“A little at a time I started teaching that one, and that one, and that one; that family and that single mom, that young guy, and that old lady. I started to show them how they could have financial peace; two words that don’t go together like airline and service,” talk show host Dave Ramsey jokingly said telling his story of how he started teaching people to take control of their money and financial lives. “When I looked to turn my own financial life around, I looked to biblical scripture for god’s words on money and sought the council of older wealthy people. Together, they both sounded a lot like common sense.
“I’m teaching the exact same principles I taught 30 years ago when I started this, and they haven’t changed. They apply everywhere.”
On April 21, 2016, author and talk show host Dave Ramsey visited Washington, DC’s DAR Constitution Hall for one of his many stops on his Smart Money Tour. It was a fun-filled evening with life stories, and learning about money management and wealth building. Ramsey opened up by revisiting his family’s own life journey, before delving into his course; Financial Peace University (FPU).
“Personal finance is 80% behavior, and 20% head knowledge. If you want to end up with money, you have to position yourself to where you’re managing your behaviors towards the results that you want. Managing your behaviors is being an adult; someone who makes decisions on purpose and doesn’t blame everyone else for their outcomes,” Ramsey said impressing upon the audience the importance of personal accountability and proactively having a written cash flow plan; one of the early key principles of FPU, the Zero-Based Budget.
One of his hallmarks in FPU, early in the night Ramsey used the popular Show Me the Money movie clip from Jerry McGuire to excite the crowd. He also used a second clip from the movie What About Bob? to introduce the seven Baby Steps of FPU:
1) Saving a $1000 emergency fund;
2) Paying off all debt using the debt snowball;
3) Saving 3-6 months of emergency savings;
4) Investing 15% of household income for retirement;
5) Saving for college;
6) Paying your home early;
7) Building wealth and giving.
“Another reason for saving money in an emergency fund is June 12, 2013. When I left my house that morning it looked completely normal. I came home at 5 pm and my garage door looked like this,” said fellow talk show host Chris Brown jokingly showing a picture of his crushed garage door. “My two young sons decided they were going to take turns on the “garage door express”; each taking turns opening and closing the door, having fun until the bearings and springs popped off, costing $1000,” he continued describing the three reasons to save money: emergencies, purchases, and wealth building. He also emphasized the use of cash for making purchases; another key principle of FPU.
“Jewish families prepare for the work week ahead with the havdalah service. Words are recited while pouring wine into a cup which runs over into the saucer beneath it,” Ramsey said using the Jewish ritual to illustrate looking at life and money management in the context of giving; the final key principle of FPU. “The overflowing cup symbolizes the intention to produce in the week ahead; not only sufficiently filling one’s own cup, but also generating an excess that will allow overflow for the benefit of others.
“In other words I’m obliged to first fill my own cup to take care of my family. Then I continue pouring, earning as it were, so that I will have sufficient resources to give away to others. It’s a beautiful visualization that if we keep our lifestyles reasonable in relation to our income, there will be a mathematical overflow to be used for the good of others. So I recommend that whatever you make, you keep your outflow smaller than you income so that there’s overflow, so that you get the personal benefit of learning generosity because generous people are attractive people, not because people want money from them, but because they’re good people.”