So I mentioned awhile ago that I had started reading Dave Ramsey’s book The Total Money Makeover. I really enjoyed it and I enjoy a lot of the principles that Dave puts out there in his book. It’s very simple and very straight forward, but it’s somewhat time consuming. Like, a lifetime, time consuming. But I think it’s going to be worth it.
So, Theresa and I decided that we should go and take his actual Financial Peace University class. It’s a 13 week course on how to get to financial peace. Each week we get together with other people and watched a video of Dave Ramsey speaking about a certain subject. Then we’d discuss it in our group and share our experiences for the last week. I know, it kinda sounds like a support group and in some ways it is… we’re making HUGE life changes and we need other people there to encourage us to keep going.
One of the things Dave does talk about is having 7 baby steps to financial peace. They are:
- Step 1: $1,000 in the emergency fund (to be used for emergencies ONLY)
- Step 2: The Debt Snowball (pay off smallest debt to biggest debt and having the minimums from your paid off debt roll into your next biggest debt)
- Step 3: 3-6 Months of expenses in the emergency fund (this is the fully funded emergency fund)
- Step 4: 15% of your income saving for retirement
- Step 5: Saving for child’s college fund
- Step 6: Pay off the house early
- Step 7: Build wealth and give it away (WHAT?!)
It’s a very simple but effective system. I think it’s effective because of how simple it is. There’s not a ton of math or complicated steps involved and it’s something ANYBODY can do.
Theresa and I are almost done with step one. We had completed step one before now but we had some car repairs come up. We had literally transferred the money into our savings account on a Friday night. That following Monday, Theresa had an appointment to take the car in to get looked at. It was having trouble shifting at times. So the mechanic looked at it and came back saying it was going to take $700 to fix it… ouch!
Thankfully, because we had just filled our emergency fund, we had the cash on hand and were able to pay for it without going into debt. That was an AMAZING feeling. Yea it sucked that we needed to basically start over w/ our emergency fund but it was awesome that we were able to just pay for the repairs and not worry about it.
I highly recommend Dave Ramsey’s Financial Peace University to anybody having or not having money troubles. It’s awesome to be able to get our money under control and know where it’s going and what it’s doing.
Sorry for the Dave Ramsey commercial today but it’s something I truly believe in and I’m excited that Theresa and I are doing. Please let me know if you have any questions, it’s totally worth going through the process. You’ll be glad you did.