What My Husband And I Thought Of Financial Peace University
I’m one of those people who love reading about money. How to save, invest, budget; all of it. Last Christmas, I asked for Dave Ramsey’s Financial Peace University for my husband and me to go through together. He tentatively agreed and we went through this past March.
My main reason for wanting to go through it was to get my husband on board and more involved with financial goals. Up to this point, he basically would go along with things I’d bring up but there wasn’t any long-term buy-in.
I wanted us to become closer through finances instead of it being a wedge between us. Having financial goals is what keeps couples on the same page and sticking to their budget.
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What Is Financial Peace University?
Financial Peace University (FPU) is a classroom-style program that uses group discussions, videos, and a book to walk you through paying off debt and building wealth.
Financial Peace University had a revamp in 2019. It used to be 12 weeks but is now only 9 weeks long. There are two additional 6-lesson courses online about teaching kids about money and leaving a legacy.
Attending Financial Peace University
The main 9-week course can be done online or you can find a local group. We ended up finding a local group because we wanted the in-person community and accountability.
Another plus is that many of them offered childcare during the classes so we didn’t need to find our own. I made sure to email them ahead of time to confirm.
The watch-at-home feature is great for couples where one spouse travels a lot or works on the weekends. There were some week-day evening classes in our area.
Many of the class locations were at a church but there were a few alternative locations. One location I thought was interesting was at a CrossFit gym.
What Do You Get With The Financial Peace University Course?
Included in the course is the Every Dollar Plus app and 1-year access to Financial Peace Membership, which is their online forum.
Every Dollar is Dave Ramsey’s super simple budgeting app. Every Dollar basic is free for everyone but the Plus costs extra since it connects your bank account to the app.
You can drag and drop transactions that show up in your checking account into the categories you set up in the budgeting app.
The cost of Financial Peace University is $129 in total. A year’s worth of access to their online community is $99 and Every Dollar Plus is $99.
Add in 9 weeks of in-person classes, 2 additional courses, and access to special live-stream videos: it’s a significant discount than if you were purchasing everything a la carte.
Finding A Group And Attending A Class
When you’re trying to find your group to attend, I suggest reaching out to the coordinators to see what they’re style is. If you need daycare then you’re already emailing them anyways.
Some groups are very boisterous and they share a lot of financial info like how much debt you have, how much have you paid off, etc. Other groups are more private.
You still have a good discussion but if you’d rather not share numbers then that type of group may be better for you.
Other groups have you watch the videos at home and come in only for the discussion portion. That cuts down the time of the class significantly. Each video is 30-45 minutes long so the
Nine weeks of classes were a sufficient amount of time. The videos were engaging and really had a lot of information. You follow along in the book and then have a group discussion with everyone.
The groups are very flexible. That’s what’s so great about having access to online videos. If you aren’t able to make the group one week, you can watch it online and be caught up for the next week.
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The 7 Baby Steps
The course follows Dave Ramsey’s 7 Baby Steps and uses the Debt Snowball to pay down debt.
Step 0: No More Debt!
Not an official baby step but it’s what gets people to start the steps. Make a commitment to never taking on more debt. Be “sick and tired of being sick & tired.”
✅Tip: Cash envelopes are a life-saver when you’re starting out budgeting.
Step 1: Save $1000 As A Starter Emergency Fund.
This isn’t enough for a true emergency but the point is to have a little amount to tide you over until you get to Step 3. At this beginning stage, it’s important to make a budget and stick to it!
Step 2: Pay Off Debt
Use the Debt Snowball to pay off all your debt except for your house. This shouldn’t take more than 2 years. If it seems like it may take longer, then your expenses should be evaluated. It may make sense to sell your expensive car or take on a second job.
List all of your debts (except mortgage) smallest to largest irrespective of their interest rates. Note: this isn’t by categories (ex. student loans vs credit cards). It’s by each individual debt.
Pay minimum payments on everything except for the little one. Put all extra money towards the smallest until it’s paid off, then use that money to “snowball” into the second smallest debt, and so on.
Step 3: Save Your Emergency Fund
Beef up your emergency fund to 3-6 months of your expenses. This is your real emergency fund. It can be left in a money market account but should not be invested. You need easy access to it in an emergency.
Step 4: Retirement Savings
Save 15% of your income for retirement. Order of importance:
- Save in company 401k up to your match. Choose Roth 401k if available.
- If investment options in Roth 401k are good then put the entire 15% in there. If options aren’t great or no Roth option, then after the company match put money into a Roth IRA if you’re eligible.
- If your income is too high for a Roth IRA then do a backdoor Roth IRA.
- If you’re still not at 15% after maxing all of these options, you can choose to contribute to your HSA plan or save extra into a regular brokerage account.
Step 5: Save For Kid’s College.
Use a Coverdell ESA or a college 529 plan. The growth is tax-free as long as it’s used for approved educational expenses.
Avoid using a Roth IRA or doing a pre-paid college plan for college savings.
Related: Here are the best places to put your child’s college savings.
Step 6: Pay Off Your Home Early.
Dave recommends taking out no more than a 15 year fixed rate mortgage with payments that are less than 25% of your take-home pay.
Now that you’re out of debt and saving for retirement and kid’s college, any extra money can go towards paying off your house early. The average home payoff is in 7 years. You’ll be completely debt-free at this point!
- Just $100/month extra has a HUGE impact.
Step 7: Building Wealth And Giving
You’re completely out of debt so at this point you max out all retirement savings vehicles (401k, IRA, HSA). Extra can be invested in the stock market and saved for purchasing income properties without debt.
It’s also important to give and be generous with your wealth at this point.
Financial Peace University Lessons
The lessons were as follows:
Week 1: Baby Step 1 – Build your starter emergency fund
Week 2: Baby Step 2 – Using the Debt Snowball to pay off all debts (except the house)
Week 3: Baby Step 3 – Build your fully-funded emergency fund
Week 4: Baby Steps 4,5,6,7 – Looking towards your future and wealth building
Week 5: Buyer Beware – About negotiating and having power over purchases
Week 6: Insurance – What kind you need and coverage
Week 7: Retirement Planning – How to invest and plan for retirement.
Week 8: Real Estate & Mortgages – Buying a house the financially sound way
Week 9: Giving – Gratitude & Contentment
These two courses are a bonus and not done with the groups:
Additional Course: Teaching Kids About Money (6 lessons, online only)
Additional Course: Legacy (6 lessons, online only)
1. Debt Snowball
The debt snowball focuses on paying minimum payments on all debt except for the one with the smallest balance. All extra money goes towards paying off the smallest debt, regardless of the interest rate.
Some people take issue with this because they say you should pay off the debt with the highest interest rate first. Mathematically, they’re correct but the majority of debt payoff is behavior-based.
Humans need that small “win” of paying off debt to keep going strong. You build up momentum as you head towards larger daunting debt. The smaller debts paid off end up being positive reinforcement along the way.
✅ Tip: This is my secret to making budgeting and paying down debt a breeze.
2. Paying Off The Mortgage
In Baby Step 6, Dave recommends putting all extra money towards paying off your house early. This is after you’re saving 15% of your income into retirement and putting money toward’s your kid’s college fund.
Some people in the financial world are in strong opposition to this. They say that if your mortgage rate is 4% and the stock market is doing 8% then it makes more sense to invest the extra in the stock market. Also, without a mortgage, you won’t get the tax credit.
While this may technically be true, it doesn’t factor in risk. It works out great if you’re able to keep the same job for 30 years and have no periods of unemployment.
That isn’t today’s reality. Companies outsource or downsize all the time. It’s easier to build wealth and not be as stressed if you know you have a place to live irrespective of your job.
Also with the new tax law changes, deducting mortgage interest isn’t as appealing as it once was. Even before the law changed, you were essentially trading $10,000 of interest in order to get a $2,500 tax credit which doesn’t make financial sense.
3. Saving For Kid’s College
There are many people who question saving money for their kids to attend college. It shouldn’t come at the expense of your own retirement but by the time you get to Baby Step 5, it should be a possibility to save something.
With the rising college costs and astronomical student loan debts, some parents are abandoning the entire college system. Others say that they themselves didn’t have help from their parents so they aren’t going to offer their own kids any handouts.
The fact is, in the future, a college education will still be important. I don’t think it can realistically continue to rise as fast as it has been but I doubt it’s going to decrease in half.
As a parent, I agree that it is my responsibility to take care of my child and for us, that means the option of higher education. That doesn’t mean I’ll be saving for an expensive private college price tag though.
Many state schools are excellent and affordable. There are many other options to help pay for school as well.
- Ways To Go To College Without Student Loans
I plan on guiding my son early on in his high school years in order for him to have the best chance at scholarships to cover the gap between what we have saved and the actual cost.
4. Chrisitan Influences
Dave Ramsey is a Christian and runs his business in that light. There is some scripture and talk of God in Financial Peace University but it’s not ostracizing.
People of all religious or non-religious backgrounds would probably feel comfortable since it’s not presented in an offensive way.
Overall Review Of Financial Peace University
The best thing about this course is that it got my husband and me on the same page. We set financial goals together so we have a plan.
It’s inspiring to have a goal that you’re both working towards. It makes going to work have more meaning than the accumulation of “stuff.”
The group discussions allowed people to ask questions without judgment. Everyone was in the same boat. No one felt embarrassed that they had debt. It was very inclusive.
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Is Financial Peace University Worth It?
I’d recommend this course to all couples, no matter where you are in your life. Dave Ramsey is a Christian so he does reference God throughout the videos but it isn’t an in-your-face style.
Someone who isn’t very religious would feel comfortable attending. You don’t have to be in massive debt in order to find benefit from this.
They cover all the way from saving your first $1,000 up through teaching your children and leaving a legacy as a millionaire.
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Certified Financial Education Instructor
Steffa is a Certified Financial Education Instructor (CFEI) and the founder behind Money Tamer. Her 12-year background in operant conditioning and positive behavioral change training is used to help people find effective motivators to change their harmful money behaviors. Steffa explains the reasons “why” behind people’s financial behaviors and how to successfully change them. After paying off over $80,000 in debt through budgeting, she now teaches families how to get their own finances in order. You can learn more about her here.
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Review Of Financial Peace University For Getting Out Of Debt
As a Certified Financial Education Instructor with a background in operant conditioning and positive behavioral change training, I have a deep understanding of personal finance and how individuals can effectively manage their money. My expertise extends to various aspects of financial management, including budgeting, debt repayment strategies, investing, and retirement planning.
Regarding the concepts discussed in the article about Financial Peace University, let's break down the key points and provide insights:
Financial Peace University (FPU):
- FPU is a comprehensive program developed by Dave Ramsey, a well-known figure in personal finance.
- It utilizes group discussions, videos, and educational materials to guide participants in paying off debt and building wealth.
- The program underwent a revamp in 2019, condensing the duration from 12 weeks to 9 weeks.
- FPU follows Dave Ramsey's "7 Baby Steps," which provide a structured approach to financial stability and wealth building.
- These steps include building emergency funds, paying off debt using the Debt Snowball method, saving for retirement and children's education, and ultimately building wealth and giving back.
- The Debt Snowball method involves paying off debts from smallest to largest, regardless of interest rates.
- While some criticize this approach for not being mathematically optimal, it emphasizes behavioral momentum and motivation by providing quick wins.
Saving for Retirement and Children's Education:
- FPU encourages participants to save 15% of their income for retirement and use specific savings vehicles like 401(k)s, IRAs, HSAs, and college savings plans.
- It advocates for responsible financial planning, balancing retirement savings with saving for children's education without sacrificing one for the other.
Criticism and Alternative Views:
- The program's Christian influences, including references to God and scripture, may not resonate with all participants but are presented in a non-ostracizing manner.
- Some financial experts argue against certain strategies promoted by FPU, such as prioritizing paying off the mortgage over investing in the stock market, highlighting differing viewpoints within the financial community.
Course Structure and Benefits:
- FPU offers a structured curriculum with weekly lessons covering various financial topics, including budgeting, debt management, insurance, retirement planning, and real estate.
- Participants can choose between in-person classes or online sessions, with flexibility to catch up on missed sessions through online resources.
Personal Experience and Recommendation:
- The article provides a personal review of FPU, emphasizing its effectiveness in aligning couples' financial goals and fostering open discussions about finances.
- The author recommends FPU to couples at any stage of their financial journey, emphasizing its inclusivity and comprehensive coverage of financial topics.
In summary, Financial Peace University offers a structured and comprehensive approach to financial education, focusing on debt repayment, wealth building, and financial planning. While some may have differing views on certain strategies promoted by the program, its effectiveness in fostering financial literacy and alignment among couples is widely acknowledged.