Review of Dave Ramsey’s Financial Peace University

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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.

Financial Peace University
Financial Pilgrimage recaps how we’ve used Dave Ramsey’s baby steps to financial freedom.

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.

Overall Thoughts

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”.

 

 

20 thoughts on “Review of Dave Ramsey’s Financial Peace University

  1. I just came to the same realization recently about life insurance. My spouse and I both have it through work, but I realized we shouldn’t have all of it tied to our employers. It’s on my to-do list to research policies.

    1. That’s awesome! I’m hoping to have a similar impact on others by leading a class in the future. Dave does such a good job motivating people to pay off debt.

  2. We have insurance via our employers too. However, if that wasn’t already included, we would have opted for no insurance. I guess we are better off not spending money on that. If one of us survives, they can take care of our son.

    1. Thanks for sharing. I’m in the process of getting quotes from a few different insurance providers. Looking at 20 year term policies. If it ends up being more than $20 or so a month I’ll probably pass. That money would be better invested elsewhere.

    1. The community aspect makes taking the class worth it, in my opinion. It’s great to see people who can be resistant at first come around to the concepts and finish with big wins.

  3. Thanks for this article! I hear so much from Mr. Ramsey’s perspective on his podcast, but it was really interesting to see a neutral party review. Anyway, well done, and good job on your baby steps!

    1. You’re welcome! After taking the class I can certainly see why he is so effective in connecting with people. He does a really good job of motivating and educating in a very simple way. I know not everyone is a fan of him, but it’s hard to argue with his track record of getting people out of debt.

  4. We went through Financial Peace University after reading Dave’s books. There was a gentleman in our class whose wife did not join him, and he ended up dropping out. It definitely helps when couples attend together (at least it did for us, as it helped us get on the same page). We both enjoyed the class and were able to pay down a huge amount of debt and change our spending habits. BTW, once you’ve paid for the class, you can take it again, at no charge, if needed.

    Dave is very charismatic and his advice is simple and easy for anyone to understand and apply. It appeals to the masses, which is important. The population as a whole is not going to save 50+% of their income, but Dave can help them learn to get out of debt.

    I really like everything about the Baby Steps, with the exception of the advice to save only 15% for retirement. If you are behind with retirement savings and started trying to catch up later in life, 15% is just not a high enough savings rate.

    Term life insurance is especially important if you have a mortgage, or other people who are counting on your income, like a spouse who can’t work and has no income, or young children. Most people with debt are not yet at the point where they can self-insure through their own savings or investments. If you are young, healthy & don’t smoke, term life insurance is very cheap. You may not need life insurance once your children are grown up and you no longer have a mortgage.

    1. Thanks so much for commenting. This is probably a better review than mine!

      We had one individual in our class who took the class solo and she was there until the end so it probably all just depends. Also, I agree with the need to save more than 15% if getting started later in life. Late starters won’t be able to benefit as much from compound interest so saving more many be necessary.

  5. I had not looked at Ramsey’s priorities before, but I would NEVER give those priorities to my four adult children. Save for college before saving for yourself? And pay down a mortgage before saving for yourself? Nope. If a parent has properly saved for their own future (and will not be a burden on their children), only then should they gift their children with a college education. “Junior, Mom and Dad have their futures secure, so we can help you with college.” And the whole mortgage argument has too many variables; if you are paying a high interest rate and/or private mortgage insurance then, yes, pay that beast down, but only enough to refinance at a low rate. But I would not pay down a 4% loan until my personal wealth was much larger than the mortgage itself. A house is an expense, not an investment, and I wouldn’t lock any more money into than I would have to. After that, get rid of the mortgage to cut your negative cash flow. But, obviously, these are personal choices and if following Ramsey gets you where you want to go, it’s far better than doing nothing.

    1. Thanks for commenting. Quick caveat – I am not fully onboard with everything Dave teaches. His advice is relatively simple and is made more for people who have little to moderate financial literacy.

      With that being said, his baby steps do teach to save for yourself first before saving for college or paying off the mortgage. Baby step 3 is to save a 3-6 month emergency fund. Step 4 is to save 15% of your income in retirement accounts. You’re probably referring to other investments and such, but anyone who makes it past step 4 is doing pretty well anyway.

      The payoff mortgage vs. don’t pay off the mortgage is an age old debate that really does come down to personal preference. The math usually says to NOT pay off the mortgage, but the behavioral aspects of paying off the mortgage are hard to argue with. I’ve never heard anyone with a paid off mortgage say they regret it.

      I contributed to a post that will be featured on Rockstar finance in a couple weeks that will argue paying off the mortgage so you’ll have to tune in for my full rationale for paying the mortgage.

      Thanks again for commenting! This is one of my favorite topics to debate.

  6. My wife and I took the financial peace class while we were still engaged. While we are both financially savvy anyways, it was nice to take a class together and see that we were on the same page.

    1. Agreed. Even though my wife has been onboard with our debt payoff journey, this really helped us both to better understand the why so we’re more on the same page. Thanks for stopping by.

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