Dave Ramsey’s Financial Peace University: Week 13 - The Great Misunderstanding

Last week - Real estate and mortgages

Last week was week 12 and we talked about real estate - buying homes and selling homes. Things we touched on:

When selling a home, think like a retailer.
When buying a home, think like an investor.
Never get more than a 15-year fixed mortgage. Don’t tie up more than 25% of your income in house payments

Be careful when buying a home and don’t get overly attached emotionally to a house. Get professional help when selling!

This week - giving and being a good steward

Week 13 in our FPU class was the last class and focused on being good stewards of what we’ve been given, and talked about the importance of giving. Key points:

The Great Misunderstanding, the paradox, is that we believe that the way to have more is to hold on to what we have more tightly.
A steward is a manager, not an owner.
Give the first 10% of your income to your church or favorite charity.

I’m glad that they decided to focus on giving, I just wish it had been earlier in the class!

Think holding on to everything you earn is the way to get more? Think again!

The first thing we talked about in class in week 13 was the paradox that most people believe that the best way to earn and save more is to just keep your fist tight around everything you earn. Save it all!

According to Ramsey, things rarely work out that way. We’re usually best off when we’re giving. Here’s a passage from the Dave Ramsey website on avoiding “stuffitis” and finding true contentment.

In 1913 a cartoonist named Arthur R. Momand coined the phrase “Keeping Up with the Joneses” when he created a daily comic strip by the same name. The strip was Momand’s satirical take on his experiences living in an affluent society. It struck such a cord with Americans that it ran for 28 years.

We’re not that much different today. We still strive to keep up with friends, neighbors and even strangers – partly because we inherently crave prestige and partly because we’re bombarded with ads for all the things that will allegedly make us happy.

Dave says that the most important key to financial peace is not budgeting, debt snowballing or investing. The key is contentment. You have to know how to be content with less before you’re able to dig in and do the practical things that lead to financial freedom. Ironically, the people who are most content with their finances and their possessions are those who actually have less.

Marty Nemko of Bankrate.com says, “Most wealthy people know that additional money beyond a fairly modest income yields little additional happiness.”

In her book You Don’t Have to be Rich, Jean Chatzky goes a bit further and says, “The financial habits of people who believe money equals happiness stand in the way of achieving that happiness.” This type of person is less likely to do the things that lead to true contentment and control.

So what’s the answer? How do we go against the grain of a greedy, possession-driven society? One thing we can do is not allow our possessions to possess us. Working just to buy the best clothes, the newest car, the latest technology or the biggest house is futile. Our aim should be a life of peace and freedom where our family, health, and wholeness are the priorities.’

Having and possessing things can’t be the only aim of our lives. Making our family, health and giving to others around us needs to be a priority as well. When we make them priorities, we will be blessed.

Giving away other people’s stuff is easier - isn’t it?

Dave talked about in this lesson on how sometimes it can be hard to give because we feel like we want to hold on to everything we have with a tight fist. It is our money, possessions and time and we want to keep it as our own!

He then turned the tables on that thinking by reminding us that everything we have is only ours because it has been given to us by God. Everything we have comes from God and is owned by God.

The silver is mine and the gold is mine,’ declares the LORD Almighty. Haggai 2:8

Since everything we have is God’s, we are only stewards of what we’ve been given, that makes it a lot easier to give away doesn’t it? Would you rather give away your own fortune, or someone else’s?

We are commanded to be good stewards of what God has given us as well.

So then, men ought to regard us as servants of Christ and as those entrusted with the secret things of God. Now it is required that those who have been given a trust must prove faithful. 1 Corinthians 4:1-2

Give the first 10% of your income to your church or charity

Whether you’re in debt or not, Ramsey suggests that it is a good idea to give 10% to your church, or if you aren’t a church-goer, to a local charity. Even if times are tough, you should try to give. He explains:

Nearly every day callers to “The Dave Ramsey Show” ask Dave, “If I’m still in debt, should I stop giving to my church or charitable organizations?”

For Christians and practicing Jews, this is a slightly more complicated situation because the Bible and the Torah instruct believers to give at least 10% of their income to the church. There are many people who simply want to be able to give whether they attend church or not, but they don’t feel they can afford it while they’re working the debt snowball.

In this situation, Dave offers some very sound and simple advice: give.

While it may be tough during the rice-and-beans, debt-dumping days of Baby Step 2, Dave says that even if it’s not much, don’t worry. It’s not about the amount or what it does for the organization to which you give. It’s about what it does to you, deep down inside.

You’ll be happier, healthier, and you’ll get so much more out of life when you intentionally and regularly give. Plus, continuing to give during the financially dry spells will solidify in you a spirit of generosity that will carry over when you’re cup is overflowing!

Whether you give to your church, your synagogue, or a charitable organization, just give. And even if you’re working the debt snowball, just stick to your budget and you’ll be in good shape.

There are three things to do with money: spend, save and give. You have to spend in order to have the things you need to live and should save in order to secure your family’s future. But there’s something special about giving, something about the way it refreshes your heart and helps you see what is most important. No matter the amount or the recipient, just give.

Recap

So there you have it - 13 weeks of Financial Peace University. We were extremely blessed to have taken the class, and we learned a good deal of very good information while taking the course. If you have a chance to take the class near you, I would highly suggest it. Even if you’re in relatively good financial shape, the things you’ll learn in this class will still be valuable - and last you a lifetime!

If any of you have questions about the course, or about your own situation, please don’t hesitate to contact me through the link at the top of the page.

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August 27, 2008 · Filed Under Dave Ramsey, Financial Peace University, Giving

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Shameless Plug: LogosForWebsites.com for your logo design needs

A new site is launched!

Some of you already know that in addition to this website, I also run a couple of other websites. I have a fitness site called QuicktoFit.com, and now within the last week I have also launched my new logo design website LogosForWebsites.com.

I have been doing quite a brisk business in the past few weeks through my free blogger logo site doing designs for a lot of my friends in the personal finance blogosphere, for other bloggers, webmasters and tons of folks who have an online presence with Twitter, Plurk, Digg or other social media. Since I was getting so much work, I decided it was time to move up to my own hosted website at logosforwebsites.com.

Get your new logo now!

If you’re in the market for a new logo, an entrecard badge, a twitter background or just an small graphic you can use on all your social media profiles, head on over to my website and I can whip something up for you in no time, at a reasonable price! Here’s a few examples of my recent work.

Head on over to logosforwebsites.com for more!

Want some more examples of my work? Head on over to my website! Already decided to buy a logo? CLICK HERE to go directly to the payment page. Already paid? Just go to our logo questionnaire and tell us what you’re looking for - it’s that easy!

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August 26, 2008 · Filed Under Miscellaneous, tips

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Sunday Roundup and Cash Crate Update!

Cash Crate check in the mail

Yesterday afternoon I checked the mailbox and instead of the usual bills that I don’t enjoy opening, I got one of those nice letters with the tear-off panels. You know the ones - the ones that have a check inside.

That’s right I finally got my first check for participating in Cash Crate! My first month using Cash Crate, July, I got a total of $27.64 for filling out surveys, signing up for free trials and referring other users. Here’s the check!

What’s even more exciting is how much I’ve made so far in August. This month I’ve already made almost over twice that - $50.09 $56.49 $60.06 as of this update writing this post! The month still has almost a week left!

So if you were on the fence as to whether using Cash Crate would really be worth your time, hopefully this will convince you. As long as you follow my step by step guide to using Cash Crate, sign up for a throw away email address and use it - and refer your friends, you can make money using their site as well. Hey, you might even make enough to pay your cable bill (if you have one - and I don’t!). As for me, I’m adding this money to our vacation fund for our cruise in 2 weeks!

Stay tuned, this week I’m going to be starting to use another similar service called SwatCash.com that some friends have recommended to me. Who knows, maybe it’ll work as well as Cash Crate!

Great reading from this week

Here’s a few great posts that I had the pleasure of reading this week. Check them out, you’ll be glad you did!

The Perfect Storm @ remodelingthislife.com: Talking about Tropical storms, and storms in our lives.
Pay yourself first challenge @ ptmoney.com: Dude, I can’t believe you actually won! Congrats!
You traded the bluesmobile for this? No a microphone! @ sensetosave.com
How much money do you make? @ Myinvestingblog.com: An anonymous survey of reader’s take-home.
Investing like a millionaire @ milkyourmoney.com: Invest like Millionaires do.
A Twitter vacation! @ fourhourworkweek.com: This guy took a vacation based solely upon the recommendations of his twitter followers. He had a great time! (look out for the bacon covered donut.
A quote from Ben Franklin about Knowledge @ freefrombroke.com: This one dovetails nicely with the bible quote from yesterday. Read mine first, then head on over!
My tithing experience @ ChristianPF.com: Bob at christianpf.com talks about his experience tithing, and asks for your story as well. I just left a comment with mine!
Support entrepeneurs in developing countries with Kiva @ consumerismcommentary.com: Flexo talks about helping others through Kiva. You can read posts about micro-lending on my blog here and here.
A bible based budget? @ freemoneyfinance.com: What would a bible based budget look like? A discussion on the topic at FMF.
Moving Update @ beingfrugal.net: Lynnae and her crew are moving to a new house. Congrats!
Conversations in personal finance @ greenpandatreehouse.com: Why do you subscribe to personal finance blogs? Would you unsubscribe if you read a post that you disagreed with?

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August 24, 2008 · Filed Under Links, Post Roundup, money

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Personal Finance Bible Verse of the Day: Knowledge

Through wisdom a house is built, and by understanding it is established; and by knowledge the rooms shall be filled with all precious and pleasant riches. Proverbs 24:3-4

If you hope to better your financial situation, it is so important that you educate yourself in ways to improve your position. Whether it is learning about personal finance, stocks and bonds, or just learning how to do a budget, continuing your education is key.

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August 23, 2008 · Filed Under bible verse, christianity, money

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Finances and Personal Responsibility: Who Is To Blame For Your Money Problems?

The victim mentality

I was reading a post over at Moolanomy.com the other day that really got me thinking about the idea of a victim mentality, personal responsibility and how people handicap themselves by blaming others when they have problems.

I think it is helpful to first define when I mean by a victim mentality. Moolanomy.com gives a good definition for this discussion:

a tendency to blame external or uncontrollable factors, instead of focusing on internal or controllable factors for things that go wrong

I think this lack of personal responsibility is one of the biggest problems we face today as a society. Much of the credit crunch and foreclosure crisis we’re having can be placed squarely at the feet of people’s lack of responsibility. People are buying into the lie that there is always someone else to blame (and someone else to depend on) and as a result find themselves paralyzed when it comes time to make wise financial decisions on their own. They feel powerless. We live in a consuming society where if we want something - we buy it. Never mind the consequences. We’ll just blame someone else for our money problems later on!

photo credit: Steven Fernandez

Do you know someone who is always the victim? (Or is it you?)

Have you ever known someone that always has an excuse for every problem that they have? When they can’t make their credit card payment, they blame the credit card company for giving them a card with such a high interest rate. When they get into an interest only or adjustable rate mortgage and they end up in foreclosure, they blame the banks for giving them a loan on such horrible terms. They always look to blame someone else when in reality they should have taken responsibility and made better decisions for themselves and their families. They should have been more responsible with their financial choices.

When it comes to personal finance, playing the victim card instead of taking responsibility will get you to one place - broke and in debt. It all comes down to how you think, and how you react to your thinking. Henry Ford once said:

Whether you believe you can, or you can’t, you are right.

The power of positive (or negative) thinking is very real.

Ok, so I want to take responsibility. Now what?

The first step to turning things around, is just realizing that you are in fact in control of your own destiny. You don’t have to rely on the government, the banks or your credit card company to help you stay in control of your finances. You can take steps to turn things around, and take responsibility for your financial decisions.

Don’t want to be in debt? Take control of your finances. Follow a plan like the one laid out by Dave Ramsey in his book “Total Money Makeover” and get out of debt - and prosper!

Decide to stop your debt spiral and stop taking on new debt. Stop using the credit cards and don’t take on any new loans.
Set up a monthly budget, and live by it!
Save a baby emergency fund ($1000-2000) for little emergencies that come up.
Set up a debt snowball, and pay off your debts with the smallest balance first. If you need to - get an extra part time job or make money online to help pay off your debts.
Save 3-6 months of expenses in case you lose a job, get ill, or something else along those lines.
Save 15-20% for retirement.

That is a good place to start. If you have questions about where you should begin, drop me a line and I’ll do my best to help answer your question.

Freedom through responsibility

One thing that I’ve found that financial responsibility brings - is freedom. Freedom to know that you can rely on yourself instead of depending on someone else for your financial destiny. The freedom to be debt free. The freedom to grow wealth instead of wallowing in debt. You will find incredible peace of mind (like I have found) when your last debt is paid off.

The Bible says:

The rich rule over the poor, and the borrower is servant to the lender. Proverbs 22:7

By the same token, those who don’t borrow are no longer ruled over, but are free! Start on your own journey towards financial freedom today!

Have you ever engaged in the “victim mentality”, and what did you do to get yourself turned around? Do you agree that the “victim mentality” is pervasive in our society?

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