Financial Peace University

Hello again!  It’s been a busy few months–much more on that to come!  In celebration of our recently slightly-more-free schedules, I’m happy to discuss one thing we just finished up: Dave Ramsey’s Financial Peace University.

Financial Peace University (FPU) is a nine-week course offered by Dave Ramsey, a financial professional with years of investing and advising experience.  His goal is basically to help families get debt free, start saving, and build wealth.  His go-to mantra is “I want you to live like no one else so that later on you can LIVE and GIVE like no one else.”  Basically, even if it means making sacrifices and struggling now, it’s better to work toward financial goals sooner so that you can reap the rewards later.  My parents recommended it to T and me since we’re just starting out and finances tend to be of huge importance in partnerships and marriage.

Now, Dave Ramsey is an evangelical Christian, which I most certainly am not.  He draws on the Bible for guidance in all his lessons.  That said, when I separated the preaching from the teaching, that is separated the Christian rhetoric from the financial advice, his words still had a lot of value.  His first lesson focuses on “The 7 Baby Steps for Success,” which are as follows:

  1. Save $1000 in an emergency fund
  2. Pay off all debt
  3. Save 3-6 months of expenses
  4. Invest 15% of income
  5. Save for your children’s college fund(s)
  6. Pay off your home early
  7. Build wealth and give

Not all of these are what I would consider “baby steps,” but the idea is to complete each one, in order, and gradually get to a place of financial stability and wealth building.  Except Step 7; you should never actually complete Step 7, but keep it up for the rest of your life.

The order of these steps is very important.  Saving in an emergency fund prevents you from accumulating more debt.  As Dave Ramsey says, emergencies aren’t always surprises.  Eventually, your car is going to need something replaced.  You’re going to have to go to the doctor for an unplanned issue.  You know this things will happen, you just don’t know when.  If you don’t have any liquid savings, you will likely end up charging the expense to a credit card.

Once you’ve got a little nest egg, next comes paying off debt, which is a pretty major step.  This includes all debt (with the exception of a mortgage): medical bills, student loans, credit card debt, car debt, etc.

T and I are currently in Baby Step 2, and probably will be for a little while.  Follow along to share in our journey to financial stability!

What are your initial thoughts on the 7 Baby Steps?

Which step would you find the most challenging?

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