Financial Peace University: Day 1, Week 2

Financial Peace University Class materials

*Bibles not included, but I personally recommend reading your Bible along with class, and always. Lots of wise money related verses in the Bible. :-)

Today (this was written last Sunday afternoon, after class.) was the big day. We got our class materials and watched the first real video in Dave’s class. Last week, the video was just an introduction to the class, this week, we got into the big stuff.

I felt a lot of different emotions going into this week. Ever have that “nothing is ever going to be the same again” feeling? Like the first day of school. You’re entering a new grade, are excited about the move up, the increase in responsibility and all that comes with it, but half-way miss the way things used to be. The way things were when you wished you were bigger and could do big kid things?

Well, Financial Peace University (FPU) is my big kid thing.

Going into this week I’ve felt a variety of emotions:

·      Fear

·      Excitement

·      Gratitude

·      Hopeful

·      Daunted

I’ve been all over the emotional map.

As a recovering worrywart and former anxiety-filled woman, I’m grateful my fear never turned into worry or anxiety. It’s been more of the healthy kind of fear, the fear that propels you to act, instead of running, procrastinating, or spending all your time worrying.

But, I’ve dreaded acknowledging my student loan debt. I know the amount I owe falls closer to ridiculous dollar amount than manageable dollar amount, and I’ve spent the past two months since graduation thinking of ways to not think about it. As of today, I don’t know my final loan amount, and that’s been a conscious decision.  

Student loans aside, I’ve felt excitement, gratitude, and hope. I’m eager to learn, to change my attitude and relationship with money, and to finally learn how to make money work for me/us, so that I/we can build wealth.

Before I talk about today’s class, I want to share how I’ve begun preparing myself, mentally, in the couple of weeks leading up to class. It’s not a long list, but doing these things made me feel a greater sense of control over my finances and the direction I’m going in.

I don’t think Edward needed to prepare himself in the same way. Since he’s our provider/breadwinner, and also handles all of our families’ finances, he already has a built-in sense of control and idea of our financial health. At least, that’s what I imagine.

Here’s my list:

·      Opened up my own, separate checking and savings account. 

·      Set up a monthly automatic savings payment of $25 from my checking to my savings account.

·      Started thinking about our budget and saving on our biggest line item: groceries

·      Started an Ibotta account. *See not at the end of this post.

·      Read a few blogs.

It isn’t necessary to do these, or any steps, but I feel one of the reasons people dread personal finance work is it often leaves you feeling powerless or a lack of control. Despite what we’d like, money is tightly connected to our quality of life, and therefore, has a large impact on our personal sense of joy, contentment, and happiness. In fact, most people over consume for the same reasons most people overeat: to fill a void. The very nature of having a void, lends itself to having a lack of power or control over life and what unfolds around us. That lack of power often pushes us to live wildly, trying to consume what we believe will make us whole.

Last week I started my first job since I became a mother. It’s a small, part-time job as an online writing tutor/e-instructor, but it’ll bring in about $800 extra dollars a month, during my lightest working months. (There will be high demand months with overtime.)

Truthfully, I was a little indignant about making so little money as an MFA grad, but my mother reminded me this is work from home, stay in your pajamas, no travel, easy work with a steady income. All things considered, not a bad gig. It’s giving me time to consider what type of work I want to do, it allows me to continue homeschooling the kids, and it’s giving me a lot of experience. As an aspiring English composition/writing professor I am getting a lot of pedagogy training and hands-on experience with the population I’m interested in working with.

Win-win.

I used the new job as a good opportunity to open up a new, separate account, and if I can be honest, it felt weird. Edward and I have shared accounts, credit cards, everything, for the past 17-18 years. He doesn’t have a separate account, so it feels odd to have my own. But, he encouraged me to do it this way, so that I could feel a sense of power and autonomy over what he calls, my income. If you read my first post in this series, you know that we have only and always lived off his salary, and so he refuses to treat my income as income. I’m not happy about that, but I do understand his mindset. For the long-term health of our family, it is best for us to not include or incorporate my income into our family budget. Doing this means we’ll always live beneath our means and focus on saving more, instead of spending more. It's a funny thing, somehow when you bring in more money, you tend to spend more money--if you are not careful and attentive to your spending.

As it stands now, we haven’t set clear goals or ideas of how we’ll use the extra income. My hope and prayer is that we’ll be able to save most and at times, all of it. That sort of discipline will help propel us to financial peace, and frankly, learning to delay gratification is what we need to cultivate. We've come far, with the financial meltdown of the past few years, we had no choice; however, if I am honest, I can still feel the impulsive need to spend unnecessarily, from time to time. (These days it shows up in the grocery store, particularly the chip and cookie aisle, when I am starving after church or Bible study.) :-)

Now, the small automatic monthly savings isn’t enough. It just isn't. As soon as I know my direct deposit is set up, I’m changing the amount. I’m not sure how much, but I’m inclined to reverse my thinking of the extra income. Instead of asking myself how much can I save, I want to ask myself how much of the money do we really need.

I’ve got some real ideas to save on our grocery bill, but haven’t had a chance to really sit down and figure things out. But, to begin I started using Ibotta, and have already made over $14 in two and a half weeks. (See my explanation below.)

As much as possible, I’m trying to read other blogs, and learn from other’s experiences of living well on less. If you know of any good blogs, please leave me links in the comments, and give me your own personal strategies, too. Let's help each other. 

Now, let’s get to the good stuff! Let’s talk about the first real week of class!

Financial Peace: Your story begins today.

I'm committing myself to believing that, adapting it as my personal motto, and proceeding with faith.

Financial Peace University Review

(Materials + First Lesson)

Materials:

·      Nice sturdy box to contain all class materials

·      Welcome box with: Welcome guide, access code to online material, stickers, pencil, sharpener, eraser, and bookmark

·      Member workbook

·      Dave Ramsey’s Complete Guide to Money book

·      Financial Peace University (FPU) Envelope System Wallet

·      Audio CDs and Case

·      Progress Poster

·      Budget Forms Folder

I was really impressed with the quality of materials Dave gives you with the class. I’m not sure what I was expecting, but the quality and breath of the materials surpassed my expectations. Dave says this class is a lifelong class, one that you can use and refer to for the rest of your life, and where the materials will always be relevant, and the materials support that statement. At my church, they have told us that we can take the class again and again, and we were encouraged to come back for free refreshers. In fact, all of our instructors are former/repeat students, and a number of classmates were back for refreshers, and to move on to another phase of the class, after making progress through Dave's beginning steps. 

The materials look and feel like they will hold up for years of use. From what I’ve seen, they also look like they will fit well with the material the class covers, and there doesn’t feel like any filler stuff. Sure, the pencil, eraser, and sharpener, along with the stickers and bookmark are extra, but they are good extras that’ll be useful. They don't feel like add-ons to compensate for a lack, but fun tools to encourage and motivate you.

The meat of the material is definitely the book, envelope system wallet, audio CDs, workbook, and online access code. These items alone would feel more than worth the cost of the class, especially when combined with the information Dave provides.

Week 1, Class Content:

This week’s class covers Dave’s ideas about savings, and it quite honestly blew my mind. While my mind was being blown, over and over again, Edward felt challenged. The ideas Dave presents are contrary to what we normally think about saving and paying off debt, and so for Edward, it was a challenge.

Personally, I like that Dave’s methods are different. They feel instinctive, and speak to what has made sense to me, but no one ever confirmed or validated.  

I guess I feel more hopeful and optimistic this week than challenged, although I’m writing this on Sunday night, before we’ve had a chance to tally all our debt. I’m not looking forward to that amount. We don’t have much, if any, credit card debt. Maybe a total of $200-300, and we have about $12k in debt from the remodeling work we had to do last year after our slab leak. Outside of that we only have our mortgage and student loan debt. We’ve made great strides in paying down our mortgage and are finally above water after the housing market crash (though we are no where near making back all the money we invested through our down payment and payments made over the eleven years we’ve been here). I feel comfortable with our current mortgage, because although it would be nice to refinance, we don’t currently have any PMIs (Private Mortgage Insurance)**, and since we don’t have the same equity, and no savings to pay off 20% of what we owe, we’d likely incur a PMI, which we don’t want.

But, student loans. Oh, student loans are an entirely different subject. Shakes fists in the air. It honestly feels like we will never pay them off. I’ve begun to feel burdened and saddened about our student loan debt, and as I was sharing that with one of my class teachers, she told me, “Don’t look at it like that. It was necessary debt for you to work. I look at my student loan debt like the IRS, it’ll always be there. Inform yourself and start working to pay it off.”

Her advice was needed encouragement and I’ve started to adjust my attitude about my student loans. I know they were necessary, and I’m not going to loose sleep about it. I'd much rather have my education than the alternative of no SL debt. 

We were joking about it and I shared with my teacher and another classmate that as long as I view my student loans as a top of the line new car, I’m good. And my classmate said, “Yeah, in my mind I’m driving a really expensive, nice sports car.”

And it’s true.  A lot of families have more than one or at least one luxury car, and change cars every five, seven, or ten years. If I view my SLs as a luxury car, then my attitude and perspective changes.

Aside from that, one of my church’s pastors shared his family’s experience of going through FPU years ago, and shared that they paid their last student loan the month before. Great inspiration.

Week 1, Goals & Homework:

·      Our short-term goal is to fund a quick emergency savings.

·      List our total amount of debt (including: credit cards, car loans, student loans, “toy” debt, 2nd mortgages, and credit loans)

·      Create a budget

Now that I’m working and bringing in extra income, funding an emergency savings will be easier, though not completely easy. When you are not in the habit of saving (not saving up to purchase something, but saving a do not touch this emergency fund), it can be challenging. We are good at saving up for purchases, well, relatively good at it, but not good with saving money and not using it. Like I said, the market crash a few months ago taught us how to delay gratification and live on less, and how to save up for big purchases, but we have not learned how to save--just to save. Honestly, on our one income that has not been a real option, and as a result, we didn't see it as a pressing need. We thought about savings for expected costs. You know, the car is going to need new tires and a tune-up soon savings, or the kids are growing like weeds this summer clothing savings. We've never focused on longer-term savings, just mid-term savings.

I hate to repeat myself and beat a broken pie, but I’m not looking forward to listing our debt and seeing that big number. As I was talking to Edward about it this afternoon, I shared with him that the only thing bringing me comfort is realizing we don’t have a lot of debt to fill those categories. All/most of our debt is necessary and good debt. The school loans were needed, and should pay off in the long run, and the home remodel debt has increased our home’s value. Not to mention, we did all of the work ourselves, saving ourselves thousands of dollars. We bought smartly, and worked hard to save costs and keep the kitchen and home remodel costs low. (Still working, actually.)

Finally, being married to an accountant who specializes in budgeting and spent most of his nearly 20-year career as a budget analyst, I’m not worried at all about the budget. Edward is truly a gifted and masterful accountant and budget analyst. He has a wonderful ability to understand how budgets work, how to project costs, and how to prepare our expenses/costs for future projects. The only way we have been able to withstand all the financial storms have been through God's grace, and a large part of that is the talent Edward has with budgeting. 

Budgeting is truly my weak spot, so I thank God for pairing me with someone who is so masterful at it. I recognize it isn’t my strength; I relinquish the control to him, and follow his budget with full trust. Budgeting, really, any sort of money work makes me uncomfortable.

I’ve always viewed money as a traffic light. Red or Green, stop or go. Money has always felt like an intangible power. A sort of injustice, and as a result I've tried to deal as less as possible with it. Can you believe I even feel uncomfortable receiving money for work I do? The thought of charging someone money for work I find pleasure in has always disturbed me. The only way I've been able to have a successful art business in the past has been thinking of payment as a pay off of materials I've bought (not services I've done), and/or giving all financial work and responsibility to Edward. Otherwise, I spend a large part of my time worrying and feeling bad over charging someone for my creative work. I'm working earnestly at changing those ideas, and learning that I do deserve to receive compensation for my work.

The good news is after this morning’s class, I’ve already felt a shift in my understanding and relationship with money. It’s beginning to feel less like a traffic signal, telling me arbitrarily when to stop or go, but more like the car I drive. I can push it, steer it, move it in the direction I need to accomplish my goals. Like a car, money can be a great vehicle to move us from one place to another in life, to accomplish things, to help others and ourselves; however, the opposite is also true, and money can also be a hurtful weapon against others and ourselves. Money can drive and control us, or we can steer it according to our will, and use it as a tool.

Today has greater power than yesterday.

I’ve decided today money will be my tool, and I will not worry myself over the years it wasn’t. I've decided to release the burden, guilt, and feelings of worth I've attached to receiving, and giving money, and develop a healthy working relationship with money.

Before I end, I'll share something else. Despite the inspiration I felt to share our family's journey with Dave Ramsey's Financial Peace University, I still went to E and asked him if it was okay, and if there were any topics, information that was off limits. People get a little funny when it comes to being transparent about money. He thought for a quick two seconds, three tops, and then shock his head no. He was more than supportive, but he had a sly smirk and question.

"So are you going to become a financial blogger now?"

"Not hardly," I told him. "Not even."

I want to share another perspective. I want to be a voice championing a different lifestyle. I want to let other mothers and fathers know that you can live a wonderful life on less. That the one income family is not a glittery unicorn, and you don't have to make six figures to afford it. But I also want to be transparent, to share our family's lifestyle, the good and the difficult, as inspiration for an alternative. And lastly, I want to redefine my own personal relationship with money. I think it's time we become amicable, me and money, and that I open my heart up to all the Lord has for us. He can't use me if I timidly tip-toe around money, fearful of receiving, and as a result, giving.

And that, my friends is what this is all about, what type of blogger and writer and woman and wife/mother, and Christian I want to be--giving.

I cannot give, serve, whether it be volunteering of time and talents or donating money and food, if I am not open to receiving. I cannot be faithful in stewarding the resources God's blessed me with if I am fearful of receiving and giving. 

If we are not financially healthy, if we are constantly in a state of surviving and not living, truly, truly I ask you, how can we serve our fellow sisters and brothers? What do we have to give if we are not well ourselves.

I pray God's grace and will be done in me, in you, and that we both live servant's and not selfie lives.

Deep and Full Blessings to You,

Kiandra

Notes:

*Ibotta is a rebate shopping app/program that allows you to receive small rebates for certain purchases. I use it mostly for grocery shopping, and the way it works is you do small, quick things (watch a 20 second video, answer a question or read a fact about a product, or read a recipe) for different products, and then receive a rebate for your time when you purchase the item. To receive the rebate you scan the product's UPC code, and take a picture of your store receipt, upload it (all from the app), and you're done. The average cost per item is $0.20-$2. 

The link above is my referrer's link, so if you sign up I receive a bonus and you receive a bonus on your first rebate. When you sign-up, you get the same referrer's perk for anyone you refer. As you refer people you build a "team," and receive more rebates/bonuses as your team redeems more items.

**PMI (Private Mortgage Insurance) is an extra cost added to your mortgage when you take out a mortgage over 80% of the value of your home. This added cost is usually for the life of your mortgage, and the extra amount does not go to reducing your principal loan amount or interest. It is extra money you pay the bank for having what they consider a high-risk loan. Now, I'm not sure, so don't quote me on this if you are shopping for a mortgage, but PMI's are rarely waved now, after the housing market crash. Again, I'm not sure, it is something I was told when asking an agent about interest rates in a passing conversation about the market, refinancing, etc. It used to be that if you put a 20% down payment, or had 20% of your home's value in equity (meaning you only owed 80% of its worth), you could avoid PMIs. 

EDITED: I've found out that FHA loans now require mortgage insurance, regardless of your loan-to-value ratio. So, if you want to avoid this cost, you need to look outside an FHA backed mortgage, and be prepared to have a 20% down payment (if you are purchasing) or 20% equity (if you are refinancing).

Our current mortgage doesn't have a PMI, something we worked hard to avoid, but because of the housing crash and the fall of our home value by about 40-50%, we no longer owe less than 80%, which is why we are not refinancing. Loosing so much money was a true bummer, but on the bright side we are saving money by avoiding PMIs (even when we technically, shouldn't have it.) Now, we may learn something new, we may learn that PMIs are not automatic and that there are still ways around them (I use to know all the tricks that no longer apply), and if so, I'll be sure to pass it along to you. But in the meantime, we're sticking to the rule of don't buy/refinance unless you are at 80/20, or can afford a 20% down payment. So we'll be here, God willing, for a good, long time. ;-)