David Ramsey Financial Peace Planner
David Ramsey's Financial Peace Planner is a great book to help you find financial peace and ultimately financial freedom. What I really like is David Ramsey really puts things in perspective when he talks about balance between spiritual, physical, emotional and interlectual. I was impressed when he said the bible didn't say that money was evil but that the love of money was the root of all evil.
David talks about putting first things first which is the same thing Steven Covey talks about in his book The Seven Habits Of Highly Effective People. David Ramsey says to achieve spiritual peace you should spend time every morning quietly thinking about the day or redirecting your life to the lord. You should think about your goals and what you can do today to move yourself closer to your financial goals. He really emphasizes spending time with your family to help improve your relationships. David Ramsey says that most couples site financial problems as the number one source of maritial strife. David talks about how important it is to stay physically fit because it allows you to have the stamana you need to make it through the day. You may be asking yourself why is he talking about spiritual, physical and relationships in a book about finances. The truth is it's about balance in your life because if your life is not balanced you can't stick to your financial plan. He also talks about your mental health and how important it is to read books that help you improve in some area of your life. Balance in life is very important but if your life is out of balance because of a drug or alcohol problem noting you read on this website or in David Ramsey's book will help you. You will need to seek professional help to teach you how to handle your addiction and get your life back in balance.
Ramsey says their are seven baby steps you Must take which are 1. Save $1000.00 in and emergency fund. 2. Payoff all your debt except your mortgage using the debt snowball. 3. Complete your emergency fund by saving six months'expenses. 4. Fully fund your retirement savings. 5. Save for your kids college. 6. Pay off your home early. 7. Build wealth and give like crazy! | Meet Our Newest Partner: Financial Expert Jean Chatzky and our new Making Money Make Sense Collection
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In order to benefit from David Ramsey's Financial Peace Planner you are going to have to budget. David Ramsey says it's imperative that the whole family is involved in this process. Ramsey says it wouldn't help for you to improve your financial habits if everyone in the house is not on board with you and willing to change their habits. David Ramsey says you should include your kids in this process, it's ok to let them know that you made some financial mistakes therefore, the family is going to have to make some changes in the way we handle money.
So many people hate to budget but it is a critical part of any financial plan. If you are one of those people who just spend until there is no more cash in the bank and then use credit cards to get you through until the next paycheck. You really need to read David Ramsey's book The Financial Peace Planner before you get in some very serious trouble which could lead you to bankruptcy. You have to know how much money you have coming in and how much you have going out in order to have control of your finances. Millionaires and big business have budgets so why shouldn't you.
One of the things David Ramsey talks about is people having stuffitis, meaning they think they have to have the best designer clothes the finest car etc... Some people get themselves in trouble by purchasing things they can't afford with credit cards so they can have the stuff that makes them feel good even though they can't afford it. David Ramsey says that studies suggest that between 2 and 8 percent of the American Population has obsessive-compulsive shopping habits. For some Americans shopping is simply a socially acceptable painkiller that may result in a bigger-than-usual bill and a rift at home.
Next thing you need to do is figure out your net worth. To figure out your net worth you would add up all your assets minus your liabilitites. In other words you take what you own and subtract what you owe and that's your net worth. If you own a home that is worth $200,000 and you owe $150,000 your net worth for this property is $50,000. Now the beauty of this is you can increase your net worth in two ways one by paying down the mortgage so you owe less. If you pay another $50,000 on the mortgage then your net worth has increased to $100,000. The nice thing about realestate is the property usually goes up in value so if your house were to appreciate by $10,000 now your net worth would be $110,000. This theory holds true if you pay off any debt. However, you probably won't get an increase in the value of the property because most people use credit cards to by clothes and depreciable assets so as you pay them off they usually go down in value. The Financial Peace Planner has worksheets to help you figure out your net worth. A negative net worth means you have to figure out ways to cut back or earn more income. |
David Ramsey's Recommended Percentage Of Household Income | | charitable Gifts 10-15% |
| savings 10-15% |
| Housing 25-35% |
| Utilities 5-10% |
| Food 5-15% |
| Transportation 10-15% |
| Clothing 2-7% |
| Medical Health 5-10% |
| Personal 5-10% |
| Recreation 5-10% |
| blow 2-5% |
| Debts 5-10% |
David Ramsey recommends that you take the above information and create a chart of how you are actually spending your money today and compare it to the chart above. This will give you an opportunity to see how your spending compares. If you find that you are over in a certain category you can make a plan to bring your finances in line. David Ramsey is very clear about what you need to do and he gives you a lot of work sheets to help you figure out where you are and what you need to do to get where you want to be in your personal financial life. David Ramsey even says you might have to get radical in some of the steps you take such as selling so many things that your kids get nerveous and think you'll sell them next. You will have to cut back on spending and maybe look for extra work until you get yourself out of the hole. David Ramsey walks you through a process of creating a spending plan. The spending plan that David Ramsey presents tells you to assign your income dollars to your bills and once you allocate the money to a bill you make it unavailable to your other expenses. When you are done you will have created what David Ramsey calls his allocated spending plan.
The only way you can create a spending plan is to know what you have coming in and knowing the bills that you have to pay. Working with the personal financial peace planner you will be forced to make sure you consider all sources of income. In David Ramsey's book he has put together a lot of spreadsheets that you can use to document and track your income. I can't stress enough how important it is to know what you have coming in and to compare that to what you have going out so you can plan how to spend your money without getting into trouble. David Ramsey talks about an envelop system in his book The Financial Peace Planner. The way the system works is whatever you budget for say dining out you put in an envelope and when you eat out you pay for your meal out of the envelop. Using David Ramsey's envelop system you have to be careful that you don't start taking money out of one envelop to pay for something that should be paid for out of another that you have already spent the money for. David Ramsey also tells you that your budget will need periodic checkups because things will change. As you pay off your debts you will have money to use for other bills or savings. David Ramsey also talks about making sure you balance your check book to make sure you have captured all of your expenses and you have not over spent your budget.
Controlling Your Emotions
One of the big issues with people who can't manage their money is they spend money for emotional reasons with no concern for sticking to a budget. The sad part about this is marketing firms capitalize on this by putting impulse type items in places in the stores where people like this can't miss them. This is called impulse buying. Store clerks are also trained to up sell you on products so you can go shopping with intentions to spend a certain amount of money but because of these things you can come out of the store and realize you have really over spent. You are a great candidate for a personal financial peace planner.
What Do I Do If I Don't Have Enough Money In My Budget?David Ramsey's Financial Peace Planner has a great sheet in his book that gives you some percentages of your income that should go towards the different expense categories (see above). I would recommend that you get that sheet and compare it to your own personal finances. If you don't have enough income to support your bills then you have to figure out how to pay down your debts and maybe sell some assets that you can use to pay down you bebts. Maybe you have a real fancy car that makes you proud to drive but if you need to cut expenses it may make sense to sell the new car and either car pool with someone else or buy a used car to get you around until you can afford a nicer car.
David Ramsey is really against credit especially when it's used to purchase depreciable assets. The problem with debt is it cost a lot in interest charges. Many times people dont pay attention to the actual interest charges they just look at the minimum balance. Car sales people are natorious for getting consumers to focus on the monthly payment for a new can not realizing how much they are really paying for the vehicle. In the Financial Peace Planner David Ramsey suggests you should look at you credit card bill and figure out an item that you have in you budget that you used your credit card to pay for and right down exactally what you paid for the item with your credit card and next month you should put that money in an envelop and pay with cash. The next thing you should do according to David Ramsey is to compare how much you spent with your credit card to what you spent when you paid cash. David Ramsey is trying to get you to see how much you are spending in interest charges when you use your credit card.
In the book The Financial Peace Planner David Ramsey references Consumer Reports which says the most expensive way to purchase a car is to lease it. The typical new car sale nets the dealer about $82.00 but if you lease it the dealer's profit is between $1000.00 and $1300.00. You are paying a lot of money every month to not own anything at the end of the lease term. That is the main reason David Ramsey is so against this type of spending.
Another concern for David Ramsey is debt consolidation loans he says the first three letters says it all: It's a con. The problem with the debt consolidation loan is you may have a lower monthly payment but you will be in debt longer and you will pay a lot more in interest. David Ramsey gives examples in the book The Financial Peace Planner that will show the effect of interest on the consolidation loan.
In The Financial Peace Planner David Ramsey recommends you make the minimum payment on your credit cards except for the one you owe the least. On that card David says you should pay as much as you can so you can pay it off as quick as possible. Once you pay the card off you should take the extra money that you were paying to the old can and apply it to the next lowest credit card. This will allow you to reduce you debt in the shortest time possible.
Other Financial Planning Lessons
Annuity Financial Planning Lesson
An annuity is a very important financial planning tool. Depending on your personal financial situation you may be interested in purchasing an annuity or you may have one and need to think about how to collect the money without paying too much in taxes.
Tax Sheltered Annuity Financial Planning Lesson
A tax sheltered annuity sometimes called a 403(b) plan allows employees of certain non profit and public education institutions to make tax sheltered contributions from their income into a retirement plan. This type of plan also allows the employer to contribute to the employees retirement account. There usually is a maximum the employee can contribute to the plan however, sometimes there are provisions for a catch up plan which allows certain employees to make catch up contributions to make up for years where they didn’t make the maximum contribution.
401K Financial planning Lesson
The 401k is a form of investing for your retirement. Usually companies set up the 401K plan and allow employees to contribute up to 15% of their salary. You can choose to have the money taken from your check before taxes or after taxes. Investing the money before taxes helps you because you get the full benefit of your money before the IRS taxes you. The company will usually match what you put in up to 6% at .50 on the dollar.
Budget Financial Planning Lesson
Your Budget Is Your Road Map To Your Financial Plan.
Your personal financial plan should definitely include a budget. Some key things to consider are cash flow, financial planning, saving, income, and wealth management.
Family Budget Financial Planning Lesson
The first step in preparing a family budget is to first identify where you are now. You need to figure out your net worth, identify your financial goals and identify a timeline for accomplishing your goals.
Cash Flow Financial Planning Lesson
Cash Flow consist of the money you have coming in minus the money you have going out to cover expenses. Obviously it’s important to have more money coming in than you have going out or at least the same amount coming in as going out.
Credit Financial Planning Lesson
Good debt is a very important part of your financial plan. Credit can be dangerous so in this lesson we will learn about the different types of loans you can get and how to properly use those loans. Many people believe borrowing money is bad but the truth is what’s most important is how you use the borrowed money. If you use the money to pay for items that go down in value (depreciate) then it is bad. However, if you use the money to buy assets that appreciate in value you can increase you profits with credit.
Debt Consolidation Financial Planning Lesson
If you have not managed your credit very well you may need to think about debt consolidation. Sometimes we work so hard to do everything we can to make sure our credit is good and when we accomplish that the credit card companies are like vultures trying to extend credit to us. Unfortunately what happens to us is we start to feel good that we have a great credit rating and we start to use the credit cards.
How To Create Your Own Website Lesson
Want to start and be successful at your own affiliate marketing business? The Affiliate Masters Course is the perfect solution for you if you can follow the detailed step by step plan that is outlined in the Free Action Guide.
About Me
To start off about me my name is Gerald Moultry. My friends and family call me Jerry. I was born in New York City but grew up in Miami Florida. On this page I want to tell you a little about me and how I make my money. I grew up in Dade County which was a tough area but I wouldn’t trade those times for anything in the world because I learned so much about life and survival growing up there.
Income Financial Planning Lesson
I think most of us would agree that income is one of if not the most important part of a personal financial plan. Your earnings can be passive or earned. Passive comes from investments such as stocks, bonds, mutual funds, real estate etc… Earned comes from a regular fulltime job or a business. There are other sources such as alimony and child support. Earnings whether passive or earned require specific skills.
Savings Financial Planning Lesson
A savings plan is a critical part of your long term personal financial plan. It’s been said for many years that you should save at least 10% of your earnings and you should pay yourself first. It’s important that you understand the rule of 72 to help you identify how your money can grow. There are many types of saving vehicles you can use to help you execute your plan. There are Certificate of Deposits, Mutual Funds, Passbook accounts, Credit Unions, 401K, and Savings Bonds.
Money Management Financial Planning Lesson
My first recommendation is that you start with a money management plan. One of the first things you need to do is identify your financial goals and determine your time line for achieving your goals. Since you now know where you want to go and when you want to be there you need to figure out where you are now. You can’t run a race if you don’t know where the starting line is. Once you are armed with this information you can start to evaluate the types of investment vehicles that will help you stay on track with your money management plan.
The Importance Of Personal Finance Lesson
I can’t stress enough the importance of personal finance and financial planning. First you should manage your personal finances the same way you would run a business. Think about it the first thing a business does is create a business plan just as you should create a personal financial plan. If you were getting married you and your spouse would sit down and plan when you were getting married, where, who would be the best man and maid of honor. Who are you going to invite and so on so why do you want financial freedom without planning.
Investment Financial Planning Lesson
An investment is an asset that is used to generate a profit through interest or capital appreciation. This is such an important part of your financial plan because as you accumulate wealth you want it to work for you so that it continues to grow. This is when you really want to put the rule of 72 to work for you. If you are not familiar with the rule of 72 refer to the saving plan lesson: Rule of 72 There are many different options available, so you have to decide your own level of experience and your tolerance for risk. Remember the higher the expected return the riskier the investment is likely to be.
Common Stock Financial Planning Lesson
There are two types of stock; common stock and preferred stock. Common stock caries voting rights and simply allows the investor to buy a portion of a company. The owner of common shares gets one vote for every share they own. Publically traded companies are required to have shareholder meetings every quarter. At these meetings share holders are allowed to vote on the changes that the board of directors are recommending. Basically stock share holders get to decide the most important company decisions.
Portfolio Financial Planning Lesson
We are going to learn about an investment portfolio. Professional manager’s focus on balancing their assets to help control risk. Risk management is a very important part of a good investment managers responsibility. When choosing a broker you really need to check their past record and try to evaluate their risk results record. Investments such as real-estate, stocks, bonds, mutual funds, precious metals, options etc... can be held in your portfolio. One of the most important things you can do with your portfolio is to diversify because you don’t want to have all of your funds in one sector or type of investment because if that sector or type of investment takes a sudden down turn your entire portfolio can be wiped out.
Life Insurance Lesson
One of the main reasons for life insurance is to protect your family members from unnecessary expense when you pass along. Your chosen beneficiary can use the money to pay for your funeral, to payoff a mortgage, or just to pay day to day living expenses. The main purpose is for your family to continue to maintain the standard of living that you helped to provide for them when you were alive. The last thing you want is for your family’s standard of living to deteriorate because of your death.
Trust Lesson
Trust is an arrangement where one person or organization manages property on behalf of another. It is governed by a written document which usually is a deed. It is also governed by local law. People or organizations that can be used to manage this type of transaction are Banks, friends, family, lawyers, or pretty much anybody you choose to name. Once you name this person they have an obligation to carry out your wishes as outlined in the document.
Mortgage Lesson
A mortgage (sometimes called paper) is nothing more than security given to the lender to prove that they are entitled to the loan payments for the property represented by the paper. Unless you are really wealthy you can’t purchase a home without a loan. The loan allows you to control a huge asset with a small amount of money. In most cases you are required to put down a percentage of the total price of the home as a down payment on the loan. This is called leverage because for say 10% of the cost of the house you own the property as long as you continue to make your payments until the loan is paid off.
Tax Planning Lesson
Tax planning is an absolute must if you want to execute a successful financial plan. I want to be clear that nothing I am talking about has anything to do with cheating. I personally feel that cheating is the worst thing you can do and there is absolutely no need for it if you follow some basic strategies. In this lesson I want to talk about tax deductions that can help you pay less in taxes.
About SBI!!!
SBI! Helps you start your own business on the web. Internet businesses are growing at at tremendous rate due to people being laid off from companies and companies outsourcing a lot of the administrative work. Now is a great time to get involved and create your Internet business. Like me you are probably a little afraid to make the step of spending money on something you just aren't sure you can do. I can tell you from personal experience starting your own Internet business can be done successfully and you can do whatever you are passionate about. I choose to do my website on financial planning because it's something I'm passionate about because I don't think the education system puts enough emphesis on financial planning for the average person. I really want to create something the average person can use and improve their personal life. I have met too many people making good money and doing well on their jobs but can't manage their personal finances. I have had people in senior executive positions asking me to help them create their financial plan. That's why I decided to create this financial planning website.
Inheritance Tax Lesson
Inheritance tax (gift tax) can be refered to as estate tax or death tax and some people believe it's immoral because you are burdening the family after they have just suffered a loss. Nontheless, We all have an obligation to pay taxes. We can legally reduce or eliminate those taxes with a little planning.
Estate Planning Lesson
Estate Planning is a vital part of your personal financial plan. The most important thing is you don't want to leave your heirs with unnecessary taxes and expenses.
I learned about this type of planning by reading because I felt so bad after watching some of my family members who didn't do any planning.
IRA Lesson
An IRA provides you the ability to invest either tax free or tax deferred. There are many different types of accounts but the most common are the traditional and the Roth. The type of individual retirement account you choose depends largely on your investment goals.
Retirement Planning Lesson
Retirementis a Critical Piece of Your Financial Plan
One of the things we are all taught is to work and put away for retirement and in this financial planning lesson I have to tell you I truly believe that is a worthy and necessary goal because none of us wants to work for the rest of our life.
"Fight For Your Money" David Bach
David Bach's book talks about how to fight for your money with the legitimate large corporations who legally take your hard earned money. He doesn't spend his time like most of us talking about the scam artist out there that figure out illegal schemes to take our money. He actually explains the legal things that banks, credit card companies, cell phone companies, hotels etc.. do to take our money legally.
<Financial Planning For College Lesson
Financial Planning for college needs to start as early as possible because the earlier you start the easier it is to reach your college savings goal. This may be a good time to take a look at my Investment Lesson to get some ideas about things that you can do to start saving for college. It’s important that you take advantage of compound interest. See the savings plan lesson to learn about the effect of compound interest on your financial planning for college.
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