Dave Ramsey-Financial Peace University

[HardcoreClone]

My church has always offered this course, so I decided to sign up and see what I can learn, 1st class was last night. I'll give a brief background then ask a couple questions of folks who have taken the course or can share financial advice....

My wife and I are both 30. We have paid off all ISU student loans. We have both of our cars paid off. We have lived in our house for about 4.5yrs now. I realize that these are already good accomplishments according to his "Baby Steps." In addition, we have a savings account with $40k+. I guess that is our "emergency account," although we haven't really designated its use. Could be for future trips, house, etc. We don't have any kids yet, but that is a good possibility.

Both of us have a bank credit card. I keep mine with a low balance and pay it off monthly. She is a higher balance than me but still stays on top of it. She also has a couple retail cards which she pays off.

Lastly, both of us have been working corporate jobs for 7 years now and have been contributing to 401ks for company match. I actually put in 15% right now, with my company matching 50% of the first 7%. I also have a company-funded pension, and we have been maxing out Roth IRA's for about 5 years now.

So from what I learned thru Class 1, we are doing very well in terms of getting rid of all debt aside from our mortgage. We have a good amount of liquid cash saved up for emergencies. It seems we could do a better job of earmarking $ or creating sinking funds for specific future expenses.

I assume as we go through the class Dave will get into more detail on investing and preparing for retirement?
Should we split up some of that cash and put some into an account that at least gets some interest? I've never really thought out saving for my kid's college but I see that will be part of the plan. What is the best route to start a fund and let it grow?

Sorry this got long. Just looking for some advice on how to keep taking good financial steps. Thanks!

 

[VeloClone]

You may want to consider paying down your wife's credit card debt even if it means you can't max out your Roth this year. The interest rate on the credit cards are much higher than anything you are likely to make back in a Roth investment. If it is under control as you suggest your Roth won't take much of a hit either.

 

[BCClone]

My church has always offered this course, so I decided to sign up and see what I can learn, 1st class was last night. I'll give a brief background then ask a couple questions of folks who have taken the course or can share financial advice....

My wife and I are both 30. We have paid off all ISU student loans. We have both of our cars paid off. We have lived in our house for about 4.5yrs now. I realize that these are already good accomplishments according to his "Baby Steps." In addition, we have a savings account with $40k+. I guess that is our "emergency account," although we haven't really designated its use. Could be for future trips, house, etc. We don't have any kids yet, but that is a good possibility.

Both of us have a bank credit card. I keep mine with a low balance and pay it off monthly. She is a higher balance than me but still stays on top of it. She also has a couple retail cards which she pays off.

Lastly, both of us have been working corporate jobs for 7 years now and have been contributing to 401ks for company match. I actually put in 15% right now, with my company matching 50% of the first 7%. I also have a company-funded pension, and we have been maxing out Roth IRA's for about 5 years now.

So from what I learned thru Class 1, we are doing very well in terms of getting rid of all debt aside from our mortgage. We have a good amount of liquid cash saved up for emergencies. It seems we could do a better job of earmarking $ or creating sinking funds for specific future expenses.

I assume as we go through the class Dave will get into more detail on investing and preparing for retirement?
Should we split up some of that cash and put some into an account that at least gets some interest? I've never really thought out saving for my kid's college but I see that will be part of the plan. What is the best route to start a fund and let it grow?

Sorry this got long. Just looking for some advice on how to keep taking good financial steps. Thanks!

Haven't been through his class since I'm not 100% agreement with him, but have heard a load of his radio shows to know the general process. If you pay off your credit cards and get more aggressive on your house, you will have his plan are are wasting your time in his class. Many times on his radio show he talkes about investing in mutual funds earning 12-13% over the last several years. I have been investing in them since early 90s, haven't had one over that period earn that on average and I invest in the aggressive things that he recommends.

 

[BCClone]

You may want to consider paying down your wife's credit card debt even if it means you can't max out your Roth this year. The interest rate on the credit cards are much higher than anything you are likely to make back in a Roth investment. If it is under control as you suggest your Roth won't take much of a hit either.

He has 40k in savings, I'd just use that.

 

[isumellie]

I have taken the class and have wanted to lead another soon, just not yet.

You are in a great position! Good Job.

First of all Dave would say to cut up all of the credit cards as the interest rate that you are paying on that would negate anything that you are earning on the money in the savings account.

Yes later classes will cover investing and retirement and the later baby steps, it sounds like you are on Steps #4, 5 & 6.

Once you have a kid you could start a 529 for their college and you are almost in position to be able to finish that really fast.

 

[cyhiphopp]

You're doing better than me, that's for sure.

 

[Clonehomer]

Basically, keep doing what your doing and don't have kids. Having kids will never pencil out financially following this system.

 

[cyhiphopp]

Basically, keep doing what your doing and don't have kids. Having kids will never pencil out financially following this system.

Oh, and if you do have kids, don't have a terrible wife and get divorced and have to pay child support for 10 more years like me!

Just an FYI

 

[NorthCyd]

If you want to hear more from the Ramsey devotees on this board check out any thread that involves using credit or taking out a loan to purchase something. Especially the car ones.

 

[Cyclonepride]

Seek to spend less than you make, rather than seeking to make more than you spend. There is a lot of financial peace to be found in that philosophy.

 

[mj4cy]

From listening to Dave over the years, he's always in favor of getting rid of credit card before building wealth.

I really appreciate Dave and his teachings and agree with almost all of what he says. I've adopted his simple "if you have to borrow money for it, you can't afford it" (besides a house). That has really helped my perspective on planning/saving ect.

The only thing we do that Dave would frown upon is we still keep a credit card even though we pay the balance monthly.



Bottom line, keep at it with FPU, I've heard great results from a lot of people.

 

[SCNCY]

You're doing better than me, that's for sure.

I second this.

 

[dmclone]

I've never taken FPU but I've listened to his radio shows and I think what he preaches would help 90% of Americans. I don't always agree with his specific investment advice (see bogleheads instead) but most everything else makes sense.

I know a lot of people have issues with him because of his religious ties but as someone who is agnostic, that doesn't bother me at all.

 

[wxman1]

We took FPU after we got married right out of college and I am very happy we did. We knew almost nothing (especially my wife since her parents had been bankrupt and all she ever knew was spend what you make if not more) so it gave us some knowledge. It also helped us to not dig ourselves too much deeper especially since she was still in college and I was working a low paying job. Have we followed it to a T...not even close but we still use a few of those principles and are set up to be out of debt by our mid 30s which for a couple of kids who had basically help financially going to school one of which does not work a very high paying job is not too bad IMO.

You are a lot farther ahead than most people that take the class. There is no reason for your wife to carry the credit card balances. I don't know if I would dig into your savings to pay them off but I would certainly come up with a plan to pay them down.

Can you take his plan and be "gazelle intense" yeah. You can also just take the principles and apply them at your liking. I wouldn't get caught up so much in following it to a T as listen to what is being said and the why. There is a reason why so many people have been successfully following him...they haven't been taught (myself included) anything like that until then.

 

[cyclonespiker33]

I think you're doing just fine with where you are

 

[Cydkar]

What is sad is that kids are not taught sound financial strategies in high school. Hell, even college. Mistakes are made early that take years to recover from.

***like getting married***

 

[CloneGuy8]

Follow the baby steps, and you'll be a wealthy person someday. The only thing I disagree with is putting off investing while paying down debt. I still invest a lot while paying debt as I want that compounded interest. The exception to this is credit card debt as it carries a high interest rate.

 

[TheJackWePack5]

Is it bad that the OP made me feel worse about myself?

 

[cyco2000]

Is it bad that the OP made me feel worse about myself?

OP #Humblebrag

 

[Boxerdaddy]

Echoing the sentiments of others on here...pay off those credit cards with your savings and pay in cash (or debit card). That was a hard pill for me to swallow. I wanted to keep that savings I had but i spent all on my debt and now working to be entirely debt free. The biggest decision you and your wife will have to make is what level are you willing to live at and what are your end goals? You can sell your cars and drive clunkers and eat bread and water, but for some like me, we want a middle ground. Wherever you choose that level to be, as long as you're doing the numbers and see the impact of those decisions (see how much a year difference that makes and how long its postponing your goals) and are ok with it, then you are ahead of the game.

And as others have stated, you guys have an excellent start.

Additionally, there are ways to cheat that I think are in the spirit of the classes. For example, I don't use cash for my gas. I use a blue bird card for all of my gas so that I can just transfer funds to that on paydays and use that instead of having to go pay in cash as the register. That way I know whats in my budget for the month, but have the convenience of the "CC". That being said, don't skimp on the "paying with cash" for the rest of your shopping. It takes some getting used to, but it does give you an entirely different viewpoint on the value of your dollars.