My new budget binder. NERD.
My new budget binder. NERD.

Review: Dave Ramsey’s Financial Peace University — Mid-Class Review 1

I have now completed 7 out of 9 FPU lessons and also 3 “bonus lessons” (lessons from the discarded 13-week format). Here are some thoughts on the first third of the course:

Lesson 1 — Super Saving ~ I was kind of surprised that the first lesson was about saving. I figured the first lesson would be about getting out of debt. But no, in the first lesson, Dave encourages you to complete “baby step 1” by putting together a starter emergency fund of $1000. (He says the fund can be only $500 if you make less than 20k per year). The reason for this is so that, when you’re  throwing everything you have to spare at your debts (see Lesson 4), you aren’t going back into debt when emergencies arise. So that you can stop using your credit card as your “emergency fund” and begin the transition to “cash only.”

Thanks to this lesson, I now take a small portion of every paycheck or child support check that I get and put it towards my starter emergency fund. Between my tax refund I just received and the lawsuit settlement money that I should begin receiving this month, my starter emergency fund will be in place soon.

Lesson 2 — Relating with Money ~ My least-favorite lesson so far. One of the things I dislike about this series is that it’s generally geared towards (a) married (b) homeowners (c) with children (d) and moderate incomes, which can leave people who don’t belong to all or most of those 4 groups feeling rather left out. This lesson is mostly about telling married people that they need to get together and have meetings about the budget.

Oh, sure, there’s a “singles, you too!” section. Apparently I’m supposed to find an “accountability partner” to stand in for a spouse and meet with me on a weekly or bi-monthly basis to discuss my budget. Eh. After a month of asking around, I just haven’t found anyone who really wants to talk with me regularly about it.

Now, I really, really wish I’d had this advice when I was married. I’m definitely the “nerd” and my ex was a “free spirit” for whom the words “whatever you want, honey” were frequently found on his lips. (Obviously there were exceptions *cough cough*.) I honestly wonder whether this course couldn’t have saved our marriage. It is definitely a good lesson IF you’re married.

But this chapter kind of left me wishing for a financial course that was more geared towards singles and towards struggling single parents. We need more than just hastily re-worked advice for married couples. We deserve more than just hastily re-worked advice for married couples.

Lesson 3 — Cash Flow Planning ~ The budgeting chapter. One of my favorites. I have at least 4 pay-outs every month (2 paychecks and 2+ child support checks) and had never really considered listing out my expenses and figuring out which paycheck needs to pay for what. This chapter also encourages you to use “the envelope system” and take out cash to pay for expenses like groceries, entertainment, etc., because paying cash creates a psychological sense of pain and weight that you don’t feel as much when you pay with plastic.

I’ve only been sticking to my budget for about a month now, but for the first time in a long time, I am pretty much on-target to not spend more than I earned this month.

Bonus Lesson — Credit Sharks in Suits ~ This lesson is for those who are really far into debt and dealing with third-party debt collectors. While there’s useful information here, you know I’ve been around the block with this too much when my reaction to this lesson was, “But Dave, you didn’t tell them _______!”

I haven’t really had to deal with debt collectors in a while, but those few years of dealing with them did teach me a lot. Like:

  • It’s illegal for a third party debt collector to use a robo-call or auto-dialer to call you.
  • It’s illegal for a third party debt collector to call a cell phone number that was not associated with the original account.
  • There is a statute of limitations on debt. It varies depending on the state you live in and the type of debt, but it’s anywhere from 2 to 15 years with 3-6 years being most typical. For the statue of limitations to expire does not erase your moral obligation to repay the debt, but it will keep the creditor or collections agency from suing you.
  • Dave doesn’t recommend sending a “cease and desist” letter to collections agencies. I do, because I think it’s better to deal with the original creditor. I’ve never sent money to an original creditor and had them not cash my check or try to sue.

I’m not giving you this information so that you can dodge a debt. If you owe money, then you have a moral obligation to pay it. However, you can use this information in your negotiations with creditors and keep them from harassing you.

To be continued…

FPU Series
Some Preliminary Thoughts
Mid-Class Review 1

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