Wednesday, March 16, 2016

Financial Peace University – Week 2





Well, this post is a little later than I wanted it to be, but here it is.  Week 2 of Financial Peace University focused on determining if you’re a Nerd or a Free Spirit when it comes to budgeting.  Our homework for Week 1 was to fill in our “Quick Budget” form & also do the snap shot of our current debt.  Our table had a lot of questions about the budget, me included.   Everyone’s situation is different and we got a good lesson in that this past week.


To determine if you’re a Nerd (me!) or a Free Spirit there is a quiz that you can take, but the concept is pretty easy to figure out.  Nerds like to be in control, they’re not really flexible about the budget and they don’t really like input from anyone else.  Free Spirits really don’t care about a budget and usually tend to say “do whatever you want” when it comes to how the money is spent.  This is Joe and I to a T.  Although Joe isn’t my accountability partner I mentioned the homework to him and explained that we needed to review the budget together & he needed to give me some input in which he responded, “you do whatever you want with it babe”.  I explained to him that his response was exactly the opposite of what he was supposed to do.  We haven’t reviewed our budget together yet, but Joe is pretty well aware of what our bills our and where most of our money goes. 


Our class as a whole (I’d say roughly 20-25 people) has $449,000 in debt, $70,000 of liquid cash (cash you can access right now), and 65 open credit cards.  That number is pretty crazy and is roughly about $20k in debt per person, give or take.   I have a hard time with the credit card part.  I’m going to be completely transparent with you guys, I have 3 credit cards.  One is for Kohl’s (paid off), one is for Pier 1 (also paid off), and one is through Chase (not paid off) and I really hate the idea of cutting them up or doing “plastic surgery” as Dave likes to say. 


To make a 100% commitment to the class you’re supposed to cut up and close all credit card accounts.  A closed account can still be paid on.  I however, feel as though if you can use a credit card responsibly and pay it off each month then there’s not too much of an issue with having one.  Before we built our house we were very responsible with our card and very rarely carried a balance.  Once we started building we used our card for a lot and because we used it so often they kept increasing our credit limit.  When we started building our credit limit was $5,800, a year later when we finished our credit limit was up to $9,800.  It was really a cruel trick in my opinion.  We have made some really good progress with our card, but we aren’t where I want to be which is with it paid off.


Credit cards aren’t supposed to be used for “emergencies”, that is what your $1000 emergency fund (and eventually your 3-6 months of expenses) is for.  If you want to go on a vacation you don’t charge it all to a card, you save the money into a fund and pay cash for all of it.  It’s a great concept and one that I think is possible, but I am having a hard time letting go of my cards.  I am definitely willing to get rid of the Kohl’s and the Pier 1 cards.  Kohl’s has really gone downhill to me (at least ours has) and my Pier 1 card I use once a year at Christmas time.  It’s silly that I even have it but I used it to buy our dining room table & get a bigger discount and points.  You can see that I can easily justify why I have my cards or why I spend money on certain things.  That is also a habit that I need to work on. 


Also in the lesson for Week 2, Dave’s daughter Rachel Cruz came out and talked about how as a child she did certain chores to earn money rather than receiving an allowance each week.  I love this idea.  I had something similar when I was a teenager to earn extra money before I got a job.  She also said having a visual for kids really helps them so a big clear plastic container that they can see their money in is a great idea.  She said that her parents told her that when she turned 16 they would match whatever she saved up to buy a car.  She had saved $8,000 and ended up with a $16,000 car at 16 years old!  It was truly inspiring to hear her enthusiasm and success. 


So far the classes are going good.  There’s still a ton of room for improvement and money mistakes are still being made (hello new pair of Nikes for Georgia) but I am trying to be better about using my debit card rather than my credit card for purchases.  Both my Kohl’s charge and my Pier 1 charge have been put away in my safe & my Pay Pal credit, although tempting, has been paid off for an entire month without any purchases which is huge for me. 

12 comments:

  1. Same here in our house..I keep up with and pay all the bills and the hubby has a general idea of the bills and where our money goes. I have a feeling it's that way for most with one person taking most the responsibility in that aspect. I always thought closing a credit card would make your score go down but on the flip side not having anything charged on it shows all of that amount available which can be bad too I think. It's all so confusing!!! Was there any info on that?

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  2. Holy crap...close ALL credit cards?
    We put nearly everything on a credit card and pay it off with our checking accounts. That way I can get points towards vacations (that hardly ever happen!) for free. Granted, this is a weird year for us and I hate seeing debt still on our CC every month, but we'll get there.
    That is so much friggin' debt for one class but you guys are all there for a reason! Good luck!!

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  3. We don't use credit cards. We buy everything outright. We save for what we want. We do have debt for our house and my student loans but that's it. It can be done :) The key is to live within your means. I'm glad you're liking the class!

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  4. Why isn't your husband going to financial peace? Do you listen to the radio show?

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  5. Yes, you are absolutely correct.your blog is giving very useful knowledge for all, i'm sharing your information to all friends.
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  6. Wow. I feel like you might be my financial twin. Thank you so much for sharing this. I'm getting some great ideas and contemplating finding a class near me!

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  7. Have you seen Everydollar.com yet? It's a product of Dave's that I love! We budget everything down to the last dollar and it really helps that we can both access the same information and it brings a lot of visibility to what the other is spending. Accountability is much easier now. I have 1 credit card that i charge everything too and I pay it off every month and keep the points for travel. I think it is perfectly allowable if they are paid each month.

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  8. Also, when I had a ton of credit card debt, I used a free counselling service http://www.careonecredit.com/ that actually contacted the creditors and negotiated a lower rate for me. This helped a ton. Again-accountability.

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  9. I think one credit card is necessary for online purchases and the gas station, for security's sake. We have one from our bank for that purpose and we pay it off every 2 weeks or so. We also have a credit card just for my husband's travel because it makes taxes and getting refunds from work way easier, but that is paid off at all times also. I think credit cards can be so useful if you're careful, but we both have econ degrees so nerd is definitely both of our personalities.

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  10. Wow reading the stats of everyone is really crazy to see. I agree if you are responsible then I like credit cards because of all the benefits of miles or points. I can't wait to hear how the rest of it goes.

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  11. PS my dad did the same thing with us and they also matched the amount I had :) Love that concept. He even created a 'bank account' and gave us interest!

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  12. i feel like i am a mix of a free spirit and a nerd.. maybe more of a nerd because i don't like anyone else's input haha but i am not strict with my budget. i have credit cards as well, and i did not know that closed accounts could be paid. i am currently working on paying them off bit by bit, hopefully by the end of the year. i agree about how you can use credit cards responsibly. we have a credit card that we absolutely do use responsibly, and we don't carry a balance, and then i have mine that do have balances. oops. working on it! i am loving reading these posts.

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