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
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
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?
{ 3 comments… read them below or add one }
Hi, I am the Jeff in Jeff and I. I just wanted to take a few words to tell you what I got out of the first class.
First, I am glad that it is in a church. Due to the current economy I have very little faith in the either economic, educational, or the main stream media to honestly evaluate this topic.
Second, I thought for where we are with our plans it is a very good place to start. However, if it was a year ago I would have preferred more up front before we talked about savings. I would have liked to get the basic budget in place. I think it is important to know where all you expenses are before you get any kind of savings plan in place.
I would have liked the small group to talked ask the question if everyone knows how to balance a checking account. I know it seems odd. However, I think some people do not know how.
For us, the step was easy. We put aside a large chunk of my husband’s yearly bonus, which has since remained untouched. If we hadn’t had that, though, we are discovering that it’s really easy for us to immediately put aside a couple of bucks every paycheck. By doing that, we quickly saved another $1500 within the next few weeks–totally surprising us. It was like found money.
We ended up spending that $1500 on tickets for the big trip to California (since my brother’s wedding is this summer), so we are back down to $1000 saved, but WOW it didn’t hurt us when we bought those tickets because we’d saved that money already!
Our next step (now that we have our $1000 Emergency Fund) is to either put it into an Electric Orange account like you or to just take it out as cash and hide it. I LOVED the idea one of the people in TMMO had–she framed it in a picture frame, labeled it “break glass in case of emergency” and hid it at the back of a closet. I really, really love this idea. It’s accessible, but not out in the open, and the message is a reminder that this isn’t blow money. It’s for the truly big emergencies.
At this point–and you know our finances intimately, being our CPA and all–we are already feeling better and freer about our money than ever. Part of this is due to the fact that, despite having my student loan, we are in a drastically better place than many of the people we read about in TMMO. If a couple making $40k on one salary can pay off a dozen credit cards and two cars in a few years, AND save for kids’ colleges, AND pay off mortgages, etc. etc. etc., how easy is it going to be for my husband and me? We have no mortgage, no car payments, one tiny credit card, a few small medical bills, and a relatively small student loan. We are SO on this.
It’s amazing how much better you feel just having $1,000 set aside for emergencies. I’m so glad you are doing well with the plan!