Giving my money the BDSM workover (a.k.a. starting Financial Peace University)‏

This may be more boring than my past posts, but instead of just talking to hear myself think, this time I actually want to chronicle something that we’re doing so I can look back after we’ve finished and see what the $*@% I was thinking. And since we started this little epic about 3 weeks ago, this post is a shade late. Sorry.

About three weeks ago, our Bible study decided to host a 13-week course on finances called Dave Ramsey’s Financial Peace University. Clayton and I have been familiar with Dave Ramsey for a while–as I’m sure most people would be at least a little interested in a guy who first became a millionaire at age 26, lost it all so bad he filed for bankruptcy (when the bank called in his debts all at once), and then made it all back again.

I’m going to hold on while you read that last part again. That’s right: he became a millionaire twice in his life, through God’s blessing and his own hard work. So if I’m wanting to build up my bank account so my family is more comfortable, and this guy walks down the street and says, “Let’s chat about money,” you’d better believe I’m going to listen to what he has to say.

Anyway.

So we’ve been doing the video coursework for FPU, but it wasn’t until Week 3 that Clayton and I finally tried the Envelope System Dave recommends using. Basically, the idea is that you make a balanced budget (you start with your income that month as a starter number, then subtract your expenses–including tithing/giving, savings, etc.–until your end number is back to zero), and then pay with cash for certain items, like most retail purchases. The idea is, when the money runs out, you stop spending in that category. Boom. Instant way to keep to your budget.

I was REALLY doubtful about this. Like, pick-a-fight-every-time-we-try-to-do-the-budget kind of doubtful. It wasn’t that I wasn’t fully committed to doing it–it’s that I was more “committed to doing it until it got hard.” Which is kinda the story of my life. And since it involves numbers, budgeting is automatically on my It’s Too Hard List. I wanted to do it, I knew we needed to do it, but I also wanted it to be fairly easy reasonable.

I didn’t want to feel like the budget was a paper straitjacket.
I didn’t want to look at numbers every night.
I didn’t want to have to go online and compare our purchases with what we actually spent that day/week.
I DID want to save money, though.
I DID want us to pay off our mortgage early, like we’d always talked about doing.
I DID want Rynn to have a pony and learn to ride while she was still kid enough to be kid-reckless on it.

But these didn’t/did wants didn’t really add up. Our situation for all of our married life, up until a week ago, had more or less been to buy the stuff we wanted when we wanted to, without much regard for where our bank account was. Sure, we’d look at it once a month or so, to make sure we knew the general ballpark figure. But we didn’t really save up for purchases. We’d say we were going to save up, and then a month later we’d go buy it. Pretty haphazard, really. We weren’t completely ignorant of our money, but we were ignorant of where all of it was going.

Prime example: we discovered, when we’d sit down to make up a budget we never ended up following, that we had $1,200 left over that was essentially unaccounted for after we knocked off all the necessities. Then we’d look at each other quizzically and go “Why wasn’t that put in savings? Where did that much money go?” and then we’d look at our purchase history and see “Chilis,” “Akasaka Hibachi Grill,” “Logan’s,” “[whatever the name is of the little Mexican restaurant up the street].” Then we’d go “WOW. We LITERALLY ate $1,200 this month. That’s ridiculous!” Then we’d vow to eat at home more, follow that for a week, and then forget the resolution for another month.

On and off for the first two weeks, we fought about money a lot. For a couple that rarely has major fights in general, fighting almost daily about the same damn thing got old by about the second argument. He’d be like, “I thought we both agreed to do this,” and I’d be like, “Well sure. As long as we do it tomorrow.” And then we’d fight like two wet cats thrown in a box, because he thought I was dodging it and I was just trying to set an alternate date. Then I’d complain about a headache because I’m allergic to numbers. We’ve been together for 11 years, and I think we actually had all 11 years’ worth of financial arguments in those first few weeks trying to get the budget in order and both of us on board. It wasn’t pretty. We were great, until Clayton mentioned the need to sit down and look over the b-word. And then I’d turn into a massive other b-word and we’d have a colossal fight complete with hand grenades and mustard gas. Like I said…not pretty. And for about 2 weeks, I was convinced that Dave Ramsey was an idiot. I finally told Clayton, “He said this would PREVENT fights about money. We never used to fight about it before.”  And my oh-so-very-astute husband answered, “Well…yeah, of course not. It’s hard to fight about something you never pay attention to.”

Ouch. Good point.

So, recap of Week 1:

Week 1 was about understanding the basics. Dave’s system is largely focused on you getting rid of your consumer debt and staying that way to amass wealth. One of his videos quotes a statistic first published in a Forbes 400 survey: 75% of those rich folks polled said that #1 way to get rich was to stay out of debt (as a side note, remember that the Forbes 400 consists of millionaires and richer). And since this advice is coming from not just one wealthy guy, but 300 of them? Yeah, I’ll listen to that.

Dave Ramsey’s system follows these Baby Steps:

  1. Put away $1,000 to start an emergency fund.
  2. Pay off all your debt using his Debt Snowball approach.
  3. Save 3-6 months worth of expenses.
  4. Invest for retirement (15% of household income in Roth IRAs and pre-tax retirement).
  5. Start a college fund for your kid(s).
  6. Pay off your mortgage early.
  7. Build wealth and give.

During Week 2, we took the first stab at a “quickie” budget to get an idea of what our necessities are. Then, in Week 3, we made a full budget that encompassed all the necessities, plus the other things we spend money on. We followed his guidance on what to include (for example, not just what you spend money on but also when these things are due), and Clayton took several hours over the course of a weekend and went through the tedious process of setting up a concrete budget–if anybody’s interested, I can make another post on all the work that went into it b/c it actually was a serious effort. But the ground work he put down to get the numbers in order have really paid off when we go to mess with it now.

And, honestly, I still wasn’t on board–or, I thought I was but, looking back, was still on board as long as Clayton did most of the work. But I finally agreed to shut up and do it, since I had, after all, originally agreed to do it…back when I was excited about it and didn’t know what I was getting into.

Then we started the Envelope System, and I got a massive reality check at the end of week 1 when I saw how much we’d saved. I’ll detail that moment I went from being an interested video watcher into a 100% ON-BOARD advocate in my next post or so. Right now I’ve written this at a time that is WAY past my bedtime and I’m tired of my Sorcha-kitty drooling on my wrist from where she’s curled up next to me. (Yeah, she’s a drooler and it is massively icky.)

What’s your take on finances, Most Highly Respected Anonymous Readers? Are you even interested in hearing about the fascinating world of my finances? Have you been in a situation before where you thought your financial system needed to change, but weren’t sure where to begin?

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7 Comments

Filed under Dave Ramsey, financial misadventure, Financial Peace University, scary stuff

7 responses to “Giving my money the BDSM workover (a.k.a. starting Financial Peace University)‏

  1. I would love to hear about what went in to planning your budget and the steps you and your husband took. I feel the same way about numbers as you. I also feel as if creating a budget would be physically painful somehow, but realize that we need to do something. A church in our area is in the middle of going through this course (which we didn’t get signed up for) and will be doing another one in the fall for which we will be registering. We were interested in getting the basics started before actually going through the course. I have to admit, reading your blog makes me feel much better about this process as a whole. I’m not looking forward to the arguments, however we occasionally have them about money now anyway. Hopefully all is going well in this area still!

    • Honestly, at first it WAS physically painful to sit through budgeting. My husband, thankfully, took the time to set it up alone as a favor to me–knowing how much I loathed it all–, but he started with our basics (i.e., listing what we need to literally JUST survive if one of us lost his/her job–food, utilities, current home payments, gas and insurance for the cars–; identifying how much each of those cost a month, and compared it to our monthly income). The goal at that step was simply to make sure our income covered those. Next, since we’d just identified the necessities, we added on everything else and their amounts and compared it to our income. If we went over (which we did), where could we cut back? We had to have very frank conversations with each other about what were “important non-necessities” (e.g. pet supplies, daycare–which wasn’t a necessity since, if one of us lost our job, that one would be home to watch the kid and save ourselves daycare $$, etc.). Hobbies were the last things on our list to fund (for me, it was most fun things related to my horse, for him it was programming/computer supplies and books). One of the hardest parts of budgeting was needing to reminding ourselves almost constantly that we were planning for the long-term, to save money to get rid of all the things we had to waste money on now–so if it was hard to give something up, remember how awesome it will be later when we’ve become completely debt free and can do whatever we want with our money.

      You mentioned you were doing a course in the fall. Are y’all still doing it? And when does it start? I’d love to hear your feedback on what your first impressions are/were!

  2. Personally, I’m super interested. Dan and I are on a skin-tight budget right now, but when he’s employed, I want to make sure we don’t suddenly start spending more. Plus, you could find a way to make anything interesting. so yes- I vote for follow up! : )

    • Thanks, Mike! I’ll make sure to keep it up, then. I’m thinking the next post on it should include a breakdown of how we’re making the envelope system work for us. Good to know it might be helpful to you!

  3. Micki

    I can identify with the cycle of “we need to change” and “okay” then the next month going through the same discussion over and over but never changing. When you hit the hard place in your budget, you find out that the change you’ve been puting off for (a month? a year? more?) is now made for you otherwise you’re in deep, er, kimche, as it were.

    I’m glad you’re liking the system. I am pleased to see we are actually following the steps you outlined (though I found them through another source). I can’t wait to see how it works out for you long-term. Oh, and to meet Rynn’s pony. 🙂

  4. Kristy

    My favorite lines from this blog post:

    “I DID want Rynn to have a pony and learn to ride while she was still kid enough to be kid-reckless on it.”

    AND

    “WOW. We LITERALLY ate $1,200 this month.”

    All of that aside, this system sounds interesting and I’d like to hear more about how it is working for you. My mom is always going on and on about Dave Ramsey, but I never listen to her. You, however, present a perspective on it that’s far more valuable to me- someone in my age group and in a similar stage of life.

    • Awesome and thank you! Yeah, so far it’s been quite an eye-opener. It’s kinda funny how, even after a week of messing with the budget and using the envelope system, (as cliched as it might sound) I feel like I’m not reacting to things that come up in my life (b/c the feeling of control goes beyond just finances)–I actually feel like I am a more proactive person now. And the only thing that’s changed is using the cash system and my perspective. It’s a cool change 🙂 And Dave Ramsey is a pretty cool guy: a funny, VERY entertaining speaker who’s good at breaking things down into helpful, instructive pieces and approaching all of it from a VERY common-sensical perspective. I totally recommend checking out one of his books. I hope my future posts about it are useful to you.

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