My husband and I just finished a 13-week Sunday school class at our church on Dave Ramsey’s Financial Peace University. Here is his website. He has books you can buy. He has a daily radio show all over the country that you can listen to. He travels the country doing live shows.
He is married. He has 3 grown children. He has made millions, lost it all and then regained wealth again in a wiser way.
Not only was this class informative, it really helped my husband and me get more on the same page with money.
I want to give you Dave Ramsey’s 6 steps to Financial Peace to whet your appetite a little. Maybe it will interest you in taking the class, reading his book, listening to his radio show or checking out his website.
I believe he has been so successful because
- he is giving hope to people;
- he is requiring them to be personally responsible for their lives and not rely on the government or any other organization or person;
- he is like a compassionate father on his radio show toward people that call in with disastrous situations;
- yet he does the tough love thing in explaining what they must do;
- and this leads back to giving people hope.
Dave chopping up those credit cards.
Baby Step 1
Get $1000 in savings. Dave says to go crazy and get this money in the bank in the first month or two of deciding to work his system. This is the first level of your emergency fund that will protect you from little emergencies. If your income is less than $20,000 put $500 in. If your income is over $70,000, put $2000 in. Remember, this is only for emergencies.
Baby Step 2
Kill all debt except your mortgage. He calls it the “debt snowball.” He says to get mad and stay mad until you get out of debt. He says “Remember there is no energy in logic, only in emotion.” What he means is, ‘by being mad about being in debt, you will have the energy to get out of it.’ Put your debt in order of smallest debt to largest and pay the smallest off first, then the next smallest and so on. You do this so you can see progress quicker.
Get rid of these babies. Fast!
Baby Step 3
At this point, your only debt is your home. So now you will go on to save the rest of your emergency fund. The amount is 3-6 months of your monthly expenses. Keep this money in a simple money market account or bank account. Do NO investing with this money. It is only to protect you if an emergency comes up. This is typically hard for the guys not to want to invest a rare chunk of money that gets saved up, but be patient. You will get to invest later.
Baby Step 4
Save 15% of your gross household income to put into retirement accounts. You can read his book or go to his site to get more details on this.
A little more leisure time out here? Sounds good!
Baby Step 5
Now and only now is it time to start college funds, if this is in your plan. He says he knows you might feel guilty about waiting until now to do this part, but don’t you dare do it before doing the first 4 steps. Again, read his book.
This place looks cool!
Baby Step 6
Now is the time to pay off your mortgage. It may be a number of years to get to this point, but when you do, you will be able to pay it off quickly, because everything else is in order.
The root word of mortgage is ‘mort.’ It means dead. That right there makes me want to get rid of our mortgage!
Baby Step 7
Build wealth, give and invest.
Hosanna Institute of the Sahel, Inc. A Mission in Niger, West Africa. This ministry brings Jesus and basic necessities to the people. I’d like to be able to give tons of money to places like this. www.hosannasahel.org
This is the road to Financial Peace.
I want to leave you today with this last little bit. It really helped my husband and me.
Women Generally Want Security From The Daily Issues
They want a cash savings account for those times when a crisis happens. Anything from an unexpected medical bill, to the washer being replaced, to the car breaking down and needing $500 worth of repairs, etc. We don’t want our husbands stressing out about these things and then that stress trickling down to the entire family. We just want it taken care of. Am I right, ladies?
Men Generally Want Long Term Security
The “emergency fund” idea of having 3-6 months worth of monthly bills in a saving account earning almost no interest is very difficult for men. Dave Ramsey had to tell my husband to do this. Not me, thank goodness. (I don’t know why life is that way ladies. It just is.)
Men tend to want the retirement, college, and other investments, in order ASAP. But that “emergency fund” savings account is key to having financial peace. Stuff will happen and you will have to pay for it. You might as well prepare for it so it doesn’t freak you both out and cause strife in the marriage.
The God Component
Jesus even said “In this world you will have trouble. But take heart! I have overcome the world.” -John 16:33. So I figure with Dave’s plan and a serious prayer life, we can be in great shape. And if you need me to prioritize this for you; the prayer life comes first!
What men and women each want in order to feel secure are both important. In Dave’s plan they are both taken care of in a precise order that has been successful for many people.
We are just starting out, but it seems to us a very wise plan of action.