Dave Ramsey and Financial Peace University Changed our Lives!

After graduating college and commissioning as a 2nd Lieutenant in the US Army, I moved to Fort Rucker, Alabama for flight school in May 2012. My fiance at the time, Megan, moved back home to Wisconsin until we go married the following December. She had a job working at the local hospital, and I was living the Army life.

Upon graduation, we had a combined $90,000 in debt.  About $65,000 in school loans (my tuition was paid for, but I still had about $30,000 in loans for my personal flight training, the remainder of the school loans were for Megan's tuition and private/instrument flight ratings). The remainder of the loans was a "Career Starter" cash loan from USAA that I took out my senior year of college to pay for my brand new Jeep Patriot and our honeymoon.  We had a lot of debt and no real plan to pay it off, making the minimum payments as required.

In December 2012 we got married, and I brought her down to Fort Rucker with me.  At the time, I was making about $3,200 per month and had about $1,500 in loan payments. ALMOST HALF OF MY INCOME WAS GOING TOWARDS LOANS! We didn't have any type of budget, and had no idea where our money was going.

In February 2013, we started Financial Peace University, Dave Ramsey's Program to "living like no one else"  After the very first class, my wife and I sat down to create a budget that would get us on-path to being debt free.  We attended all of the classes and for the most part, follow what Mr. Ramsey says.  We did make a huge mistake in the winter of 2013, when we took out a loan on a car.

Throughout Financial Peace University we learned about the Baby Steps Listed Below:

1. Establish a $1,000 Emergency Fund.

2. Pay off all debt using the Debt Snowball

3. 3-6 month expenses saved in your emergency fun

4. Invest 15% of household income into Roth IRAs and pre-tax retirement

5. Fund your children's college

6. Pay off your home.

7. Build wealth and give!

Here's a youtube video that describes the baby steps

We are still on Baby Step 2 and at the time of this post, have about $45,000 left in debt to pay off. We are a lot further along in paying off debt that I would have expected at this time and we should be debt free by the end of 2018.  

Financial Peace University Changed our lives for the best! We are not as worried about our finances as we used to be and have an idea of how we are going to reach our goals!! If you're intersted in finding a Financial Peace University Class, click here to start your journey to being free.

An Emergency Fund. What is it and why do you need one?

An emergency fund is a liquid savings account in which you can easily access in the event of an emergency.  An emergency is something that happens such as losing a job, the dishwasher breaks, or you get an unexpected medical bill. An emergency fund is not "Oh look at the car, I need to buy a new car." or "That's a cute purse, I want that." It is for EMERGENCIES!!

Recently, my 2012 Jeep broke down.  The transmission went out and I was stuck on the side of the highway.  Luckily, it was covered by warranty. That didn't prevent me from dipping into my emergency fund.  I had to get my Jeep towed to the repair shop.  I paid $150 to tow my Jeep.  I didn't even break a sweat.  That is exactly what my emergency fund was for.  The best part is, my insurance company repaid me for the towing, so it was back up to its normal amount within two weeks.

Why do you need an emergency fund?
1.  An emergency fund will give you a sense of comfort.  It is comforting to know that in the event of an emergency I have some cash that I can use in my bank account to cover the cost.  I don't have to worry about my credit card limit or going further into debt.

2. It gives you a source to fund an emergency.  A majority of people that I talk to don't have any type of emergency fund.  They say that their credit card is their emergency fund.  To be honest...Three years ago, my credit card was my emergency fund.  And I used it as an emergency fund.  At the time I was a broke college student and bartending at a Golf Resort. I was driving to work and I rolled over something and got two flat tires.  I had no cash to pay for it and my credit card only have a $500 limit.  I had to go out and find two new tires for under $500, which wasn't too difficult but I just about maxed it out.  It was at that point where I decided I needed an emergency fund.  A credit card will only worsen your financial situation in an emergency.  How do you plan on

How much should be in my emergency fund?
Dave Ramsey suggests building a $1000 emergency fund until you get out of debt.  I personally did not feel comfortable with having only $1000 in my emergency fund.  Even though I have a steady job in the military, my wife and I felt more comfortable having a $3000 emergency fund.  This will allow us to fix our car if it breaks down.

After getting out of debt, Ramsey suggests building your emergency fund up to 3-6 months of expenses.  For us, that would be about $4,000- $7,000. We'll build up to about $7,000 once we get out of debt. But for now, we're comfortable with the $3,000.  It's enough to cover two months of expenses, or an emergency with our car.