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Review of Financial Peace by Dave Ramsey
Financial Peace is a resource you might need more than you realize. For those of you unfamiliar it is both a book about personal finance(see left) and a personal finance course offered by Dave Ramsey. If you find yourself saying things like, "I know what to do with money, I just need to be more disciplined" or "I don't worry about money" this resource may offer more for you than you realize.
The First Step Toward Successful Personal Finance
For myself, I figured I knew what to do and I'd never considered myself a worrier. I was in for a surprise. It had seemed logical to my husband and I that the first step would be paying off your debts. But that's not the first step. According to Ramsey the first step is actually to have an emergency fund in a money market account.
Ending Worry Over Personal Finances
The reason is two-fold. One, so that you don't have to worry about money. As I said I've never thought of myself as a worrier but after this class I realized it wasn't that I didn't worry, it was that I avoided worry. Let me explain.
Much like the ostrich with his head in the sand, if I saw our paycheck and realized it wasn't enough to cover our expenses I would ignore the situation (i.e. simply pay none of the bills). This would continue until either the situation pounced on me (creditors began to call), the nagging feeling of impending doom made me deal with the situation (much like a rabbit fleeing its hiding place when the hounds are barking) or we got more money such that I could pay the bills.
Obviously the first situation is not good. We would incur late fees and our creditors usually got paid in the order they harassed me rather than any logical order. Also, because I was feeling harassed I would often pay more than we could truly afford.
However, the second situation was no better because I was dealing with our finances like a scarred rabbit. I wouldn't want to spend all our money because of the thought that we might need it for something (an emergency). So I held back my own "emergency fund". But unlike a true emergency fund I knew that this money was actually earmarked for one of our creditors. So I would hold the money, late fees would accrue, and as soon as I knew more money was coming in I would pay the bill and the cycle would begin again. The result being late fees month after month.
Establishing an Emergency Fund
Therefore when we did establish an emergency fund I felt an unexpected since of relief. I had been worrying about money the whole time I just avoided thinking about it.
And to those of you who say, "You should trust in the Lord." Yes, we should trust the Lord to provide. And it is something I am now aware that I need to work on but doesn't the Bible also tell us to be good stewards? God entrusts each of us with gifts and resources and expects us to be good steward of that with which He entrusts us.
Using the Emergency Fund
One more quick note on the value of the emergency fund. After my husband and I had established our emergency fund the battery on our car gave out. Previously this would have sent us into a panic. Where are we going to get the money to pay for this? How are we going to get places till we can pay to fix the car? But with an emergency fund there was no sense of panic. We simply bought a new battery and went about our day. And the next month we put the money back into the emergency fund.
Class or Book?
One final note, I've mentioned that Financial Peace can be purchased as both a book or a finance course. While the book is great and contains all the needed information if you can afford it the class is even better. Having others walk the journey with you will help keep you on the path.
But whatever your choice, good luck on your financial journey.