Financial Peace

For the past three weeks, Hubby and I have been attending Dave Ramsey's Financial Peace University: A nine-week "Biblically based curriculum that teaches people how to handle money God's ways" at a nearby Church.

When I first posted a Facebook status a few months ago about the state of our student loan debt, the response I received was overwhelming. So many of my friends shared great advice (and empathy) in how to go about ridding ourselves of the $125,000 monkey on our backs. That's right, $125,000. (Is the second job beginning to make a little more sense?)

Several people recommended using FPU as a resource, and after three weeks in class and 7 chapters into his book, Dave Ramsey's Complete Guide to Money, I know why! Everything Dave speaks to is so simple, and yet so very contrary to our debt-ridden consumerist culture.

I know that there are a heck of a lot people my age who are in the same boat, so I wanted to take the opportunity to share a couple things I've learned so far and steps we're preparing to take.

> > >

1. Don't buy on credit.

If you don't have the cash, you can't afford it. This is one of those "simple, yet contrary" principles I was talking about. It makes so much sense and yet, Rent-to-Own and furniture stores continue to make big bucks off of 90-Days-Same-As-Cash plans. From now on, any money we spend to make big purchases will be hard-earned savings and not credit card debt that we'll carry for the next 10 years.

2. The "Debt Snowball."

Dave's method for tackling debt is ingenious. For years, I've been making the mistake of trying to pay as much as I can toward each of my bills in hopes of paying them off sooner. But with Dave's plan, we're going to begin paying only the minimum on all our credit card/student loan bills with the exception of our smallest debt, until the smallest is paid off. Then with the money we've saved in paying off that debt, we'll apply it toward our next biggest debt, creating a sort of snowball effect. This way we can keep the momentum going and pay our debt off faster!

3. Money management is 20% math, 80% behavior.

Oh, how true this is. We can already tell the biggest battle we face is those little seemingly insignificant purchases that add up fast! Buying ad space, iTunes, booze after a long work week. Our goal is to set $20 cash aside each month as personal spending in order to curb these habits.

4. Renter's Insurance.

Up until today, I have never had renter's insurance. Not because I didn't think I needed it. But mostly due to sheer laziness and a lack of desire to create another bill for myself. However, I realize how risky and foolish this is. If, heaven forbid, a fire were to start in our ancient duplex we would lose all of our possessions and our landlord is under no legal obligation to cover our losses. We don't have many valuables, but having to buy all new clothes, furniture and electronics would set us back like crazy if the worst ever did happen.

5. Your credit score is bulhonkey. 

A credit score is not a determination of your income or net worth. It is simply a way of telling creditors how in debt you are and your payment history. Count me out! From now on, no more buying things on credit or signing up for payment plans. We're cash-only from here on out!

> > > 

These are just some of the lessons that have stuck with me over the last couple weeks, but Dave has so much more incredibly insight to share. If you could use some help in tackling your debt, learning how to budget or figuring out how to save and invest- Financial Peace University is definitely something worth looking into!

And stay tuned for more money talk to come!

All images courtesy of DaveRamsey.com