Budgeting, Debt, Personal Finance, Relationships, Saving Money

Dave Ramsey Financial Peace University: Week 2

This is a series of posts about what you will find in Dave Ramsey’s Financial Peace University course. This is week two (week one)

This week’s lesson is about money and relationships. I was excited about this week because relationships are something that everyone has to deal with, no matter how much money they do or don’t have. I was interested to see what advice Dave would give to deal with those times when money strains relationships. Money fights are probably more common when a family is struggling, but everyone fights about money from time to time, even those who have plenty of money. Some couples are complete opposites and one is a saver and one’s a spender. Other couples are closer to each other in terms of spending habits, but money can still cause problems. In my house, despite the fact that things are going well money-wise and we’re both natural savers, we still have times where we argue over spending or saving priorities. Rather than focusing in detail on relationships however, this lesson jumped all over the place.

It started with a discussion of the stereotypical roles that men and women play in marriage. Men like to negotiate, women prefer to bargain hunt. Women like security, men like risk. Women like to shop, men can’t stand it. Men tie money to self-esteem, women tie money to security. Men handle the money, women handle the kids. In other words, women and men approach money very differently and this is the source of friction. While I understand that drawing such generalizations makes it easier for Dave to make his points, it did get old after a while because I know many couples that don’t fit these stereotypes. I found myself wondering if he makes these generalizations just for the laugh factor and for simplicity’s sake, or if this is really how he sees the world. I can’t answer that, but knowing he comes from an extremely conservative worldview, it makes me wonder.

Despite all the generalizations, his main point for the lesson is that both partners have to take an active role in the family finances if there is to be any success. There also has to be open communication. He spends a lot of time talking about free spirits — those who don’t really care about money and just want to spend as they see fit — and nerds who are the ones who like budgets. The nerd is often guilty of trying to control or browbeat the free spirit and the free spirit is often guilty of blowing off the nerd’s suggestions. If this is your relationship, I can certainly see the problems. However, Dave doesn’t spend any time dealing with what happens when both partners are nerds (my house) or both partners are free spirits. In my house, we tend to over-control the money, sometimes to the exclusion of some much needed fun. Couples who are both free spirits would have a hard time staying out of debt and ever saving anything, I imagine. I doubt that most couples are as directly opposite as Dave would like the class to believe.

I do agree that, whatever your natural tendency, be it nerd or free spirit, honest communication is essential for financial success. You can’t have each partner off doing their own thing and expect to stay on budget. You can’t have opposing goals, either, unless you negotiate how to save for both. You can’t have a partner sneaking off and buying things, or lying about how much they cost. Eventually the other partner is going to find out and stuff is going to hit the fan. Communication and openness is key and on this I agree with Dave.

The lesson hit briefly on the challenges faced by singles and then moved on to teaching kids about money. This probably could have been a lesson unto itself. There are many challenges involving kids and money, starting with the “allowance,” which is essentially giving kids money for nothing. Dave expects kids to work for the money and he calls it a “commission.” I like this approach because it begins to tie the concepts of work and money together for even the youngest kids. He also believes in making kids pay their own money for their “wants,” even if it means they are disappointed or frustrated at times. He also wants us to teach kids to give at a young age by giving a portion of their “commission” to the church. I’ll get to that in a minute.

While I don’t have kids, I have to agree with his advice here. This method of teaching kids about money seems far preferable to the approach taken by one of the members of our small group. This woman admitted that they have been giving their kids all the money they ask for for years. Now that the kids are teens, they have no real concept of where money comes from or what it means that there is no more. Now that the parents are trying to get their financial house in order, the kids are having fits because they aren’t getting what they used to. The woman is afraid that it might be too late to help her kids and I fear she may be right. It will be interesting to see, as the class goes along, whether this woman can get her kids to understand money.

Now, about the giving: In just two weeks of this class, the concept of giving to the church or “tithing” has come up no fewer than twenty times, both in Dave’s lectures, in the small group, and during the general administration/recap period that precedes each class. It’s also mentioned often in the workbook and in Financial Peace revisited. I understand where this is coming from. Dave makes no bones about conducting these classes with a Christian worldview in mind. As such, he urges people to give to the church. And the church where this class is taught would really like us to give there, so they also put in their pitch.

I don’t have a problem with the message per se, although I do wish it were uttered a little less frequently. However, if the concept of tithing bothers you, be aware before you sign up for the class that you will hear it often. If it bothers you, you can try to reframe it in terms of giving to an organization other than the church. The main point of the class is that, once you have enough money for yourself, it’s your moral obligation to give back to society. If that’s the church for you, great, but there are a lot of other charities out there that can benefit from your generosity that might suit you better.

My other growing beef with the lectures is the constant sales pitches. So far I’ve heard pitches for Financial Peace Junior for kids, Dave’s program that can be taught in high schools, the envelope system (of which we received a free version, but apparently there is a deluxe version that we can pay for), the website (that we get for free for now, but we’re encouraged to pay when our free membership runs out), and tickets to see Dave live. The workbook is peppered with ads for everything from Dave’s apparel and water bottles, to all sorts of other tools and books that we should consider. I get it. Dave is a business and needs to make money. But at the same time this is irritating to me because many of the people in the class are deeply in debt and don’t have any extra money to spend. Tempting them and making suggestions about things that can “help” them seems wrong, somehow.

When we moved on to small group, it was inspiring to see what a difference the quickie budget has made to most people in the class. Several people reported having already paid down some debts using money they freed up once they did the budget. Several more people reported that, now that they can see where the money is going, they were able to trim their spending and save up large amounts of money already. One couple got paid just as we were beginning the budget and they were able to save $390 out of that paycheck. That’s more money than they’ve ever had in the bank before. When they added the proceeds from some sales of unneeded stuff, they had managed to accumulate close to $500. They are halfway to their emergency fund in one week. Other couples had similar stories. The point is that seeing where the money was going gave them some control. So far, the plan is working for many people.

As for me, I’ve managed to put away about $50 in coupon savings that I transferred directly to savings, plus I racked up about $65 from some rewards programs, rebates, and found money. I sold a few DVD’s we no longer watch and made another $20. I didn’t count my regular contributions to savings because those aren’t “new” to me. I’m trying to come up with $1,000 of money as though I didn’t have the extra income to just put it away easily. I’m at $135, although next week I should get some more because I have some payments for side work coming in.

Another story emerged in small group that I’m interested to follow. One couple has about $35,000 in debt, not counting the house which has an ARM that is about to reset. They don’t know what to do next, but even as the husband is recounting all of this, I hear an element of pride in his voice that he has a big motorbike in the garage, that he dresses well and travels often, and that he refuses to eat leftovers. Even as he admits that these things and habits are causing some of their financial problems, I can tell he does not yet want to change. He takes pride in consumption and it’s not something he seems willing to give up just yet. The wife says that the class was her idea. It will be interesting to see if the husband comes around to her way of thinking.

Next week we’re supposed to get into hard core budgeting with a detailed budget. This week for homework, in addition to reading, we’re to start saving all of our credit card offers that we get in the mail. At the end of the class we’re going to tally up how much potential debt was offered to the class. I probably won’t get many since I opted out long ago from the mailing lists, but I still do get a few that I’ll put aside. I’ll keep saving up that $1,000, too.

Next: Dave Ramsey Financial Peace University: Week Three

13 thoughts on “Dave Ramsey Financial Peace University: Week 2

  1. Interesting to read you reports. Pride is likely one of things that gets people most in debt- living up to the proverbial Jones when you don’t really know anything of their behind the scenes life is brewing trouble.

  2. I feel so fortunate that my husband and I don’t fight about money (really, we rarely have strong disagreements about anything). Communications is key. We’ve been married 10 years and have discussed our finances from Day One. We occasionally disagree about what we’re going to do with our money initially, but have always been able to talk it through and come to an agreement before we do anything with it.

  3. your week two sounded much like mine this week. I agree with you that his pitching of his other stuff is a little much. I definitely do not want to buy his other products and could do without all the extra ads. I had a small group that was a little less talkative this week and i could tell both men in the other two couples had been dragged to the class and didn’t really want to be there. makes for a less satisfying small group when hardly anyone wants to talk or can’t get into it. I’m still looking forward to the next class as I am getting out of debt myself. My wife an I finished our emergency fund by selling stuff on craigslist and we are the only ones in the class to have even come close We’ve also paid off two hefty CC with our tax refund and working on the last one before student loans. Should be a good class this week tho. I have found that since starting dave ramsey’s program my wife and i have had less money fights as well and we communicate much better which has made our home much better overall. I can thank dave for spurring that communication.

  4. I think this is my favorite FPU lesson. I think there is a lot of humor it it. It was the first CD I convinced my wife to listen to me with and finally got her on board!

  5. As far as finances are concerned, I am the nerd and my sweetheart is the free spirit. Which is interesting because with life in general we would both be categorized the other way around.

    I agree with your take on Dave Ramsey so far. Can anyone suggest a class like this that I could attend with my sweetheart with fewer religious and marketing messages?

  6. I must say I do agree with the giving part. However I feel that it should go to your church and it should be 10% off the top. Not because this is what I was taught but because It is what I have learn. Before I did this my care would break down or I would get a ticket or something would happen every time I had extra money. Now that I do pay my 10% I have never had a problem with money. I just cant understand how people can get so far in debt. I guess because of my self control and great budging skills is why I don

  7. Admittedly, I’m an avid listener of Dave’s radio show and enjoy the inspiration and entertainment that it regularly provides my wife and me. However I do agree with you regarding his over-the-top sales pitches. We went to his live event last year and were disappointed in all the attempts to sell books/classes/dvds/etc. It made his company seem cheap to me.

  8. About kids and money (of which I have no kids, but do observe my sisters and their kids) – I like what Amy Dacyczyn wrote about in her Tightwad Gazette. Everyone has different, valid approaches but she said she didn’t like the approach of allowances in exchange for chores. She preferred to teach her kids that everyone in the family has reponsibilities to make sure the home is clean and enjoyable to live in.

    I have to admit, after watching my sisters and their kids, I like Amy’s philosophy. My niece and nephews have learned the lesson of money for chores so well that they throw a fit and won’t do hardly anything if they aren’t paid to do it. Everything from washing dishes to mowing the lawn – nothing is considered a chore for the family good, everything is a money-making enterprise.

    I have no problem with finding ways for the kids to make some money of their own, to learn money management skills and tying it to some effort on their behalf – especially when they’re too young to have a job. Where I think my family went wrong is that the kids didn’t really have any set chores to begin with, so there was no basis for making a distinction between responsibilities and getting paid to do something outside their regular scope of duties.

  9. In relations to DR and his teaching of kids. I have heard him say that kids have certain things they do “because they are part of the family” as well as certain weekly chores they do where they can earn their commission. Of course, you can also offer “extra” commissions if you have an extra tasks that need to be done or the kids are trying to make extra money.

    The principles are to teach kids that you must work for your money, but it does require teaching, not just paying the kids for everything they do.

    He is combatting the “allowance” mentality that you get something just for existing.

  10. I like your insight about this class. I have been taking it online and have listened to Ramsey off and on for a couple years. The only thing I would note is that Dave has said that the “Free Spirit” is not necessarily the spender and the “Nerd” could be the spender. This juxtaposition, nerd-spender, free spirit-saver, is how he describes his own marriage.

  11. Pride is a very big reason for money problems. My ex and his free spirit money spending ways helped us get into $42K worth of credit card debt–that didn’t include the mortgage for the house we had to have and the car we had to have. When I told him there was no more money and he couldn’t charge anything, his response was that I was ’emasculating’ him! At that point our minimum credit card payments were over $1100 a month! He didn’t even bring in that much money a month! But his attitude and spending sent us into a deep hole. I got out of the hole by divorcing him, selling the house to pay off the credit cards, and selling the car for one that was affordable. For the next couple of years he just kept on piling up debt. I have no idea what happened to him at this point but I’m sure he is still spending somehow and blaming others when there is no money to even pay the minimum on the bills.

    So happy that my current (and last) hubby is on the same wave length as me when it comes to money. We have had financial problems caused mostly by medical problems but it is much easier dealing with it than having a husband having temper tantrums in a grocery store because I won’t buy him something we can’t afford!

  12. In my group dynamics class we studied stereotypes. They asked us if we had experiences with being in extreme poverty, eating pretzels and mustard for dinner and being upset when the honey mustard was out because all that is left is hot . They asked us if we had experiences with being extremely wealthy, only grandchild for thirteen years with families owning two profitable businesses.
    They asked if we had private school, yes Pre-k-7th. Public, three different schools in 6th alone.
    They asked if we had ever lived in a small, podunk town. Bicknell, IN. Major metropolis? Washington DC. Did we have very successful people to look up to? owning your own business is tops on my list. Being your own boss? No question. Did you have experiences with those not-so-good role models? parents who drink and/or do drugs are not the best to set it up for you. You must learn to do what you know is best.
    You can’t begin to cover the way money affects a person’s relationship with another. You may have so many factors determining your attitude that there isn’t room for compromise to another person and their wants and needs. Dave was smart to be vague but still shed light on the pupal’s way of approaching the “couple” situation and money.

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