When Nicole and I got married, we were young, in love and … in debt.
I had a luxury lease car, a mortgage balance more than the value of my home and nearly $30,000 in student loans.
Nicole only had a $20,000 car loan. Yeah, I married up.
Needless to say, we were prime candidates for Financial Peace University (FPU). This course was developed by Dave Ramsey, the best-selling author of the Total Money Makeover. The goal of FPU is to learn how to “dump debt, budget, build wealth and give like never before.”
Dave’s book, the course and daily radio show encouraged Nicole and I to live on a monthly budget for the last 7 years, pay off all of our debt and even eliminate our mortgage by age 35.
I’m very grateful for everything I learned from Dave and his team. For that reason, I wanted to give back and pay it forward to others by coordinating Financial Peace University classes … even though I didn’t exactly agree with all of Dave’s teachings.
The Principles I Don’t Agree With
When I started down the Total Money Makeover and Financial Peace University path, I did everything by the book. If Dave said it, I did it.
Looking back 7 years later, here are the things I wished I didn’t do:
Getting Rid of Credit Cards
One of Dave Ramsey’s major beliefs is that you should not have a credit card. According to him, there is no good reason at all to have a credit card.
His expertise and rationale was good enough for me. I stopped using credit cards cold turkey and my wife (begrudgingly) came along for the ride as well.
I lived with the “credit cards are no good” truth in my life and preached that to my friends, family and anyone else who would listen for the next 5 years.
And then, I realized our spending didn’t really change. Because we were living on a monthly budget and sticking to it, it didn't matter if we were using a debt card or a credit card.
(BTW – Nicole and I love Mint for our monthly budget, but for you “spreadsheeters” out there, Tiller is a solid option as well).
We also missed the points and rewards!
So … we decided to go back to credit cards.
For the past two years, we’ve been able to enjoy vastly discounted vacations and cash back solely based on our daily spending. We figured, if we're going to spend money on gas, utilities, food and fun, why shouldn't we get the rewards?
We found that we had the discipline to use credit cards and not carry a monthly balance. Not once have we paid interest charges. I know that’s not the same for everyone given that our country recently surpassed $1 trillion in credit card debt.
I get it. Credit cards can be very dangerous and cause major financial distress to families. If used responsibly though, they can be very helpful, convenient and rewarding.
Pausing on Retirement Investing Until Debt Free
The power of compound interest works best if you start early. If you start investing in your 20’s versus your 30’s, you are going to have a much larger retirement nest egg. Simple math, right?
Dave suggests holding off on ALL retirement investing until you’re consumer debt free. Of course, I followed his instructions and did just that.
The reasons I regret this decision are two-fold:
- I gave up free money from my employer’s matching 401k program
- The stock market has been on a major bull run for the last 9 years (hindsight in my favor here)
That extra time for investing and benefit from my employer would have put Nicole and I much further ahead in our retirement savings.
Having Blind Faith in my Endorsed Local Provider
When it was time to start investing, I partnered up with one of Dave Ramsey’s Endorsed Local Providers (ELP) in my area. This was a financial advisor who was meant to help us with our retirement investing plans.
They were supposed to have the heart of a teacher, but our experience did not turn out that way. From the beginning, Nicole felt like our ELP talked over our heads with industry jargon and didn’t take the time to help us learn what we were investing in.
Nevertheless, I persisted. I thought, “if Dave endorsed this person, they must be worth it”.
I was wrong. The high fees associated with our “partnership” and some risky market moves caused us to lose money when we shouldn’t have.
How Do I Find the Best Financial Advisor? https://t.co/IldE2tpLCs
— Andy Hill (@AndyHillMKM) March 25, 2018
Why I Still Want to Coach Financial Peace University
Even after all of these hardships and lessons learned, I still believe in Financial Peace University. And that’s why I’m a coordinator at my local church.
In fact, we just completed a session last week. Our class of 11 eliminated over $40,000 of debt and saved over $30,000 in just 9 short weeks!
For those of us in debt and having a hard time seeing eye-to-eye with our spouses on our financial goals, this class can truly change lives for the better.
Here’s why I think Financial Peace University is transformational:
Living on a Budget is Freeing
It is amazing to see the enlightenment, pride and joy that comes from couples who are finally tracking their spending for the first time. You can see it in their eyes. They feel empowered and in control of their money.
FPU goes through the importance of the monthly budget and how to stick to it. This is the best part of the course in my opinion and that’s why it’s one of the first lessons.
It Helps People Going Through Major Life Events
For newlyweds, FPU can be very impactful. If you start off your marriage talking about money, you’re reducing your risk for brutal money fights down the road.
I’ve also seen divorcees and widows find FPU as an incredible place to rebuild their lives. Their partners were handling their money and now they are no longer in the picture. The camaraderie that comes with being in an FPU class can be therapeutic during those tough times.
Not Everyone is in Control of their Money
I feel proud of the progress Nicole and I have made together. We went from a -$50,000 net worth to a $650,000 net worth in the last 7 years, we’re mortgage free and our children’s future looks even brighter than ours. But that’s not everybody’s story …
I have to remind myself that not everyone is where we are. By coaching FPU, I get the chance to help others achieve similar wins. The core principles of the course help people gain control of their money. I want to help people gain that control.
In class, when someone pays off their debt, signs up for low-cost term life insurance or completes their family will, I feel like I’m a part of something really special. These are monumental actions that truly help families thrive.
Listening to Dave’s message of strong family financial principles inspires me to help others in the same fashion. I think I’ll just have to do it in my own way.
Isn’t that what it’s all about? Discover what works for you and what doesn’t. Create your own path.
If my final points above resonate with you, I'd suggest checking out a Financial Peace University Class in your area, but go in with your eyes wide open. Do your research and get other points of view before making any big decisions.
This is YOUR money and YOUR future. Do what's best for you.
Have you taken Financial Peace University?
What was your experience?
Please let me know in the comments below!
Thanks for this Andy. It is insightful. I am curious to learn how someone else could be an instructor for financial peace university. On his website, there is a coordinator role, but I didn’t know if that is what you are referring to or if there are other ways to teach the class.
The coordinator and instructor roles are the same. I would communicate with your local church or reach out to Dave Ramsey’s team directly. Go to daveRamsey.com/church/coordinator to learn more. I think you’ll really enjoy the experience Kris!
I can definitely agree with you on the ELP point. We had the same scenario happen with the investing ELP we were paired up with. Luckily, the PF blogging community helped get me pointed in the right direction and we are more educated and are in a better spot with our investments at this point. My wife and I owe our turn around to FPU, as it really helped us get traction after taking it in 2011. It’s been a wonderful ride, and the baby steps really do work.
I don’t regret not investing until our debt was paid off though. We will have plenty when it comes time to retire. Contentment and gratitude have played a huge role in our success. I think that for us, freeing up the cash flow, was a huge key to us getting where we are now.
We don’t use credit cards. I get why some people do, but I think it can be a gateway thing for some. If you can make it work, good on you. I do believe that it can be a trap for some where they win for a while while things are going great. But once something happens that threatens to sweep them off their feet, that’s where the credit card companies win. I don’t want to give that option to the credit card companies.
Teaching FPU and Legacy Journey definitely allows us to keep in touch with what it feels like to be back where we started and I appreciate that. Since we’ve been debt free (except our home mortgage) since 2013, it gets harder to remember what it felt like to have the debt looming over us.
The only thing that looms over us now is how we can create more cash flow to get to our 15% retirement contributions while paying down the house that we love (we’re currently in a 15 yr mortgage that is close to 34% of our take home pay) and also making the necessary contributions to kid’s college.
Thanks for your insight and willingness to provide this class to your church! I think it’s a great core class to get people thinking about the need to start getting control of their finances and the freedom that it brings!
This is awesome feedback Steven! I especially appreciate your point on contentment and gratitude. Those two pieces of the puzzle are the most important at the end of the day.
Those are the lessons that should be taught to our children. I’m personally working on that. Thank you for the reminder.
Even though we’ve been following Dave Ramsey since 2011, we just completed Financial Peace University at our church. It was a cool experience and I also have aspirations of leading a class soon.
Like you, I don’t agree with all of Dave’s teachings. However, his method works and has proven to be successful to get people motivated to get out of debt. I actually wrote a very similar post to this one back in November.
One additional disagreement that I have with Dave is “credit ratings do not matter”. They absolutely do and unless you have millions of dollars not having a credit rating can come back to hurt you. Credit ratings are increasingly being used in the job interview process, they are often a variable used by landlords, and of course not having a credit rating (or having a poor one) can hurt your chances of getting a mortgage.
Great point about the credit ratings! I wasn’t aware of that.
I’d highly recommend teaching the course at your church. With your financial savvy, you’d help people who really need it (baby steps 1-3).
I had the pleasure of being trained by Dave Ramsey’s group in his program. I also agree with you that he is not perfect in everything. He does a great job helping people get out of debt. While some of us are good with credit cards and can use them wisely I think I probably spend more than I might if I didn’t have a credit card. I do love the rewards!
Well said. It’s one of the traps of using credit cards. It works until it doesn’t. They are depending on you getting into a hard place where you will roll the balance over and have to pay the interest, plus since it’s delayed pain, you won’t mind spending a little more.
Slippery slope for sure!
I’m very grateful for his teachings and his inspiration to live debt free. It’s a great feeling to have no debt. If you’re looking to be debt free, he’s the master for sure.