Financial Peace University
After following the Dave Ramsey baby steps for nearly seven years, my wife and I decided to take the Financial Peace University (FPU) course through our church. We completed our final lesson a few weeks ago (mid-March 2018).
We were introduced to the concept of becoming debt free from Dave Ramsey in 2011 by reading the Total Money Makeover. Even though we have been on this debt pay down journey for years it was refreshing to go back to the basics in Financial Peace University and see first hand how other people react to Dave’s philosophy.
Dave Ramsey has been more successful than just about anyone to encourage a diverse audience to eliminate debt and live a more purposeful life. There have been many conversations in the personal finance community about how to better reach the low to moderate income population. My suggestion would be to start with Financial Peace University. Dave is effective in rolling out basic personal finance principles such as budgeting in an inspiring way.
Dave uses a seven step approach to eliminate debt known as the baby steps. Once you become debt free (baby step 2) and save up a three-to-six month emergency fund (baby step 3), people can usually start moving to more advanced personal finance guidance. For example, in baby step 6 the goal is to pay off the mortgage. Even though we have decided to pay off our mortgage, the same may not be best for others depending on an individual’s unique set of circumstances (my opinion, not Dave’s).
What is Financial Peace University?
Financial Peace University is an interactive 9 week course facilitated primarily by weekly videos featuring Dave Ramsey. While you can purchase the course material and take it on your own, I’d highly recommend seeking out a small group to go through the course together. The real magic of the course comes through the small group discussions which also creates accountability. It’s similar to the Weight Watchers approach that creates a small community of individuals who hold each other accountable. After all, personal finance and weight management has similarities. The overall concepts are simple but the actual doing is hard.
9 Week Lesson Plan Overview
Below are the topics covered in Financial Peace University.
- Super Saving – Lesson 1
- Relating with Money – Lesson 2
- Cash Flow Planning – Lesson 3
- Dumping Debt – Lesson 4
- Buyer Beware – Lesson 5
- The Role of Insurance – Lesson 6
- Retirement and College Planning – Lesson 7
- Real Estate and Mortgages – Lesson 8
- The Great Misunderstanding – Lesson 9
The Financial Peace University course is based on biblical principles. Many people may not know that money is one of the most referenced topics in the bible, and is mentioned more that 800 times. If you aren’t a Christian I wouldn’t let this deter your from taking the class. The biblical teachings are primarily referenced as background information in a non-threatening way. We had a family in our class who did not attend church and didn’t appear to be Christians. They ended up being two of the most engaged individuals in the class.
For additional information on Financial Peace University, you may visit the Financial Peace University site using this non-affiliate link. Please note this article is not in any way sponsored or affiliated with Dave Ramsey.
Why Did We Take the Course?
So why would we take Financial Peace University when we have been following the program for the past seven years? The primary reason is that I would like to lead a Financial Peace University class as a way to reach individuals who need help with personal finance and debt management.
We also wanted to go through the class to learn more about the reasoning behind Dave’s approach. As detailed in this previous post, even though we have followed the baby steps for years, we have done so in our own way. For example, we’ve never had a zero-based budget, my wife and I do not have combined bank account, we still use credit cards, and we always contributed to our retirement accounts up to the company match. Regardless, I believe in the overall message and want to do my part to spread it more broadly.
What Was the Class Makeup?
I don’t want to give away much information about other families in the class. However, I think it’s appropriate to reference the success of our group in aggregate terms.
There were eight to ten families who originally joined the class. By the final week there were six families still attending regularly. During the first few weeks many individuals were asking challenging questions and really pushing back on the concepts. You could tell that for some individuals even saving the $1,000 emergency fund (baby step 1) was an insurmountable task.
By the final week the five families (not including us) had either increased savings or paid down debt by a combined amount of $21,000! That is more than $4,000 per family in just over two months. Dave is an exceptional motivator. You could tell the people who stuck around to the final week were onboard with his approach.
My wife and I stayed relatively quiet during the classes. We were mostly there to listen and observe and didn’t want to step on the toes of the facilitators. Revealing that we were debt free besides the mortgage may have led people to wonder if we were only taking the class to brag or show off our success. We didn’t reveal to the class that we are in baby step 6 until the final week. It’s not that we were trying to hide the success we’ve had over the years, but we missed a few weeks early on and there really wasn’t a good time to bring it up without going out of our way.
What Did We Learn?
As someone who is a regular consumer of personal finance related information, I wasn’t expecting to learn much. However, there were a few videos where I had several takeaways. For example, there were eye opening moments during the “Role of Insurance” lesson. We have life insurance through my work, but probably need additional term life insurance through a different provider. We also plan to shop our insurance rates and explore getting an umbrella policy since our net worth has increased during the past several years.
Another reason we wanted to take the class was to see first hand how this course connects with individuals with limited financial literacy. Being someone who is a personal finance nerd, I am continually surrounded by great personal finance related information. When you’re close to a subject it can be difficult to remember what its like to have limited knowledge. I wanted to see first hand the impression this course made on people of all income and education levels.
What I found was concepts that are common knowledge to me such as budgeting, eliminating debt, and building emergency savings were completely new to others. What Dave does so well is explains the “why” behind being reducing debt and increasing savings.
I believe just about anyone could benefit from joining a Financial Peace University small group. Even individuals who are savvy with personal finance would benefit from the group aspect. I learned a lot about the challenges other people face to get out of debt. Even saving for that first $1,000 can be a huge task depending on a person’s situation.
Even though I don’t completely follow Dave’s guidance, after going through the class I have a better appreciation for his approach. Take credit cards for example. It’s easy for someone who is already financially responsible to leverage the benefits of credit card reward points. With that said, someone who lacks financial discipline could find themselves back in debt with extremely high interest rates using credit cards.
Reading The Total Money Makeover back in 2011 was one of the best things to ever happen to our family. Digging our way out of debt has helped us set a strong financial foundation. As someone in our group put it the during the final week, “this is life changing stuff and it needs to be shared more broadly”.