Week 2: And so it REALLY begins

Today is the first day of my new financial life. My wife and I have been committed to Financial Peace University for about a month, including two weeks of classes. But today is the day the big B-word (our budget) goes into effect.

I’m excited, and nervous. It’s one thing to talk about budgets in theory (which it turns out I love to do!), but now I’m really putting my money where my mouth is.

We’ve never had a budget before, so it’s going to take some getting used to. Ours is not perfect. I know that. Dave Ramsey says—and our friends who have gone through FPU agree—that it takes about three months to work out most of the major kinks and get your budget running smoothly.

Just knowing we have this plan in place has me thinking differently. Pretty much my whole life, my first impulse after “Oooo, I want that” has been “Buy it.” Now, the impulse is still there, but it’s being overruled by “Is that in the budget?” Like an effective diet that puts food into perspective, thinking about how that DVD boxed set will look on my budget takes the shine off of it. That’s a good thing. I might buy that boxed set after all, just not impulsively. I’m going to wait until it’s in the budget and I can pay cash. That waiting period will help me limit the frivolous and emotional spending that kept me from building wealth in the first place.

Maybe you figure that budgets exist solely to deprive you, and now I’ve gone and confirmed it by comparing budgets to diets. Notice that I wrote “effective” diet earlier. A good diet helps you lose weight without you feeling as if you’re missing out. I don’t consider our budget to be financial belt-tightening. We’re in control here. Since we created the budget, we know it will work for us. And if it doesn’t work, we can change it. See how easy that is? By telling our money where it will go before the month even starts, we actually give ourselves freedom, confidence and security.

Well, that’s the theory.

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I am not buying a car … yet

I’ve gotten a lot of feedback about the incongruence between my post “I want a new car” and pretty much everything I’ve written about Financial Peace University. Rest assured, I am aware of the disconnect!

I started my car search innocently enough: I talked to a couple dealers about cars that have been catching my eye, and even got basic financing information to know what kind of payments I’d be looking at. But if you know me—and even if you don’t—it’s not a stretch to predict that talking to car dealers and car financiers would quickly lead to a car purchase.

I have no doubt that I’ll gain plenty of insight from Dave Ramsey about cars and the car-buying process. Financing big-ticket toys like houses and sweet rides is what gets so many of us in trouble in the first place. Ramsey has already talked about it early, and I wouldn’t be surprised if he talks about it often.

So I wanted the world to know that my wife and I have decided to officially put our (read: my) car search on hold until we’re through Financial Peace University—or my car completely shuts down, whichever comes first.

Week 1: The Intro

In this week’s Financial Peace University, we took our first step. Dave Ramsey says this is the easiest step—but warns it’s also the hardest. For most of us, saving $1 here and $20 there is not going to be difficult. Ramsey asks us to quickly find $1,000 for an emergency fund.

Done.

By doing this, though, my wife and I are making a commitment to this program, to change our lives. Whoa. This is it, isn’t it? It hits me that these 13 weeks are going to be HARD. Ramsey reminds us that this isn’t a get-rich-quick program, and I’m beginning to see why.

Along with the overview, we were given some teasers of lessons to come. We learned about the wonders of compounding interest, to illustrate how important it is to start saving early in our lives. Part of our homework was to lay out a basic budget. We don’t yet know why, but I suspect it’s to get us in the habit of financial discipline and to help us identify the areas where we can cut back to find savings. I’ve started ours. I’m quickly realizing how many fixed expenses we have! Some of it we can change, some we can’t. You can bet I’ll be calling the cable and cell-phone companies to re-evaluate my packages.

As I write this, my wife and I have identified all our expenses except food, clothing and entertainment. We need the first, obviously, but I’m amazed at how eager we are now to cut down on the second two, because those are the keys to our ability to save.

I’m also keenly aware of just how hard it’s going to be to change our old habits. Since the first session, we’ve purchased a sweet new laptop and spent $300 on pool repairs.

Oops. There goes that $1,000 emergency fund. Time to set aside another one.

In search of financial peace

This weekend my wife and I start a 13-week course called Financial Peace University, taught via DVD by Dave Ramsey, a radio host dedicated to counseling people who are, as he says, “hurting from the results of financial stress.”

A few couples from my church who went through the program months ago raved about Dave. My wife was hot to get involved, too. Me? Well, I was on the fence. Being a chronic over-thinker, over-calculator and over-researcher, I wanted to make sure our investment would pay off. I conducted my research and eventually decided my wife was right (smart move, eh?). We enrolled. And I couldn’t be more excited about what’s in store.

Financial Peace University teaches you how to manage your money, get out of debt, pay for retirement and more. Thankfully, we are not hurting—we are blessed to be in a really good financial place right now. But we know that could change at any moment, and we want to be ready. We’re looking to put away money now for raising our future children, to be able to pay cash for our next car, or start making serious dents in our mortgage.

We’re also looking to get on the same financial page, my wife and I. We’re close, but not walking completely in step. This is my first goal in Financial Peace University. The other stuff, frankly, is gravy.

Over the next 13 weeks, I’ll be using this space to share what I’ve learned.