A Repeat post for Molly :)

This is a post I did about 2 years ago on Dave Ramsey's Financial Peace University. Most of you have probably heard of this program through your church. He has written several books, but I went through the extensive 13 week program. It seriously changed my life. I've decided instead of doing a post about his program, I'm just going to write what I personally got out of the program--how I turned the Dave's principles into my own system. Remember, I wrote this before I had a husband and a house, but the system works the same no matter what your income/debt level is. These principals work the same for me today as they did two years ago, even though I've acquired more bills and debt. 

1. YOU HAVE TO MAKE A BUDGET, NO MATTER HOW MUCH OF YOUR INCOME IS "DISPOSABLE," OR NON-DISPOSABLE: I do not currently have many bills, so about 3/4 of my income is considered "disposable." When I first started working, I spent most of my paycheck. It was fun because I got a lot of stuff, but at the end of the day, I was unhappy because I didn't have any real money in the bank, and even though I made good money, it seemed as if I was always broke. Dave says "Learn to manage your money, or the lack of money will manage you." I make a new budget any time things change financially (every several months or so). I start by writing down ALL of my expenses. In an FPU (Financial Peace University) budget, Income must equal outgo... so, there is no "left over" money. After you have given your tithes, put money in savings, and paid your bills, if you still have money left over, go ahead and assign it to a category. I usually divide mine between my different savings accounts, or pay extra on a bill or two. 

2. SAVINGS: EMERGENCY FUND, RETIREMENT, FLEXIBLE, AND CHRISTMAS: If you didn't notice the order in #1 (give, save, pay bills), notice it now. Only after you give tithes, and BEFORE you pay your bills, you must put money in savings... I know, I know, you may claim that after you pay all of your bills, there is no money left over to save. Thats just a lie you've been telling yourself. EVERYONE has a few spare dollars, or we wouldn't be buying starbucks, or going out to eat. If you don't have much money "left over" after paying bills, just start by saving $5.00 per paycheck... It may not seem like much, but you won't miss the money and you will be glad you have it if your car breaks down. I use my bank's service of automatically debiting my checking account twice a month and putting it into savings. I have 4 savings accounts: 

• Emergency fund: Dave says to have $1000 in the bank for emergency use only. This money doesn't get touched. Once you reach your $1000 fund, keep building until you have 3-6 months living expenses in the bank. This is a goal that I achieved just now, after 4 years of following the program---it's not easy or fast, but it will pay off (pardon the pun). 

• Flexible savings: money I save for vacations, unexpected expenses, big purchases, when your bills "run over" one month... and so on 

• Retirement (I have a roth IRA) I can only contribute $25 per month to this account right now, BUT if I never put any more in, at age 65 the balance would be around $50,000... Thats like $30,000 for free!

• Christmas Club: My bank makes it almost impossible to get to this money before October of each year. After that, I get a lump sum of cash to spend on Christmas gifts, so I don't have to take money out of my normal budget to pay for gifts. Again, it is only $37 per paycheck (twice per month), but I don't miss it since my bank automatically debits it out. 
  

3. CASH ENVELOPE SYSTEM: FPU is  H U G E  on the envelope system. Its a way to assure yourself that you don't overspend in certain categories. It works like this: When I deposit my paycheck, I get cash for gas for 2 weeks, disposable money for 2 weeks, "entertainment" money for Trey and I (to go out to eat or to a movie), and grocery money. I put the cash in individual  envelopes. I do not allow myself to use my debit card for any of these categories. This keeps me in check and I never worry about enough money being in my checking account for bills.

4. PAY OFF DEBT USING THE DEBT SNOWBALL: Do you have a lot of credit card, medical, student loan, car debt? If so, this program will pay off your debts FAST. Here's how it works: write down all of your monthly minimum payments for each debt, starting with the LOWEST total balance. Each month when you pay your bills, pay ONLY THE MINIMUM on all of your debts except the lowest one... Throw all of your extra money on this debt! Lets use this example: 

• Pretend you have a credit card with a $500.00 balance / $50 minimum due each month, a medical bill of $1200/ $100 minimum due each month, and a car loan of $8,000 / $300 minimum due each month. Each month, pay ONLY the minimum amount due on the medical bill ($100) and the car note ($300). Pay the minimum amount due on the credit card ($50) PLUS any extra money you may have. If you have $200 "extra" in your budget, send it to the credit card... If you only have $20 "extra" send it, it doesn't matter how much extra you send, just make sure you send some, even if it is only $5. Pretty soon, your credit card balance of $500 will be paid off.... Now, take the minimum amount due from your credit card ($50), PLUS the minimum amount due for your medical bill ($150), PLUS any extra money and send it towards the medical bill.... after this is paid off, add up the minimums and extra money again and send it to the car note...... see how this works?
  

5 (but not least). GIVE TO THE LORD: I think that we've all been in the position when we feel like we don't have the money to pay our tithes... This is always a lie. You should pay tithes first, and I promise that everything else will work out. God will not give us more money than we can handle, so if we aren't good stewards, why would he want to give us more? There have been so many times when I thought I was BROKE, but I wrote my "church check" anyway--banking on faith. It ALWAYS works out: and unexpected check in the mail, someone who owes me money finally pays, a Christmas bonus, a house plan job... God always provides. 

I refresh myself on Financial Peace University every other month or so, and I always get something new out of it. I encourage you to check out his program or his books. There are so many wonderful principles that I didn't mention.