FPU-If you've done this, I have 2 questions...

[Diana in OR]

Our church is sponsoring FPU and dh and I are thinking of signing up, but we have 2 questions.

 

We have TTMM book. Is FPU worth the money, or is all the information in the book?

 

Also, realizing that no one person has all the answers, if one were to disagree with DR on a particular piece of the program, will it still work? Specifially, I am thinking of a vehicle we have that we are way upside-down in. We have tried for 2 years to sell it, trade it and explored many options. If we were to sell it for less than it's worth and take a consumer loan to repay the difference, we would be out a vehicle--the payments on the consumer loan would be as much as our car payment and the term almost as long as we have left to pay on the vehicle.

 

So, we decided after exploring all our options, to keep making the payments. We have 2.5 years left to pay on it. We will explore other options after it's paid off. I've never heard DR give this advice.

 

Anyway, I'd like to know if you think FPU is worth the time, money and effort.

 

Thanks!

[TexasRachel]

I really enjoyed FPU. I'd never really listened to his show before (DH had) or done more than really look through a book of his, but I like FPU. He does a great job of teaching. I think the real reason for FPU though, is it makes you accountable every week to someone else. Sometimes we all need a swift kick to get going and/or keep going. We took the class 2 years ago, but are thinking we need to go again. It's nice to have that refresher course option.

 

Have you listened to his call-in show? He sometimes will make excuses from his "rules", but not often. He doesn't want people to think, "oh, that doesn't apply to me". I think in your case though, if you're that upside-down on your car that he would tell you to find ways of paying it off quicker--his famous deliver pizzas, for example.

[OnTheBrink]

What is FPU?

[susie in tx]

I did FPU online. I learned more from it than I learned from the book. I'd love to go to one in person, but I doubt it will ever happe.

 

If you can't sell the car, and you are that upside down on it, I'd find it hard to believe that DR would recommend that you sell it at a loss and get a consumer loan. I do think he would recommend trying to get it paid off more quickly and then not get another loan for a vehicle.

[Diana in OR]

I did FPU online. I learned more from it than I learned from the book. I'd love to go to one in person, but I doubt it will ever happe.

 

If you can't sell the car, and you are that upside down on it, I'd find it hard to believe that DR would recommend that you sell it at a loss and get a consumer loan. I do think he would recommend trying to get it paid off more quickly and then not get another loan for a vehicle.

 

That's the advice I've heard him give on his show. The rationale being if, for example, you owe $15,000 on a vehicle you are in debt $15,000. If you sell it for $12,000 and take out a consumer loan for $3,000 to pay the difference, then you've reduced your overall debt from $15,000 to only $3,000.

[shell in SC]

Yes you may have a $3000 vs $15000 debt, but how are you going to get from point A to point B?

 

The payments on the consumer loan may not be that much less than the original pmts due to APR, term etc.

[mom31257]

What is FPU?

 

It is Financial Peace University by Dave Ramsey. It is a dvd course that you can do as a group. We did it 4 or 5 years ago, so I'm not sure how much has changed. We got a workbook with blanks to fill in from the dvds, his envelope system, a cd with stuff for the computer (lots of printables), and the entire presentation on audio.

 

Our dd listened to the audio when she rode with her dad to private school in 2nd grade. She became a dedicated saver after that and now has about $1200 to her name. It might be worth the cost just so your kids can listen, too.

 

I wish I could say we've done everything he recommended, but we haven't. We still have a small debt on cc that we are working on paying off. That is currently our only debt besides house. We're trying to put money away for the next car. With only 1 income and rising costs, saving is hard. Where we fall short is managing the spending. I really do need to go back to the envelopes. I just feel like I'm so busy with homeschool, church, the house, paying the bills, that it's hard to try to keep track of the spending, too. We do still use a credit card because we want the Disney dollars. We do pay it off every month.

 

As far as the car, I believe he would tell you to get it paid off as quickly as you can, then put that same money toward saving for your next car so you won't have a payment on it. Maintaining upkeep on a paid for car is almost always cheaper than car payments.

[susie in tx]

That's the advice I've heard him give on his show. The rationale being if, for example, you owe $15,000 on a vehicle you are in debt $15,000. If you sell it for $12,000 and take out a consumer loan for $3,000 to pay the difference, then you've reduced your overall debt from $15,000 to only $3,000.

 

Wow. Maybe the other person had another vehicle so that they could get places, like to work. I guess if I had to sell the car at a loss, and could get another smaller loan to cover another car and the difference, I might do that. However, less expensive cars generally cost more in the long run due to repairs being needed, etc.

 

I'd work very hard to pay off the car I already had the loan for. But, that's just me.

[jmgconner]

I love FPU. I've been through it twice, and my DH and I are now the facilitators for FPU at our church. It is WELL worth the investment. I encourage you to sign up.

 

As far as the car goes, it sounds like you've sat down and figured out a plan. Roll it into your snowball and get gazelle intense. My DH and I agree with just about every single thing DR says and follow his program to almost a "T", but we didn't sell our boat to help us get out of debt. We've included it in our plan, we've looked at the long range numbers and consequences of not selling our boat, and we made the decision to cut back in other areas. If for any reason, we couldn't put food on the table or a roof over our heads, we'd sell it in a heartbeat, but for us it was the equivalent of other people's vacation fund.

 

So many people see Dave Ramsey as being ONLY about getting out of debt. That's a large part for many people in our culture, but there's more to it. He wants you to live a life like no one else.

[Sue G in PA]

We're doing this in Sept. at a local church! I posted the same Q that you did on DR's website and everyone wrote in saying it was the best investment they ever made...that's if you actually put all that you learn into practice! Go to http://www.llnoe.com and you'll get lots of great advice/answers! I'm really excited to start even though our financial picture depresses me and I have a feeling that digging deeper into it will only depress me even further. But...hopefully this class will help!

[PariSarah]

I guess if I had to sell the car at a loss, and could get another smaller loan to cover another car and the difference, I might do that.

 

Yes, this is what he generally recommends. Get enough of a loan (if you must) to cover a cheap car until you're out of debt.

 

However, less expensive cars generally cost more in the long run due to repairs being needed, etc.

 

Yes and no. Yes, a $2K car is apt to need more repairs than a $15K car, over the course of three years.

 

But a $15K loan, on a car that will depreciate $10K in two or three years is still WAAAAYYYY more expensive than a $5K loan, with interest, to cover the old debt plus a car that will depreciate $1000 in two or three years, and need a couple hundred dollars worth of repairs. You come out ahead even with a couple thousand in repairs. At the end of three years, you've spent $15K on the first and you have a $5K car (net expense: $10K). On the second, you've spent $5K on the loan, you still have a $1500 car (net expense: $3500). You'd need to spend $6500 in repairs in order to come out behind with the cheaper car. I've had beaters almost all my life, and I've never spent $6500 in car repairs over three years. Our current car has been our worst, and we've spent, max, $3000 over the last four years. And I'm not even counting interest on the loans.

 

Maybe if I had a car somewhere in between--a $6K loan, say, with the car still worth a good $4K or $5K--I'd agree with you, that keeping the more expensive car is probably better in the long run. And when the numbers are that low, Dave usually DOES recommend keeping the car. The two relevant formulas are: if you can pay off everything in two years, you can keep it. And if the total value of all your vehicles is less than half of your annual salary, you're in decent shape.

[susie in tx]

I'm really excited to start even though our financial picture depresses me and I have a feeling that digging deeper into it will only depress me even further. But...hopefully this class will help!

 

I've dug my head in the sand about our finances for years. I always figured if we just made a little bit more, then everything would be all right. Well, it never quite worked out that way.

 

After really delving into our financial picture, I am now more confident about what we need to do and how to do it. When I get all goofy and quit looking at our financial picture or keeping track of it, then I get all scared.

 

Remember, knowledge is power. And you can use that power to your advantage.

[susie in tx]

Yes, this is what he generally recommends. Get enough of a loan (if you must) to cover a cheap car until you're out of debt.

 

 

 

I didn't quote your scenario and I should have.

 

Say you sell the car and buy a beater. You pay off the old car. You're still living paycheck to paycheck and don't have an emergency fund. How do you pay for the repairs on the beater?

 

I'm not trying to be argumentative, but truly trying to understand. We're not in this position anymore as we have a 6 month emergency fund, but we've most definitely been in a spot where we had to choose which bills to pay, and anything going wrong with a car put us over the edge. We ended up using credit cards to get by. And that was never a good idea.

 

My girls may get to a point in their lives where they have to make choices like this, and I'd love to be able to give them good advice on what they should do, rather than bail them out or give them advice that will only help them to dig in deeper.

[PariSarah]

Say you sell the car and buy a beater. You pay off the old car. You're still living paycheck to paycheck and don't have an emergency fund. How do you pay for the repairs on the beater?

 

Well, worst case scenario, you put it on credit card, and you're still in far less debt than you used to be, right? :D

 

But I'll channel Dave for a second here: How were you paying for the the $15K? What was the car payment there? I couldn't even begin to guess what a car payment would be on that kind of loan, so I'm just gonna make stuff up, but you plug in "real" numbers if you are in this situation.

 

So, you started out with your $15K loan, at payments of $400 a month. Now, you're making smaller payments on the $5K loan--maybe $200 a month instead. So now, you've got $200 a month freed up. You were throwing that $200 at the car before, so you know you can live without it. So your first month, you should already have a $200 emergency fund.

 

It's not just that you reduce your total debt in this process--you also reduce the monthly payments you need to make. If your minimum payments balance is lower than it used to be, you can use what you used to be paying on all that debt to start your emergency fund.

 

But let's say things are SO tight that you can't even do that. You can't even make minimum payments on all your debt. DR says (and I think he's right), you buy necessary food first, then you keep the lights on, then you provide basic transportation, and basic rent. If you need the car, you repair it with your take-home pay, even if it means skipping a credit card payment that month.

 

That's what you do when you're in crisis mode. And you do every blessed thing you can to get out of crisis mode--sell stuff, get a second, third, fourth job, move in with Mom, whatever you have to do to get to where you're on your feet again.

 

But if you're just in "things-are-tight" mode, you should be able to get together an emergency fund very quickly.

[susie in tx]

But I'll channel Dave for a second here: How were you paying for the the $15K? What was the car payment there? I couldn't even begin to guess what a car payment would be on that kind of loan, so I'm just gonna make stuff up, but you plug in "real" numbers if you are in this situation.

 

 

See. This is why I should never post when I'm pregnant. I don't think that the disparity between the two loan would be that much different, but my brain had totally forgotten to take the difference between the current car payment and the new one to put together a fund for saving. I can see now how that would be helpful. If it turns out that the car doesn't need any work, then you have that money in savings. If it turns out that it does need work, you have the money. If it turns out that the car needs more money than you have in savings, then you do what you can.

 

Thanks for being patient with me. :)

[PariSarah]

See. This is why I should never post when I'm pregnant.

 

Should I tell you what it's like to take a three-hour oral exam while pregnant? There's no end to the stupid!!! :D:D

 

Just remember--all those brain farts are telling you that you need more nutrients. Like the ones found in ice cream!:D

[Diana in OR]

Well, worst case scenario, you put it on credit card, and you're still in far less debt than you used to be, right? :D

 

But I'll channel Dave for a second here: How were you paying for the the $15K? What was the car payment there? I couldn't even begin to guess what a car payment would be on that kind of loan, so I'm just gonna make stuff up, but you plug in "real" numbers if you are in this situation.

 

So, you started out with your $15K loan, at payments of $400 a month. Now, you're making smaller payments on the $5K loan--maybe $200 a month instead. So now, you've got $200 a month freed up. You were throwing that $200 at the car before, so you know you can live without it. So your first month, you should already have a $200 emergency fund.

 

It's not just that you reduce your total debt in this process--you also reduce the monthly payments you need to make. If your minimum payments balance is lower than it used to be, you can use what you used to be paying on all that debt to start your emergency fund.

 

But let's say things are SO tight that you can't even do that. You can't even make minimum payments on all your debt. DR says (and I think he's right), you buy necessary food first, then you keep the lights on, then you provide basic transportation, and basic rent. If you need the car, you repair it with your take-home pay, even if it means skipping a credit card payment that month.

 

That's what you do when you're in crisis mode. And you do every blessed thing you can to get out of crisis mode--sell stuff, get a second, third, fourth job, move in with Mom, whatever you have to do to get to where you're on your feet again.

 

But if you're just in "things-are-tight" mode, you should be able to get together an emergency fund very quickly.

 

When we looked into the consumer loan option (hypothetically 5K), the payment was the same as what we'd been making on our car. It was only a few months' shorter term than the vehicle loan. This was because our car loan is at 3.9%, and we couldn't get a consumer loan for less than 8%. Add to that the fact that our car is still under warranty, and will be for another 2.5 years, so other than basic maintenance, we don't have to worry about repairs.

 

I wouldn't use that rationale as a justification to run out and buy a new car, but it's where we are and keeping the car makes the most financial sense for us. If I had to do it over again, I would never have bought the thing in the first place.

[susie in tx]

Should I tell you what it's like to take a three-hour oral exam while pregnant? There's no end to the stupid!!! :D:D

 

I can only imagine. There are truly not enough brain cells to take any oral exam while pg, let alone a three hour one.

 

Just remember--all those brain farts are telling you that you need more nutrients. Like the ones found in ice cream!:D

 

I made more ice cream today. It's in the freezer, doing it's thing. It'll be ready for breakfast. I did eat chocolate today. That was definitely worthwhile. And, I'm craving bananas. We get some in our co-op box tomorrow and I really hope they are ripe.

[shell in SC]

I know where you're coming from Diana. I had a feeling that the monthly pmts wouldn't be much different b/t the two. If you get rid of the new car, you're constantly wondering if the clunker will get you where you need to go w/o breaking down and leaving you stranded. There's piece of mind in a newer car. Cars are not cheap to repair unless you can DIY and it could be possible for the repairs to strap you. I think in your situation you're making the right decision!

 

shell