Dave Ramsey’s Financial Peace University: Week 1 - Super Saving
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Signing up for class
My wife and I started attending the Dave Ramsey “Financial Peace University” class a week or so ago through our church small group. We had some people in our group that were “Dave Ramsey evangelists”, and who thought that everyone should take the class at least once. “It’ll change the way you think about money!” they said.
Most of us in the group were pretty enthusiastic, and everyone signed up! So we now have a group of 7 couples doing the seminar together. At $100, the class isn’t cheap, but we figured it would be worth it. Dave Ramsey is an engaging speaker, and the video series we’re watching for the class is very well produced and professional.
Week 1
The format of this particular class we’re taking is:
- Watch the class video
- Class discussion topics
- Assigned homework
So what was the topic for week 1? Super Saving!
Super Saving
We watched the video, and in it Dave Ramsey talks about saving money, and how most people never even get started on this basic first step. The number one priority for the lesson this week was to drive home these points:
- Savings must become a priority.
- You must save for an emergency fund, major purchases, and wealth building.
- Decide and agree with your spouse on what qualifies as an emergency.
My wife and I agree that savings is a huge priority for us, and we were able to agree what constitutes an emergency in our household. Emergencies could include medical problems, losing a job, car trouble, death in the family and an assortment of other things. Needing a new TV is NOT a reason to tap our emergency fund.
The Baby Steps
To help illustrate the steps to becoming financially independent, and eventually wealthy, Dave Ramsey uses what he calls the 7 Baby Steps. This week we looked at baby steps 1 and 3, which both have to do with saving.
Baby Step 1
Baby step 1 for Dave Ramsey’s system is to save a small emergency fund of $1000. He says that most people can save that amount in a month or two if they really work at it. My wife and I had already saved just over $1800 in our emergency fund, so we had already finished this step. The problem is that just over a month ago my wife had a medical emergency where she was in the hospital for 3 weeks, had multiple surgeries and now requires daily medication.
How much did all of our hospital bills cost after insurance kicked in? Just over $1800. That just goes to show how important that emergency fund is. We were very blessed in that the amount we needed was exactly what we had in that emergency fund. God is good isn’t he? (I’ll also be doing a post soon about how important health insurance is, so stay tuned for that)
Baby Step 3
In Baby Step 3 Dave Ramsey talks about how once we’ve got our debts paid off (baby step 2), we need to save 3 to 6 months of expenses and put it in a money market account somewhere. Keep the money accessible.
He talks about how this step (as well as baby step 1) is especially important for many women as they get a sense of security from having money stored away “just in case“. Having that emergency fund and 3-6 months of cushion in the bank allows them to feel more at ease, and less likely to tense up about the money situation. For men, he says it is an investment in their marriage. I think I have to agree.
Homework for next week
After discussing the topics surround saving for an emergency fund, our class was assigned homework for next week which included reading some chapters from Dave Ramsey’s book, and setting up a “quickie budget”. This quickie budget is just a quick listing of all the household expenses so that you can see where the money is going. As easy as that sounds you may be surprised at what you find. For us, we were very surprised to see how much money we were spending in some categories - especially our spending on clothing and dining out. Time to cut those categories down to a more manageable size!
Also this week we were told to check out Dave Ramsey’s system to “Drive Free Cars and Retire Rich” on his member’s only website. I posted about this last week, so check that out for details!
Next week in class? Relating with Money.
LINKS:
Unboxing Dave Ramsey: Opening the Financial Peace University Membership Kit
Drive Free Cars and Retire Rich
Dave Ramsey’s 7 Baby Steps @ M-Network Blogs
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