Dave Ramsey recently revamped his popular Financial Peace University from a 13 week course to nine weeks. On Tuesday night The Village Christian Church in Minooka hosted the Super Savings lesson at their church office and it covered Baby Steps one and three in Ramsey’s popular step by step approach to managing money.
Ramsey is known for his straight forward approach to handling money and debt utilizing Biblical principles. The following are the seven baby steps:
- Save $1,000 in a small emergency fund
- Get out of debt (consumer debt including student loans, but not the mortgage)
- Save 3-6 months of living expenses
- Save 15% of income for retirement
- College planning
- Pay off home early
- Give and build wealth
The Super Savings lesson is similar to the original in that many of Ramsey’s stories and jokes were the same. One particular difference in this first lesson is how Ramsey started with a story about sitting around an old oak table in the kitchen. He mentions the good times and the bad including receiving bankruptcy and foreclosure notices at that table.
As Ramsey starts to educate the viewers of the importance of Baby Step One he shares an interesting statistic, “70% of Americans live pay check to pay check while only 55% are worried about it.” He drills home that the “baby emergency fund” should be done fast and it can be done by selling something, having a garage sale or potentially taking on a second job.
He teaches that there are three main reasons for saving: Emergencies, purchases and to build wealth. Baby step one and three cover the emergencies and purchases can be built into the month-to-month budget while wealth building comes in the later baby steps.
Ramsey includes the story of Ben and Arthur again in this version of Super Saving. “I don’t think you should be able to graduate high school until you can explain the story of Ben and Arthur,” Ramsey preaches.
The story regarding Ben and Arthur is utilized to illustrate the power of compound interest. Ben saves $2,000 a year at 12% starting at age 19 up to 26 for a total of $16,000 invested.
Arthur invests $2,000 a year up to the age of 65 for a total of $78,000 invested. At age 65, Ben had $2,288,996 compared to Arthur’s $1,532,166. The difference is Ben started earlier and allowed the power of compound interest to work.
An additional change to the new version of the FPU is that Ramsey introduces three co-presenters to teach with him including Rachael Cruze, his daughter, Jon Acuff and Chris Hogan.
The next class review will be “Uniting with Money.”