Being debt free and having more freedom has been a goal of mine for a while now. I’ve made progress by paying off all credit card debt and student loan debt, but I still have a ways to go. I still have a car payment and want to buy a house sometime in the next year or so. Because of this, I’m currently enrolled in the personal finance class from Ramsey Solutions called Financial Peace University.
If you are not familiar with the class, it’s a 9 week program where you learn about beating debt, building wealth, and living like never before. Classes are about 2 hours with a 1 hour video and then follow up discussion in small groups.
Last week was my first week going through the program and I’d love to share my experience here on the blog for anyone looking to try the class or wanting to pay off debt.
Why Paying Off Debt Is So Important
Despite having incredibly smart parents I didn’t get much of an education in personal finance.
Like many people in my generation I went to college not quite understanding the burden I was taking on to “get an education” and worse, “follow my dreams”. My desire to pursue a career in the low-paying field of journalism paired with a private college education left me jobless, in debt, and spiraling into depression.
I originally started blogging during that period of my life and it’s always been at the back of my mind: get out of this situation and never go back. That meant both getting out of debt and finding a healthier lifestyle.
Over the years I’ve made a lot of progress in both directly. I lost 60ish pounds permanently and learned how to care for myself in a healthy way. I paid off all my debt besides my car loan and have worked hard to build a career despite not knowing what I wanted to do.
I also watched what debt can do to people. I watched as someone close to me lost a house to foreclosure when the payments were too high for a meager income. I watched my half-sister succumb to a battle of depression because her enormous debt made her feel like a burden to her family. I’ve watched debt destroy lives.
Our society hardly blinks at the concept of taking out loans and going into debt but I’ve seen the dark side of it both personally and in those close to me. Debt isn’t something to be taken lightly and it’s something I aspire to be free from entirely.
Financial Peace University Week One
The first week’s lesson is all about the importance of saving money and how to become a super saver. It covers the basics of saving money as taught by Financial Peace University such as making saving a priority and paying yourself first.
The lesson teaches that you should save for an emergency fund, purchases you plan to make, and for wealth building. The emergency fund is important because unexpected things do happen! In this plan you start our with a beginner emergency fund of $1,000. This is to keep you from going into debt every time something happens. You’re also told to save money for purchases rather than borrowing and making payments on depreciating assets (like a car!)
The lesson also briefly covers wealth building which is the last reason to save money. It shows how much wealth you can build over time with consistent savings. After you see the charts you instantly want to start saving more money!
My Takeaways
At the end of each lesson you are asked to write and share your one-minute takeaway so I’m going to share all my takeaways from the lesson!
- Having savings will eliminate a lot of stress and drama from your life. You won’t have to scramble each time there is a large payment or bill due.
- Budgeting is very important! If you don’t budget and pay attention you won’t have extra money to save.
- Saving when you are younger gives your money more time to compound and work for you, so get started ASAP!
Other thoughts about the first week:
Dave Ramsey is a great speaker and teacher. It’s the reason why he has a successful talk radio show – people enjoy listening to him. The video was entertaining and educational at the same time.
I didn’t get much out of the group discussion in the first week so I’m hoping that changes in the coming weeks. It would be great to learn from a variety of people on a similar journey!
The lesson really hit home about my car payment. It’s my last bit of debt and it doesn’t feel outrageous because I can easily afford it and *everyone* has a car payment. However, the lesson shows how much this money can add up to be over time and I felt renewed in my desire to pay off all debt including this car loan!
That’s it for now. I’m looking forward to the second week of the class tonight!
Sounds like a great program. I am in the process of rebuilding and resetting my life. And my finances is definitely one area that I am working on. My biggest change is to not use my debit card. I take out my ‘allotted spending money” each week. I know that there is more money in my account for that week if I really need it…but it’s become a game to stay within my ‘budgeted cash’. Heck, it’s become a game to actually end the week with at least half of my allotted spending money. When my next pay check hits my account, I take out whatever is left from the previous paycheck and stick it into savings (half into my ‘play’ savings and half into my ’emergency’ savings account….the play is for vacations and fun things…the emergency is ‘do not touch unless really needed’ money.) It’s amazing how cutting the debit card purchases has made such a difference! (Before I was lucky if I had $100 left at the end of the pay period….now I consistently have quite a bit more!)
Nice! That sounds similar to the envelope system used in Financial Peace University. I imagine it will help a lot with overspending. I know my debit card gets me in trouble because it’s so easy to spend when I know there is more money in there!
I LOVE financial peace! My husband and I have been through it twice. Being debt free is our goal and our condo is almost paid off. whoot!
Sounds like you are doing great!
Oh that’s awesome! One of the most exciting ideas about the whole process is eventually having a paid for home. Like, what? How freeing and awesome will that be!