Dave Ramsey Financial Peace University Week 10

If you are just tuning in I’m taking the Dave Ramsey Financial Peace University classes and reviewing them each week. If you missed any you can catch them here;

The Class

This week’s class is called From Fruition to Tuition, it’s about planning for retirement and college. Dave talked about all the different kinds of retirement plans including traditional and Roth IRAs, SEPs, 401(k)s, 403(b)s, and 457s. He says you should invest 15% of your income in “qualified plans”, which are the plans mentioned. Hey lays out the order of that you should attack your retirement planning; employer plan up to the match, max out a Roth IRA, then max out your employer plan.

For saving for college Dave recommends using a Education Savings Account (ESA) or an Education IRA. He suggests using a 529 only if you either max out a ESA or your income is too high to participate in one.

He also gave 3 “Nevers” of College Savings.

  1. Never save for college using insurance.
  2. Never save for college using savings bonds.
  3. Never save for college using pre-paid college tuition.

I think this was the most boring class of the group. Dave is obviously a very good public speaker and can turn a pretty dry subject into something entertaining, but because 75% of the material in the class won’t have anything to do with you makes it pretty boring. You aren’t going to be eligible for all the different plans so when he is talking about 457s it’s hard to not space out. Plus, if you don’t have little kids the college planning is not going to be interesting. But hey, if you get a few good pieces of info, or better yet, if it motivates you to save a little more for retirement then it’s worth your time.

The Sharing

Our class is basically becoming a support group for The Pinks. They are the only ones who come regularly that are struggling. I think everyone else is kinda like me, just there to see what it’s all about. So The Pinks ask questions and we all give our advice. Mrs. Pink had a new hair-do and made a joke about she didn’t ask for a cash discount. So everyone chimed in on whether or not we ask for discounts at the hair salon. (I don’t.) Mr. Pink talked about his eight year old son. He asked his dad how much college costs and is already saving up for it. He sounds like quite the saver and they joked that he handles his money better than they do.

With the holiday coming up we did a lot of talking about things other than finances. One lady is suing her neighbor for putting up a non-HOA approved building right on the property line. We talked about how our terrible neighbors had just moved out. One couple spent their first Thanksgiving in the US. Looking forward to seeing what they thought of it. I’m pretty sure they had plans for a real Thanksgiving feast.

Next week: Working in Your Strengths.

About Ashley

2 Responses to “Dave Ramsey Financial Peace University Week 10”

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  1. Weston says:

    I can not for the life of me imagine how I could have possibly put 4 kids through college without our state’s prepaid college plan.

    It was an absolute godsend.

    • Brad Chaffee says:

      I think the idea is that you can have a better return on that investment by investing the same money elsewhere.

      This is from Dave Ramsey’s website on why he feels you should avoid prepaid tuition. I tend to agree with him though prepaid tuition is much better than racking up a pile of student loan debt. It’s not the worst way to pay for college but he’s saying there are better ways to get more out of your money. 😀

      “Avoid prepaid tuition because your rate of return is the inflation rate on that item. If you prepay $40,000 and the college tuition when you use it is $80,000, you made $40,000 on your return. Generally, the rate of return on prepaid tuition is about 7%. You can invest in a good growth-stock mutual fund where you have at least 5 years to invest. The first $2,000 per year should go to the educational savings account, and I like them because you have control and flexibility with it. If you don’t like where the money is, you can move it. The 529 plans are all over the map. Some of them give you control and some of them don’t.” Dave Ramsey

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