I’ve been reading a lot about money lately — personal finance books. I started out with Dave Ramsey and participating in Financial Peace University. The company I work for offers it as a benefit — you pay for the class, it takes place at our company headquarters, and once you finish, they reimburse you for the cost of the class and give you a $100 bonus.
I enjoyed the class and I started making some changes as a result, but I didn’t really adopt everything 100%. I started doing a better job of saving, and I started putting more money towards paying off debt. One of Dave’s big things, though, is to not use credit cards at all. He argues that they just end up getting you into debt (with a really high interest rate) more often than not, and even if you do pay off your credit card every month, he cites studies that say that the average person simply spends more money when using a credit card. So you may be paying it off every month, but you’re still spending more than you would otherwise.
I still use credit cards. I only have three, and I basically use one most of the time. I use the other two only if I’m buying something from the store that sponsors the card, because there are extra benefits that way.
Despite continuing to use credit cards, in the past 1-2 years since I attended FPU I’ve become more of a Ramsey “disciple.” My wife and I have paid off all of our debt (admittedly, there wasn’t a ton because neither one of us had to take out student loans — it was mainly just my car that needed to be paid off), we have an emergency fund that should cover us for 6 months, and we’re budgeting hard and saving a large percentage of our money to go towards a down payment on our first house. We track every expenditure we make.
My wife doesn’t use credit cards. She’s all debit. She feels that it’s easier to track expenditures that way and control spending, and I agree. I still use credit cards because of the rewards, and I feel like I have a good system for tracking and controlling my spending. I developed good spending habits during a period when I was strictly debit and not using credit cards. Over the past few months I’ve started really tracking my spending and being even more diligent about making sure I stay within a budget. Maybe I’ll dump the credit cards at some point, but I feel good about things right now.
The Dave Ramsey stuff really helped me with making decisions about insurance and how to start saving for retirement, too. His system is very simple and easy to understand, which I really appreciate. A month or two ago, I got to the point where I felt like there wasn’t really anything more for me to apply from his teachings, so I went looking for more information.
I ended up reading “Rich Dad Poor Dad.” I got pretty into it and wanted to start figuring out how to get more out of my money, especially in the way of investments and the stock market. Thoughts about money and how to make more of it started to dominate my mind. Everything else kind of took a back seat. I don’t think it was very healthy. There are some good things I learned from that book, but, honestly, I didn’t feel peaceful about money when I was trying to apply its teachings, and that lack of financial peace made me feel a little bit unsettled about my life in general.
I really just figured this out a couple of days ago. Dave Ramsey’s stuff is so great because it is so simple. You can apply his teachings and be just fine, and you can make your financial situation very comfortable. You may not become a multi-millionaire, but I think you’ll enjoy your life overall a lot more. It’s not all about money — it’s more about making sure money doesn’t become a distraction from the things that are more important, like your relationships with family and other loved ones.
When I started to become a little bit fanatical about money, I wasn’t able to put as much thought and effort into my relationships. I also wasn’t able to put as much energy into my spiritual growth. In the past couple of days, since I turned back to a wiser, more balanced approach to my finances, I’ve felt more calm and present. I’ve been able to spend more time in the scriptures and actually be focused on what I was reading. It’s been great, and I look forward to more of that.
To give a little bit more specific information — last week I had some extra cash that I wanted to put into the stock market, and I wanted to figure out which stocks to buy (and when to buy them). I watched videos of Warren Buffet explaining some things and I started reading “The Intelligent Investor,” but I just couldn’t figure out what to do. Finally, after much deliberation, I decided to follow Dave Ramsey’s advice and put the money into a good mutual fund. The idea is to let the professionals decide which stocks to buy so I don’t have to worry about it. I just have to pick good mutual funds based on their track record, making sure that they’ve had at least a good 10-12% return for the life of the fund.
I feel good, and I highly recommend Dave Ramsey’s stuff. It’s all about common sense. If you follow good principles and exercise discipline in how you handle your money, you’ll have financial peace. You’ll have enough money, and you’ll be more free to enjoy the most important things in life.