Wednesday, June 10, 2009

Financial Peace University Week 1

Yesterday, Felicia and I started our first class of Financial Peace University. FPU is a 13 week course made up of a hour of Video Tutorial by Dave Ramsey and an hour of discussion in small groups. We have been looking for months for a class to fit our schedule and due to my work schedule the best time was Sunday evenings.

Originally, we found a small church that had 3 participants in the class in Cedar Hill. We were going to join that class but we felt we wanted to be part of a class that was little bigger. Yesterday, the class was at a Duncanville church and had at least 75 participants in the class and during the discussion period, the class had to be broken into at least 5 small groups. We both enjoyed our first class and our looking forward to the rest of them.

This first class was about saving money and accomplishing Step 1. Step 1 is saving $1,000 for an emergency fund. I know it is not a huge emergency fund but it is a good starting point. The idea is to set small goals and accomplish them so you stay encouraged to keep going. Dave does a good job of explaining why we need an emergency fund and where to keep it so we can get to it if we need it...and only if we need it. After Step 1, you attack your debt and when that is gone, you work on a fully funded emergency fund. We have achieved Step 1 before and now we are needing to do it again.

Dave also covered compound interest, and paying cash for things that you want. Great examples were given on how you can make compound interest work for you. Dave showed what a $1000.00 can turn into in a six percent interest account for 40 years. The example he gave was 25 year old putting in $1,000.00 and taking it out at age 65 and it turned into $10,957.14.

One reason Dave gave for the importance of saving was retiring with dignity. This resonated with me because I see some loved ones that are close to me that are a little closer to retirement age than I am and I worry about how they are going to make it if something happens to them. What if they get hurt and can't work? Or what if they get fired? Or forced into early retirement? Are they going to have to keep working forever or retire and live from one pension check to the other? I worry for them and I do not want to be facing the same questions when I am their age. How wonderful would it be to know that Felicia and I can retire and not have to change our lifestyle one bit! It would be great to know that we can work on Felicia's dream business and not have to worry about turning a profit right away, or travel, or just sit on our porch and watch the sunset and not have any worries about money?

On the way home from class, Felicia and I were talking about how we want to win with money. We talked about how nice it would be if one of us could quit our job and stay home if we wanted to. We are trying to make a commitment to the process but to be honest it is hard. It is easier to do what makes us feel good now. I look at all the figures and say we can do this and that, but turning it into action is hard. Hopefully, we can make progress by going through the classes and being held accountable through our discussion group.

No comments: