Dave Ramsey Financial Peace University: Week One

When I heard that Dave Ramsey’s Financial Peace University was being taught at my church this year, I was intrigued. I’ve read Dave Ramsey’s books and heard his show on Fox Business channel, but I’ve always found myself wondering exactly what about him and his advice makes people shell out $100 for the thirteen week class? His advice has always sounded simplistic to me and the type of thing that’s easily learned for free. It’s always seemed to me that someone deeply in debt shouldn’t be shelling out $100 for anything, much less something that can be learned for free. I’ve never been able to figure out exactly why he has such a devoted following and what, exactly, people get out of his course that can’t be learned for free elsewhere. To satisfy my curiosity, I signed up.

I didn’t think that I needed to be there for my finances. We do very well and have our money management down to a science. We have all the recommended emergency funds, full insurance, and we’re debt free. But I’m always open to learning new things, so I hoped that I might learn something new. Just one new idea would make the price of admission worth it, as far as I was concerned. If the program turned out to be truly great, then I wanted to know so I could tell others about it and let them know exactly how it could help them. If it wasn’t so great, I wanted to be able to explain to people why they should save their money and look for advice elsewhere.

It’s pretty obvious that I have some preconceived ideas about Dave and his advice, but I vowed that for the thirteen weeks I would try to put everything I already knew aside. I set some rules up for myself and vowed to follow them.

1. I would approach this course with an open mind. I would try, as much as possible, to pretend that I had never heard any of Dave’s programs before. I would take in everything from a neutral position and be open to being surprised.

2. I would participate in the class. I would not just sit on the sidelines and watch. If there was a chance to ask questions or offer help, I would do it in the spirit of someone who wants to learn and to help others learn. I would not just be a journalistic observer.

3. I would do all of the homework. I knew going in that some of the work would be things I’ve already done. Much of the reading was going to involve things I’ve already read. Many of the activities, like making budgets or doing worksheets are things I’ve done before. No matter. If there was homework to be done, I would do it and not take any shortcuts.

So with my rules in mind, I plunked down the $100, ordered my materials, and headed off to the first class. On the first night we picked up our materials. The materials include a workbook, a copy of Financial Peace Revisited, CD’s of the lessons, the envelope system, and some other doo-dads like tipping cards, forms and worksheets, debit card holders and membership to Dave’s website. After everyone finished ripping into their materials, class began. The first hour is spent watching a video of Dave teaching the weekly lesson. After the video the group breaks up into smaller groups for a more intimate discussion of the lesson.

The lesson for the first week is about saving money in general and, specifically, saving up $1,000 for an emergency fund. The advice is oft-repeated but I can tell that many in the room have never heard of these ideas before. Pay yourself first, make saving a priority, save up to buy things with cash rather than on credit, and put your emergency fund in a safe bank account, not an investment account. There is a brief explanation of compound interest and how it can help to build wealth. I can see most of the people in the room are amazed by his examples, but clearly don’t believe that it can ever work for them. None of this is new to me, so for a minute I am baffled by the ooh’s and ah’s from the audience as every revelation is handed down. As a personal finance writer and someone who is slightly obsessed with money, finance, and frugality, I tend to forget that not everyone “just knows this stuff” and that many people come at it from square one. I vow to try to get more in touch with the person I was before I knew about money so I can better understand my classmates and identify with those who are learning for the first time.

The first point Dave wants us to get is that we need to have an emergency fund to cover life’s unexpected events. Without it, every problem has to go on a credit card. To that end, he wants us to save $1,000 as fast as we can. I understand his point, but find myself thinking that $1,000 isn’t nearly enough. One big car repair, the heat goes out, or the roof needs replacing and that $1,000 is long gone. A thousand dollars is better than nothing, but it’s not enough to cover a big emergency. I was further disappointed that he didn’t really delve deeply into ideas about how to save up that $1,000. He touched on selling things or getting a second job, but other ideas like couponing, cutting services, or other frugal tips that can really help weren’t discussed. I vow to bring this up in small group.

The one part of the video that was interesting to me was his discussion of money being amoral. Too many people get caught up in thinking that money is bad, therefore saving too much must make you a bad person. Dave points out that money isn’t bad, nor is it good. It simply is. It’s what the person does with it that is good or bad. There can be wealthy people who do a lot of good in the world, and wealthy people who are misers. It’s worth remembering that having money is only one part of the equation. It’s what you do with it once you have it that makes you a good or bad person.

We finally break into small groups and, looking around the room, it’s easy to see that everyone is nervous. It’s sort of like hanging out in the waiting room of a psychiatrist’s office and wondering who is really crazy and who’s okay. Everyone is checking each other out, wondering why they’re here. You can practically see the thought bubbles over everyone’s heads. How much money does she have? Is that man in more debt than me? I saw him pull up in a BMW. Can he really afford that? Given that I’m wearing sweats, I wonder what they’re thinking of me.

We go around and introduce ourselves and talk about logistics. We’re led by a couple that has completed FPU and is devoted to following Dave’s message. The introductions take up much of the hour, but near the end a woman across from me asks the question I wanted to ask.

“How are we supposed to come up with $1,000 when we can’t even make ends meet?”

Several people jumped in and a good discussion of ideas ensued. Several people talked about Craigslist for sales, couponing, stockpiling, price matching, saving spare change, reducing or eliminating unnecessary services, and negotiating prices on things like cell phones and cable. People also talked about the money to be saved by eating at home instead of at restaurants and by banking tax refunds (it is tax season, after all) instead of spending them on fun things. Again, there was a lot of surprise among the group about things like price matching and that cable rates can almost always be negotiated. I realized again that things I take for granted are not really common knowledge.

Once the ice was broken, the group really took off. Some people shared their stories of layoffs, pay cuts, and other things gone wrong. No one got too specific, but the group began to get a sense of why certain people are in the class and it got a little more personal. From my early impression, it looks like the small group will be the real meat of this course. Dave will touch on the big ideas, but it will be the small group that will step in and fill in the details and share experiences and real world examples.

Our homework for the week is to fill out the quickie budget form. It is what it says: A very simple, basic budget form that gives you a quick idea of where your money is going and which accounts it’s coming from. This didn’t take long for me, but I can see that someone who has no real knowledge of their finances would have to spend some time on it. However, it would be time well spent since it would provide a foundation for starting to clean up any financial messes. You can’t clean anything up until you know what’s wrong and in this respect the quickie budget is a good start. I think a more complete budget is on the horizon, but this gives a good, non-intimidating start for those who’ve never worked with money before.

We also had to register for Dave’s website. I was really looking forward to that part because I’ve heard a lot about the message boards and the resources. Once I got signed up, I was a little disappointed. The forums were not as extensive or well organized as I had hoped and don’t cover a lot of ground beyond FPU. There are better board communities out there if you’re looking for everyday budgeting and saving ideas. If you’re not a member of FPU you have to pay to join this site. For FPU members free access is limited to the duration of the class. From what I can see at first glance, this isn’t something I would pay for because the content is just too sparse. But, for free, I will make use of it during the course and see what people have to say.

Along with the other homework, we’re to start working on saving up our $1,000. Even though we already have much more than this in savings, I vow to try to come up with $1,000 in additional money as fast as I can, just like everyone else in the class. I want to see how easy or hard this is to do in a short time frame. I’ve got some ideas about a few things I can sell and some ways to bring in some extra money over the next couple of weeks. I’ll let you know how it goes.

I understand that next week’s lesson will be about family relationships and money. This should be interesting since it’s one area where almost everyone has some sort of issue, even if they have a lot of money.

Next: Dave Ramsey Financial Peace University: Week Two

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21 Responses to Dave Ramsey Financial Peace University: Week One

  1. Cheryl says:

    Thank you Maggie.

    Our church offers the FPU, but like most, I don’t want to spend the $100 for what I think I already know and can read out of his book from the library.

    I appreciate that you are letting us SA readers and bloggers know what goes on in those classes. I also hope that over the 13 weeks, you will keep giving us a synopsis of each class.

    Maybe I will follow along and be a part of a virtual class and also try to do the homework. Although I do already have my emergency fund, and have been working on or accomplished some other of Dave’s steps, it might be fun to see what your group comes up with. I blogged about my steps a while ago here:

    Very Interesting and thank you again.

  2. Josh says:

    Dave Ramsey is so absolutely horrible I would label his advice as criminally negligent! I have heard advice come out of his mouth that would have me fired and looking for another finance job. He does not understand finance in the least but for some reason the blind always choose to follow the blind. What he does should be considered providing financial advice so he can be monitored the way the rest of the industry is. I think it’s horrible that he is able to give the financial advice he does without being legally responsible for the consequences his advice causes to these poor people who follow it. I have no problem with having paying off all debt but once his advice goes beyond this he should just be honest and tell the callers he has no idea what he is talking about instead of giving ill informed advice that I am sure often does more harm than good. Please don’t give this criminal more money or publicity.

  3. Sounds like you should start a course on money management and charge people $100 for the course. Teach 10 people, and you have your $1000.

  4. Brent says:

    I just started FPU even though we’ve been on the plan for a couple months. Our first class was on valentine’s day. Your synopsis of it was very accurate. I could tell most in our group were having trouble grasping just how to get 1000 in the bank as well. I would have to disagree with you that 1000 is too small. If you look ahead to his steps, the emergency fund grows to 6 months of expenses and that this 1000 is a BABY emergency fund, to have while one pays off their debt. I think it is doable to someone in as much debt as a typical person just starting dave’s plan (lots of credit card and loan payments). If it was too large then this would seem impossible and any smaller and it wouldn’t cover alot of emergencies.

  5. Tricia C. says:

    Dave is wildly popular for the obvious reason that you already stated…most people don’t have a clue. Like you, I am frugally and financially minded, but most people aren’t. And the cost? The sad thing is, the majority of folks wouldn’t take it seriously if they weren’t paying. Dave is awesome! His advice is spectacular…I’d like to know what horrible advice Josh is referring to. The world would be a much better place if we all followed Dave’s sound financial advice.

  6. frosty22 says:

    The message is so good. Even if there is a sales pitch at the end of the seminar, realize that some people need that extra help, and hopefully you do not. Take the info, make a plan, write down your plan, refer and stick to it each week. You can move forward toward any goal. Just take Nike’s motto and DO IT!

  7. Jessica says:

    I just started the FPU class too. Like you we already were budgeting and had the math part down. However, when my husband was out of work last year we got really off track. Our behavior really caught up to us. I agree that the small groups are what makes the class work. I think without that there isn’t really any accountability involved. If you are looking for more detailed information on DR’s plan, try checking out some family finance boards. I have been a posting on those for over a year. That is where I get all my menu planning and frugal tips. That and DR’s plan I think can do wonders for any budget.

  8. Jo says:

    Did the course through our church last year and I found the course to be of excellent value.

  9. KellyB says:

    Great idea for a post! I’m very interested in reading the whole series and see how it goes for you. GOOD LUCK.

  10. I love Dave Ramsey and can’t wait to read more about your FPU! We have been talking about going to the classes but the next one doesn’t start for 10 weeks!
    Thanks so much for sharing your info.

  11. Robert M says:

    Not sure what part of Dave’s you feel is “criminally negligent”. You did say getting out of debt was good. Saving for purchases (cars, TV’s, emergencies) not using credit cards, saving 15% for retirement, saving for college, paying off the house, term insurance, giving to great causes seems like pretty sound advice too.
    Maybe you sell life insurance and the buy term vs whole life is cutting into your salary. Or maybe you feel paying the bank interest is better than paying 70% less to the IRS (paying off your house).
    I did sell life insurance some time back, and I have not run across anyone who has been able to show me how whole life could work for me or anyone else regardless of their financial situation. The interest deduction for taxes as well has been a fun topic among accountants and finance guru’s. The insist it is the best way and I “just don’t understand”. It must be very, very complicated since even the experts are not able to show me numbers that make sense. “Trust me” was one of the last comments that came my way.
    No thanks. I will pay the irs their money, use my debit card (they get points too), save for purchases and enjoy being debt free as well as being looked upon as a moron from the financial experts.
    If someone could show me a better way I would follow it.

  12. Isabelle says:

    It is amazing what people don’t know! I follow a website in the UK called ‘Martin Lewis’ and there are two particular forums, debt free wannabe and money saving old style that I read.

    So often people say things that astound me. How can they not know these things? It is just like food, many have no idea what they are putting into their own and their children’s bodies.

    I’ve read many times about Ramsey and how his system has helped people. He is running a business not a charity and like every system for anything, it is not for everyone. But, if it makes people aware enough to take on the message and go on to find other ways and sites about saving and how to free up money to save, it will be $100 well spent.

  13. Gail says:

    I have appreciated what Dave Ramsey has to say. I have read his books and have tried to follow his advice over the years. Not sure either what is so criminally negligent Josh is referring to either. There are a whole bunch of people out there that are completely clueless about personal finances and DR has some good helpful advice.

    I too am amazed at what people don’t know. I remember several years ago on the discussion board here there was a thread going about how to wash dishes. All I could think was how could anyone not know how to do dishes as I have been doing them since about 2nd grade! But then some people were never required to help around the house or do any kind of chores and were handed everything and never had to work for anything. Those that can’t/won’t do things for themselve end up paying someone to do the things for them or buying a machine (dishwasher) to do it for them, thus wasting money.

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  16. Arthur says:

    FPU does cover some things that the total money makeover book does not. If you call the Dave Ramsey customer service people and tell them you can’t afford FPU now but would like to buy the FPU CDs, they will sell you that. They did for me. The FPU CDs are great. You will learn from them.

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  20. HelpMeFriend says:

    For those saving pre-kers out there, we do need to start small. I also would be a little annoyed by the oohs and ahas at every simple idea, but there are those who spend the course sign up fee without any question because someone will help them to save money.
    See where they are coming from?
    $1,000 is huge to them, and it is such a small step.
    People like you give hope to people like us that one day, we too will be able to take a refresher course and see how well off we really have worked to make ourselves.
    Thanks for giving us a track to draft you on.

  21. Bill says:

    Wow Josh…really harsh words. Criminal? Based on what? What bad advice, lack of understanding etc? Dave’s plan was a Godsend for us and has turned our finances around completely. And helped reduce the money fights big time.

    His advice works flat out. I do think his investment advice is not as strong but overall it is incredible advice.

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