A number of years ago my wife and I were invited to sign-up for Dave Ramsey’s Financial Peace University (FPU), a faith-based nine week course designed to help people take control of their financial lives. We ultimately decided to sign-up for the class because we felt like we were always a step or two behind on our finances. We had good paying jobs and we owned our own home, however, we were trapped in an unhealthy credit card cycle. Any time an “emergency,” such as a car repair, home repair, or medical expense came up we didn’t have the savings to cover it. We would rack up debt, eventually pay it off or refinance it but then another “emergency” would hit again. We had to break the cycle.
The first session of the class was immediately helpful. It introduced us the concepts of an emergency fund, the debt snowball, and compounding interest. The thinking behind all of these was simple: stop paying for your money and make your money pay you. If we had an emergency fund then we’d have a pot of money to pull from instead of charging something to a credit card. If we paid off our debt then we would no longer be paying interest charges to a bank every month for years on end. If we put money into savings and investment vehicles that earned interest we would make money on our money year over year.
Future weeks taught us how to communicate with each other about our finances, create and keep a budget, manage our risk, and plan for retirement. All of this had an immediate impact and we saved up about $2000 and paid off a few bills fairly quickly.
Old Habits Die Hard
We became hardcore FPU fundamentalists, sticking strictly to all of the principles we learned in the class through the videos and workbooks. After about a year, however, we began to slip into bad habits. The only people we have to blame for this is ourselves. However, I think it became difficult for us to keep up with the FPU model because it was very “analog’ while our lives were becoming more digital. For example, all the worksheets were paper sheets we had to print out and fill out by hand. One of the core features of the model was also the “envelope” system where you withdraw all of your spending money each pay period in cash and then divide that cash into physical envelopes that represent your various budget categories. This was helpful in the sense that it gave you a more personal feel of your money and exactly how much you had to spend. When it was gone it was gone. But this became burdensome for us because withdrawing cash from a bank was inconvenient. We had to go down to a branch, wait in line, then have a teller give us an exact breakdown of the types of bills we needed. To make matters worse we had a different teller every time we went to the bank and each one had different requirements for showing ID, cashing paychecks, etc. Eventually this just became exhausting and we convinced ourselves we could go back to using credit and debit cards without slipping back into debt.
A Digital Personal Finance Future
We ultimately stopped using the FPU model as our old personal finance habits overwhelmed us. Again, this was non ones fault but our own. We got lazy. Fast forward to today and we’ve been back on the track for financial freedom for over a year. However, we are not using Financial Peace University or any Dave Ramsey products. We’ve developed a custom program for ourselves using a combination of mobile apps and websites. I should mention that FPU has now adopted some digital tools such as a budgeting app. While we don’t use it I’m sure it would have made a difference for us sticking with the program a few years back since it seems to allow the program to rely less on the cash envelope system. We have some family members who are currently using it and they say they are big fans. I’ll be sharing details about our current family financial system in future posts.
The bottom line is that even though FPU didn’t work out for us long term it is a wonderful way to face your financial demons and to begin a journey to a more stable financial future. The current cost for materials, including a subscription to the budgeting app, starts at $129.99. You can find a local FPU group to take classes with or you can do all the modules at home.
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