial peace.
- Step one is set aside $1,000 as a small emergency fund to provide a cushion for unexpected events as well as giving peace of mind.
- Step two (paying off debt) comes in a later lesson.
- Step three is to expand the emergency fund to equal three to six months of household expenses.
Throughout the lesson, Ramsey reminds us emergency funds should not be tied up in long-term investments including CDs, but rather should be easy-to-get-to, such as in a simple savings account or money market account.
Also, he stresses purchases, wants and whims do not qualify as emergencies.
Let Your Money Work For You
The DVD lesson concludes with Ramsey briefly teaching the magic of compound interest and living frugally.
He uses the example of a 16-year-old who spends $3 daily on cigarettes. He says if instead, the teen invested his cigarette money and averaged a 12 percent return, by his 76th birthday, he’d have $11.6 million.
Even your emergency fund can work for you!
Consider using a high yield savings account or money market, like those from CIT Bank, and get paid to leave your money there while it acts as your safety net.
Wait, There’s Homework?
Finally, the class finishes with a quick primer on simple budgeting and a homework assignment: several chapters of reading from Financial Peace Revisited, FPU’s companion text, and completion of a “quickie budget”.
My wife and I left the evening’s session fired up about working hard together on our finances.
I think for couples, this might be one of the best parts of the entire program—getting it together, together.
We knew we had a long way to go to get our financial ship in shape, with a lot of debt to wade through as well as so many old habits to break and replace with new ones.
We were eager to get started, beginning with the reading and the quickie budget while looking forward to the next twelve weeks.
FPU – Week 2 – Relating With Money
Our second session of Financial Peace UniversityTM was humbling.
The course coordinator asked each family to write on a nameless index card the best guess of our total level of indebtedness, as a group.
He would add all of the figures together for a class total and then we could use it as a benchmark for measuring success when a new total is calculated at the end of the course in May.
Writing down this number was a sort of reality check.
I wondered how our number (which I felt was way too large) would compare to everyone else’s figure.
Battle of the Sexes
The second FPU lesson was relating with money.
In it, Ramsey discusses the different approaches men and women take toward money and savings, and how finances are often the top issue in marriages.
He tells how money is tied to men’s self-esteem, and to women’s sense of security.
While admitting it was an over-generalization, Ramsey says—according to women—having an emergency fund is the most important part of a financial plan.
Nerd? Free Spirit? Spender? Saver?
Ramsey also introduces several personality types, sharing his experience how most marriages have one of each.
These are the nerd and the free spirit.
Free spirits can be lackadaisical in their approach to money, sort of in a carefree way.
On the other hand, nerds like to feel in control: they love doing budgets and (gasp!) may even enjoy filing tax forms.
He also says people are usually either spenders or savers.
Again, most marriages have one of each. It’s hard for me to imagine how someone could be a nerd/spender, but I guess it’s possible.
My wife and I had already discussed this concept years before, and we’re easy to classify.
I am the typical nerd/saver.
On the other hand, I like to call her a recovering free-spirit/spender.
I say recovering because we’re both totally on board with following The Baby Steps which Ramsey outlines, and improving both our finances and our relationship.
As FPU teaches, we know we must get it together, together, and make financial decisions together.
Singles and Money
Through the lesson, Ramsey gives pointers on working together as a couple, how single people should approach their financial decisions (get an accountability partner and beware of impulse buying) and how to teach kids about money, too.
Relating to Others
Following the DVD lesson, our class split into smaller groups to discuss our own circumstances.
Since none of the people in our group knew one another, no one was really willing to open up about their own situation, or to share their circumstances.
We all introduced ourselves and shared pleasantries, but that was about it.
It looked like we had some work to do if we were all going to relate to one another.
FPU – Week 3 – Cash Flow Planning
Tonight’s lesson was about the hated B word: budget.
I’m sure for some people, this was maybe their first exposure to planning where money is to go.
My wife and I have budgeted with limited success over the years. Usually, it’s been the case of planning how to spend this week’s paycheck based upon what bills and needs were most pressing.
We never had done a whole month’s budget at once before. This should be interesting!
Dave started the night with some basics.
- Checking accounts which are not in balance are messes waiting to happen.
- Overdrafts are signs of sloppy and lazy money habits and ATM withdrawals and debit cards can bust budgets
- Most people don’t budget because others have used budgets to abuse them; they fear finding out what’s really happening to their money and they feel locked in with a budget.
The night continued with reasons everyone should have a budget or cash flow plan, and then progressed into things (sadly) many people don’t know how to do any more: balance a checkbook.
Envelopes And The Envelope System
We were introduced to the envelope system—a spiral-bound series of envelopes which came in our FPU kit.
Because our brains actually feel pain when we spend cash (spending with a debit card or check registers less pain and with a credit card almost no pain), Ramsey recommends using cash.
For example, instead of swiping plastic, or writing a check at the grocery store, put the month’s budget for groceries in an envelope marked food, and spend from it.
It forces users to stay on budget—if there’s no money, there’s no buying.
Forms (and More Forms)
We then began to learn about a variety of forms provided to us by the class:
- consumer equity sheets (a balance sheet to learn our financial health)
- a form to list all sources of income
- a lump sum payment form to help work non-regular payments into a monthly budget
- a very, very detailed monthly cash flow plan
We also learned the recommended percentages of our income which should go toward things like housing, transportation and clothing.
Then we learned how to allocate our spending based upon income, not upon which creditor was screaming the loudest, or how much we wanted to buy ourselves something.
The Big Challenge
At the end of the lesson, we were challenged to go home and make a monthly budget (maybe for the first time ever).
We were told it would be stressful, at best, and probably downright frightening.
We also heard couples should expect to have some intense discussions while working together on their budget.
Okay, let’s be honest. Couples should expect to fight on this one!
As we talked among our small groups, we discussed why we each had failed to live on a budget before.
Answers ranged from admitted laziness to cases of life just getting in the way.
We discussed our initial reactions to the thought of budgeting (“we’ll try it,” “it will never work for us,” and “I’m excited about it”).
We went home and worked on the months’ budget. There were some surprises and a few discussions, but no fights.
We were ready. Bring on the month!
FPU – Week 4 – Dumping Debt
It’s the reason we had signed up for the class.
Our enthusiasm was contagious—our 16 year-old-daughter and her boyfriend agreed to attend the night’s session with us. She’s expressed some interest in a career in finance, so I thought it would be a great experience for her.
The evening’s DVD lesson featured Dave Ramsey popping the myths of conventional wisdom like balloons: 15 in all.
Among the first were the beliefs about how loaning others money, or cosigning loans, is a way of helping them.
Sharing stories of people who’ve had to pay other’s debts, as well as their own, he said to always refuse to “help” in this way.
Instead, Ramsey added if you have the money to give, then give it, but don’t ever expect it back.
From there, Ramsey explained the pitfalls of cash advances, rent-to-own, payday loans and car lots with on-site financing.
He called these “services” horrible, greedy rip-offs. He also called the lottery, and other forms of gambling, a tax on the poor and those lacking basic math skills.
On Auto Pilot
Next, he took on the myth about how people will always have car payments.
He shared how typical millionaires become wealthy, partially, because they do not buy new cars.
He explained how a new car will lose up to 70 percent of its value in the first four years, and how leasing is the most expensive way to operate a vehicle.
Despite our money mistakes, this is one area where we’ve been on target for many years.
There are four cars in our family—all paid for!
I can’t imagine what it would be like to have car payments and I don’t plan on ever having them again.
Financing a Home
Ramsey shared how people take out a 30-year mortgage, saying they’ll pay extra on it each month, when the truth is that the “extra” rarely happens.
Instead, he recommended never taking more than a 15-year mortgage and shared how a payment of just a few hundred dollars more each month (compared to payments on a 30-year note) translates into thousands—and sometimes hundreds of thousands—in savings.
Then came the part of the lesson I so wanted my daughter to hear: the dangers of credit cards.
She’s heard my wife and I preach this lesson so long, I couldn’t wait for her to hear it from someone else.
Ramsey outlined the dangers of credit cards from the company’s marketing tactics to the fact spending with plastic is psychologically less painful than using cash.
With the largest pair of scissors I’d ever seen, Ramsey began sharing the alarming truths of credit cards and cutting through the offending Visa, Mastercard, and Discover cards, as well as a variety of retailer-issued plastic.
Finally, he shared the exciting truth of what life without debt can really be and, using the example of a gazelle intent on escaping predators, motivated his audience to become debt free using Baby Step 2 – the debt snowball.
The Debt Snowball is simply paying as much extra as possible on your smallest debt, to eliminate it, then rolling over the amount of those payments onto eliminating the next smallest, etc.
I couldn’t wait to ask our young guests what they thought of the lesson.
I could tell during the session it was making an impact.
Our daughter’s boyfriend said he couldn’t wait to share what he learned with his parents.
Our daughter came out on fire to never be in debt, and to help others reach financial independence and freedom.
As soon as we got home, she began investigating college programs to become a financial planner.
My wife and I came out of the class with a new resolve to dump debt and make good choices. Let the gazelle intensity begin!
FPU – Week 5 – Credit Sharks in Suits
Carrying over the team of debunking myths he used in the fourth lesson, Ramsey teaches in the fifth lesson of Financial Peace UniversityTM there is one additional myth: the importance of the almighty credit score.
He explained how a credit score is calculated (calling it an ‘I love debt‘ score) and explaining how people actually can live without worrying about—or even having—a credit score.
An extensive discussion of credit bureaus and credit reporting agencies followed.
Ramsey shared how these reports work, and how a vast majority of them contain errors—often damaging mistakes. He recommends checking your report at least annually, and mentions how to correct errors on credit reports.
As one of the fastest-growing crimes in the nation, identity theft was a main focus of the evening’s teaching.
We learned what to do, and how to proceed if someone stole our identity, and how to work to fix problems a theft causes.
Identity theft insurance was also discussed, and recommended, by Ramsey.
Turning to the more seedy side of the evening’s discussion, Ramsey presented horror stories of debt collectors and some of the tactics they use, some of which are illegal, and many of which are completely unethical.
He shared protections provided in the F