FPU-Coordinator-Guide

Lending Myths

MYTH: The home equity loan is GOOD for

consolidation and is a substitute for an Owe no one
emergency fund. anything except to
love one another.
TRUTH: You don’t go into DEBT for emergencies.
—ROMANS 13:8
MYTH: Debt consolidation SAVES interest and
It’s stupid to
you get just one smaller payment. guarantee someone
else’s loan.
TRUTH: Debt consolidation typically saves little to no
interest because you will throw your low- —PROVERBS 17:18 (CEV)
interest loans into the deal.
Coordinator 101
TRUTH: You can’t borrow your way out of debt. Dumping Debt 63

TRUTH: Smaller payments equal more time in debt.

TRUTH: Debt consolidation is a CON .

MYTH: By COSIGNING a loan, you are helping

out a friend or relative.

TRUTH: The bank requires a cosigner because the

person isn’t likely to REPAY . So be ready

to pay the loan and have your credit damaged
because you are on the loan.

Credit Score Myth

FICo? only if it means MYTH: You need to take out a credit card or car loan
“Finally, I’m Cash only!”
to “build up your CREDIT SCORE .”
—Joel

TRUTH: The FICO score is an “I love DEBT ” score

and is not a measure of winning financially.

FiCo breaKdoWn

35% PAYMENT HISTORY
30% DEBT LEVEL
15% LENGTH OF HISTORY
10% NEW CREDIT
10% TYPE OF CREDIT

The Biggest Myth of All

MYTH: Debt is a TOOL and should be used to

create prosperity.

TRUTH: Debt is proof that the borrower is SLAVE

to the lender.

Want to bust some more TRUTH: When surveyed, the Forbes 400 were asked,
myths? We cover a few “What is the most important key to building
more online.
wealth?” 75 % replied that becoming and
daveramsey.com/fpu/myths
staying debt-free was the number-one key to
102 Coordinator wealth building.
64 Dumping Debt

Gazelle intensity

“My son, if you have become surety for your friend, if you have shaken hands
in pledge for a stranger, you are snared by the words of your mouth; you are
taken by the words of your mouth.

So do this, my son, and deliver yourself; for you have come into the hand of
your friend: go and humble yourself; plead with your friend.

Give no sleep to your eyes, nor slumber to your eyelids.

Deliver yourself like a gazelle from the hand of the hunter,
and like a bird from the hand of the fowler.”

—Proverbs 6:1 5

How much could you SAVE , invest, blow, and Hope deferred makes
GIVE if you had no payments? the heart sick, but
when the desire
Steps Out of Debt comes, it is a tree
of life.
• Stop BORROWING more MONEY !
• You must SAVE money. —PROVERBS 13:12
• SELL something.
• Get a part-time JOB or overtime. If you cannot a ord
• PRAYER really works. the minimum payments
on your debts, check out
2babY steP Pay off all debt using the the online tutorial for the
DEBT SNOWBALL . Pro Rata Debt List form
immediately!
If you’re currently in
collections or facing
bankruptcy, watch
the free Credit Sharks
in Suits lesson online
immediately! You can
ind it in FPU Central.

Coordinator 103
Dumping Debt 65

Debt Snowball

Get the ball rolling and start attacking your debt!

List your debts smallest to largest by balance Once a debt is paid off, add the next minimum payment to your
current amount. This becomes the new payment.

debts total paYoFF Min. paYMent neW paYMent

Diagnostic 50 10 t (Garage Sale)
Hospital Bill 38 =
Home Depot 460 48
Chase VISA 770 45 93
Car Loan 3,300 150 243

6,400 310 553

Sign in to FPU Central at daveramsey.com to download this form and explore our other online budgeting tools!

HaVinG a FinanCial eMeRGenCY? ANSWER KEY
If you cannot a ord even the minimum payments on your
debts, or if you are considering bankruptcy or facing pressure MYTH DEBT
from debt collectors, do not lose hope! We have a free bonus
lesson just for you! TRUTH SAVES

In Credit Sharks in Suits, Dave shows you how to handle calls MARKETED CON
from collectors while teaching you what your rights are under
the law. He also unpacks the bankruptcy and post-bankruptcy PARADIGM SHIFT COSIGNING
process and shows you how to use the Pro Rata Debt List form.
RENT REPAY
If your church has a coaching ministry, be sure to talk with
an expert in that area. If that’s not an option, you can talk to a PURCHASES CREDIT SCORE
Ramsey Solutions Master Financial Coach. To learn more, visit
daveramsey.com/coaching. DEBIT DEBT

MONTH TOOL

NOT SLAVE

FEEL 75%

TEENAGER SAVE

TARGET GIVE

PAYMENTS BORROWING

HOW MONEY

LEASING SAVE

EXPENSIVE SELL

NEW JOB

60% PRAYER

GOOD DEBT SNOWBALL

Pssst...

The video is ending soon. Turn the page
to find out what happens next.

OnOen-Me-MiniuntuetTeaTkaekaewaawyay

What jumped out at you in this lesson? How can this affect your story?

Financial Peace University Coordinator Guide

DISCUSSION & ACTIVITY

Break Into Small Groups

†† If your class is larger than 20 people, split the class into multiple discussion groups with
a co-coordinator for each group.

†† Arrange the chairs in a circle for the small group discussion.

Small Group Discussion (5 minutes)

†† Take out the Question Cards numbered 1–2.
Distribute both to individuals in the group.

†† Direct everyone’s attention to page 68 of their Member Workbook and say:
I’ve passed out a few cards with numbers on them to help with
our small group discussion. Whoever has Card 1 will read the
first question, and we’ll all talk about it together. Then whoever
has Card 2 will read the second question. We only have a few
minutes, so let’s get started.

I If you are pressed for time and need to skip some questions,
be sure not to skip Question 2! That question leads directly
into the next activity.

106 Coordinator Only

Small Group Discussion

true life-change happens when you open up and work through this
material together. Break up into discussion groups of no more than 20
people to talk through the following questions. Be honest in your answers!

1 Proverbs 22:7 says the borrower is the slave of the lender. What
would your life look like right now if you were totally free with
no debt whatsoever? What would you be able to do?

2 If you have any credit or debit cards in your purse or wallet,
take a moment to get them out right now. While holding them
in your hands, talk about the di erence between these two
types of cards.

68 Dumping Debt Coordinator 107
Dumping Debt 68



Financial Peace University Coordinator Guide

CLASS EXERCISE

This activity should flow right out of the last discussion question. At this
point, your members should already have their credit cards in their hands.

Credit Card Exercise—Part 2 (5 minutes)

†† It’s time to chop some plastic!
Carefully follow the process below to lead your class through their first “plasectomy,”
or “plastic surgery.” Begin by saying:
Benjamin Franklin once said, “When you run in debt, you give
to another power over your liberty.” Today, you’re going to have
the chance to take some of your power and liberty back.

†† Now, take out your scissors in front of the group.
They’ll know what’s coming! Continue by saying:

We’re going to pass these scissors around to each person in
the group. When they come to you, you should either cut up
your credit cards or tell the group why you aren’t ready. If you
don’t have any credit cards, tell the group why they should cut
theirs up.
†† When someone cuts up a card, the whole class should applaud and celebrate!
Take the lead by applauding for every single card that is cut up.
†† Make sure everyone knows that cutting up a card does not actually close the account.
Anyone who cuts up a card will still need to call the companies to officially close the account.

Coordinator Only 109

Financial Peace University Coordinator Guide

ENDING THE CLASS

Class Wrap-Up (4 minutes)

†† Review This Week’s Homework on page 69 of the Member Workbook.
Call attention to the Credit Sharks in Suits bonus lesson by saying:
Be sure to notice that there’s a free bonus lesson online called
Credit Sharks in Suits. That lesson deals with what to do if you’re
in collections, facing bankruptcy or a lawsuit, or just can’t cover
your monthly minimum payments.

†† Make sure the FPU Attendance Sheet is complete and turned in.
†† Remind everyone to bring their budget and Debt Snowball form to class next week.

Stress the need to bring the forms every week by saying:
Don’t forget to bring your budget and Debt Snowball form to
class next week! I’ll do the same budget check that we did this
week to make sure you have it!

†† Tell everyone that next week’s lesson is Buyer Beware.
Dave explores the clever ways marketing tries to interrupt the financial plan we’re
trying so hard to master.

†† Remind everyone that if they miss a class they can view lessons online at FPU Central.
†† Encourage everyone to be gracious guests.

Return the chairs to their original places and make sure any garbage is removed.
†† Class dismissed!

After Class

†† Complete the items on the After-Class Checklist on page 17 of this guide.
†† Pray for your class members throughout the week.

Unraveling a lifetime of debt myths isn’t easy! Ask God to help them see through the myths
and embrace the truth about debt.

110 Coordinator Only

This Week’s Homework

Personal finance is 20% head knowledge and 80% behavior. Take charge
of your financial behaviors by completing the following tasks this week. Be
sure to work with your spouse or accountability partner where noted!

Complete the Debt Snowball form.
Use either the online budget software or the paper form to list
your debt snowball.

Discuss your Debt Snowball form.
Singles: Share your Debt Snowball form with your
accountability partner and discuss how long it will take for you
to become debt-free. Brainstorm ways you can knock out the
debt even faster. Review your budget to find ways to cut your
spending and free up even more cash for your snowball.

Married Couples: Call a Budget Committee Meeting to review
the Debt Snowball form and discuss how long it will take for
you to become debt-free. Brainstorm ways you can knock out
the debt even faster. Review your budget to find ways to cut
your spending to free up even more cash for your snowball.

Chop some plastic.
Even if you didn’t cut up your credit cards in class, there’s no
reason why you can’t do it right now! If you aren’t ready to cut
them up, meet with your accountability partner or spouse and
discuss why you originally applied for them and why you’ve
decided to keep them. If you cut up any credit cards that have
a zero balance, be sure to call and close the account.

Reading Assignment: Read the “Dumping Debt” chapter in
Dave Ramsey’s Complete Guide to Money.

Extra Credit: Read the “Credit Sharks in Suits” chapter in
Dave Ramsey’s Complete Guide to Money and watch the
free lesson online at FPU Central.

Prepare for next week.

Get ready by reading ahead to next week’s lesson!

Coordinator 111
Dumping Debt 69

FINAL WORD

The Debt
Snowball Questions

It’s the Baby Step that Dave is best known for: Baby Step 2, where you use the
debt snowball to give your debt the beatdown.

BUT WAIT, YOU MAY SAY. What if you’ll lose steam and stop paying item, sell it. If you are making
I’m investing for retirement? Do I extra, but you’ll still have all your $500 monthly payments on
need to stop that? How do I know debts hanging around. your car and it will be another
if I should sell one of my cars? three years before it’s paid o ,
People have a lot of questions But when you ditch the small get rid of it. The impact of freeing
when they start their debt debt irst, you see progress. That up that monthly payment, plus
snowball, but don’t worry. We’ve one debt is out of your life forever. not owing a huge car balance,
got you covered with our top ive. Soon the second debt will follow, will rock your world.
and then the next. When you see
1 Why pay the smallest debt that the plan is working, you’ll The same rule goes for boats,
irst, instead of the one with stick to it. By sticking to it, you’ll rental properties and anything
the highest interest rate? eventually succeed in becoming else except your home. Being free
debt-free! of the payment will drastically
The point of the debt snowball is help your mindset and your
behavior modi ication. If you put 2 How do I know when to sell wallet as you break the chains of
a student loan irst because it’s something or pay it o ? debt. But if you own a motorcycle
got the highest interest rate, you A general rule of thumb is this: If that will be paid o in a few
won’t see it leave for a while. You’ll it will take you more than 18 24 months, it’s all right to keep it. Just
see numbers going down on a months to be debt-free on an get rid of the debt on it!
page, but that’s it. Pretty soon,

112 Coordinator
70 Dumping Debt

3 Should I keep saving for KEY TERMS
retirement while in Baby Step 2?
Annual Percentage Rate
No. You want to commit all your (APR): Annual cost of borrowed
energy and resources to getting out money; takes into account the
of debt while on Baby Step 2, and interest rate and other related
diverting money toward retirement fees on a loan
savings means you’ll stay in debt
longer. Don’t dilute your e orts; Credit: An amount of money
concentrate on one thing at a time. placed at a person’s disposal by
a bank; could be described as a
Even if you get a company match, 5 What if I get laid o while debt limit
don’t take it while you’re eliminating paying o ?
your debts. With a cut lifestyle, extra That’s scary to think about, but if you Credit Card: Card used to
income from a second job (if you lose your job, go into survival mode. access available funds in a credit
take one) and extreme focus, you’ll account
get out of debt quickly and establish
your full emergency fund. Then you Debt Snowball: Preferred
can go right back to investing. Being method of debt repayment;
debt-free will more than make up for includes a list of all debts
taking a year or two o of investing. organized from smallest to
largest balance; minimum
“When you see that the plan is working, payments are made to all debts
you’ll stick to it. By sticking to it, you’ll except for the smallest, which
eventually succeed in becoming debt-free!” is attacked with the largest
possible payments
4 What if a baby is on Make sure your lifestyle is slashed to
the way? the basics. Keep up your minimum FICO Score: Number used to
First o , congratulations! A baby is payments, but no extra ones. Stop evaluate a consumer’s “credit
always cause for celebration. What the debt snowball until you ind work worthiness”; calculated by
you want to do if you’re expecting is (and get a job delivering pizzas or considering credit history, debt
to stop the debt snowball and pile up some other work until you land a full- level, length of credit history,
cash. Keep making your minimum time position with another company). new debt and type of credit
payments, but stock away all the
If you get severance pay, don’t kick Introductory Rate: typically
remaining back and live o of that. Try not to even a lower-than-normal interest
money. If an touch it. Live bare bones and hunt like rate offered to a consumer
emergency crazy for work. The sooner you get a during the early stages of a loan;
happens and new job, the sooner that severance a marketing method used to
there are looks like a huge bonus that you can attract new customers
medical bills, apply toward the debt snowball.
then you have Loan Term: the designated
the money If your church has a coaching ministry, time frame in which a loan must
there to take reach out for help with your debt and be repaid
care of them. budgeting questions. If that’s not an
option, you can contact a Ramsey Coordinator 113
Once your new bundle of joy is home Solutions Master Financial Coach
and everyone is all right, then take in your area. Learn more at www. Dumping Debt 71
your saved-up money and apply it to daveramsey.com/coaching.
the debt snowball.



Financial Peace University Coordinator Guide

BUYER BEWARE

VIDEO TIME: 49 MINUTES

Expect This
This week’s lesson shines a spotlight on common marketing techniques that are
used against us every day.

There is no breakout group activity this week, so you can use any extra time
following the small group discussion time to answer questions about budgets, the
debt snowball, etc.

From now on, be sure to bring your scissors to class every week. We will have
another scheduled opportunity to cut up credit cards in Week 7, but it should
always be an option for anyone who wants to do it at any time.

Do This
Review the Before-Class Checklist on page 16 of this guide.



Financial Peace University Coordinator Guide

WELCOME & REVIEW

Do This (5 minutes)

†† Welcome everyone back!
Tell them that this week’s lesson is going to be a lot of fun.

†† Budget check!
Repeat the same budget-check process you did last week. Get it started by saying:
Take out your Monthly Cash Flow Plan and Debt Snowball forms. I’m
going to come through and check them all just like I did last week.

†† Go through the class to make sure everyone did their budget homework.
†† Review last week’s material.

Read this question aloud to the class:
Last week, Dave made a pretty compelling case against debt of
any kind, including credit cards. If you cut up your cards last
week, what kinds of emotions have you experienced since then,
knowing that you no longer have access to them?

†† Instruct everyone to turn to page 74 of their Member Workbook.
†† Circulate the FPU Attendance Sheet for members and guests to sign during the video.

Start the Video

The following pages match the Member Workbook so you can follow along with your class.

Coordinator Only 117

Tell Your Story

Week 5
What’s your current process for planning

for and making major purchases?

DAtE

BBEUBWBYEUEWAYREARRREE!

THE POWER OF MARKETING ON YOUR BUYING DECISIONS

THE POWECRaOnFyMouArReKcEitTeI,NfrGoOmNmYeOmUoRrBy,UtYhIeNaGdDveErCtIiSsiInOgNsSlogans of at least

Can you r1e0cciotme,pfarnoimes?mHeamveoyroyu, ethveeraedxpveerriteinscinedg“sbluoygearn’ssreomf oartse?”
least 10 cAommepriacnaiiesst?heHmaovset myoaurkeetveedr-toexcopuenrtireynocnedEa“rbthu.yTehro’ussands of
remorse”c?omAmpaenrieiscaariesctlhame omrionsgtfmoraorukremteodn-etyo—caonudnwtreyuosunalElyarruthn.to
Thousandhsanodf ictotomthpeamn!ies are clamoring for our money—and
we usually run to hand it to them!

In Buyer Beware, Dave draws on years of selling and marketing

In Buyer eBxepweraierne,ceDtaovsehodwraywouseoxnacytleyahroswoaflsl eolfltihnegseabnudsimneasrseksegtient g
experientcheeitromshesoswageydoeuepexinatcotylyouhroswubacollnoscfiothuse.sTehbenu,soinnceesysoeus get
their mesusnadgeersdtaenedpthinetgoamyoeu, DrasvuebacnodnJsocniowuilsl ,shwoiwthyoouuthyoowutoevfiennally
realizinggiati.nTphoewne,roonvceer yyoouur puunrdchearssetsananddtgheet tghaembees,tDdeaavlewwheilnl
give you yfiovue’rke ereyasdtyoto(fibnuay.lly) gaining power over your
purchases!

Thteogmoaadlkonoef’ate,pvtrehorfeyyitbc.ulsIofisnete.hsesyis Caveat Emptor
Let the Buyer Beware!
The plans of the
diligent lead surely Companies use every angle to aggressively compete for
to plenty, but those of
everyone who is hasty, your MONEY .
surely to poverty.
Major Ways Companies Market to Us
—PROVERBS 21:5
• PERSONAL selling
the Rule of 78 is a
method of calculating • FINANCING and CONVENIENT
the total interest on
certain types of loans. payment methods as a marketing tool
Under the Rule of 78,
earlier payments are ú 88 % of the 90-days-same-as-cash contracts
weighted with more convert to payments that are usually at 24 %
interest than later ones.
As such, paying off the APR with the Rule of 78 prepayment penalty
loan early results in you
paying more in interest. ú Convenient Payment Methods:
> Store loyalty and reward cards
120 Coordinator > Store debit and credit cards
74 Buyer Beware > Mobile payment options

• TV , radio, magazines, INTERNET and

other media

ú TV ads are incredibly expensive. A typical Companies spend
30-second national TV commercial costs nearly more on internet
advertising than on
$300,000 to produce—that’s $ 10,000 all forms of print
advertising combined.
per second!
—eMarketer

ú By contrast, the cost to produce an entire hour of
prime-time public television is about the same—

$300,000, which comes to $ 83 per second.

• Product POSITIONING

ú Brand Recognition
ú Color
ú Shelf Position and Packaging

Signi icant Purchases For where your
treasure is, there your
A “significant purchase” is normally anything over heart will be also.

$ 300 . —MATTHEW 6:21

Our bodies go through physiological CHANGES sInommoierrtrdoiemrreatsnodyhosauavyhe,afv“ieNnoat,noncloiotaolktpoiednaactyeh.,e”

when making a significant purchase.

We all have that spoiled, red-faced, grocery store kid

living inside of us. His name is IMMATURITY .

Coordinator 121
Buyer Beware 75

He who is impulsive Gaining Power Over Purchase
exalts folly.
Because you can always spend more than you make, you
—PROVERBS 14:29 must develop power over purchase.

STRATEGIES FOR WISE BUYING DECISIONS

• Wait OVERNIGHT before making a purchase.

You don’t want to keep up with • Carefully consider your buying MOTIVES .
the Joneses. They’re broke. No amount of STUFF equals contentment

or fulfillment.

• Never buy anything that you do not

UNDERSTAND .

• Consider the “ OPPORTUNITY COST ” of

your money.

• Seek the COUNSEL of your spouse.

Who can find a virtuous wife? For her worth is
far above rubies. The heart of her husband safely

trusts her; so he will have no lack of gain.

—PROVERBS 31:10–11

“Let the buyer
beware” means I am
responsible for my own
foolish purchases.

—Julie

122 Coordinator
76 Buyer Beware

Simple Rules for Successful Negotiating ANSWER KEY

• Always tell the absolute TRUTH . MONEY MOTIVES
PERSONAL STUFF
• Use the power of CASH . FINANCING UNDERSTAND
CONVENIENT OPPORTUNITY
• Understand and use WALK - AWAY power. 88% COST
24% COUNSEL
• Learn to SHUT UP . TV TRUTH
INTERNET CASH
• Say, “That’s not GOOD ENOUGH !” $10,000 WALK AWAY
$83 SHUT UP
• Identify the dreaded GOOD guy, BAD POSITIONING GOOD ENOUGH
$300 GOOD
guy technique. CHANGES BAD
IMMATURITY TAKE AWAY
OVERNIGHT

• Master the “If I TAKE AWAY ”

technique.

BONUS VIDEO
For more tips on how to get the best bargain every
time, be sure to check out the free bonus lesson,
That’s Not Good Enough.

daveramsey.com/fpu/bargain

Pssst...

The video is ending soon. Turn the page
to find out what happens next.

One-Minute Takeaway

What jumped out at you in this lesson? How can this affect your story?

Financial Peace University Coordinator Guide

DISCUSSION & ACTIVITY

Break Into Small Groups

†† If your class is larger than 20 people, split the class into multiple discussion groups with
a co-coordinator for each group.

†† Arrange the chairs in a circle for the small group discussion.

Share Victories (15 minutes)

†† It’s time to celebrate some wins!
Spend this time having your members share any victories they’ve already experienced.
Examples could be completing a Baby Step, paying off a debt, or even improved
communication in their marriage. Get the discussion started by saying:
Believe it or not, we’ve already reached the halfway mark of the
class! This is the perfect time to take a breath for a few minutes
and celebrate some victories. Tell us what your biggest takeaway
has been, what’s made the biggest difference, or if you’ve
already had some quick wins as you’ve gotten started.

Small Group Discussion (20 minutes)

†† Take out the Question Cards numbered 1–5.
Distribute all five to individuals in the group.

†† Direct everyone’s attention to page 78 of their Member Workbook and say:
I’ve passed out a few cards with numbers on them to help with
our small group discussion. Whoever has Card 1 will read the
first question, and we’ll all talk about it together. Then whoever
has Card 2 will read the second question. We’ll keep going until
we’ve covered all the questions. We’ve got about 20 minutes, so
let’s get started.

124 Coordinator Only

Small Group Discussion

true life-change happens when you open up and work through this
material together. Break up into discussion groups of no more than 20
people to talk through the following questions. Be honest in your answers!

1 Now that the tactics are fresh on your mind, we want to
make sure your new budget doesn’t get wrecked by a clever
marketing campaign. What brand’s commercials, ads or
marketing do you find most compelling? Why do you think
they are so effective on you?

2 What was the last thing that caused that red-faced grocery
store kid inside of you to wake up and scream, “I want one!”?
Did you give in to the urge to buy?

3 Proverbs 1:5 says, “A wise man will hear and increase learning,
and a man of understanding will attain wise counsel.” What
are some ways you can attain wise counsel before making a
major purchase?

4 It’s now been two weeks since you did your first zero-based
budget. We know this can take some getting used to, so what
questions do you have about your budget?

5 Pull out your Monthly Cash Flow Plan form or your budget
from EveryDollar. Have you identified any areas that have been
particular trouble spots for you in the past? In what areas do
you feel you might be overspending?

78 Buyer Beware Coordinator 125
Buyer Beware 78

Financial Peace University Coordinator Guide

ENDING THE CLASS

Class Wrap-Up (3 minutes)

†† Review This Week’s Homework on page 79 of the Member Workbook.
Call attention to the free That’s Not Good Enough! lesson in the online resources.

†† M ake sure the FPU Attendance Sheet is complete and turned in.
†† Remind everyone to bring their completed budget (either their Cash Flow Plan form or

EveryDollar budget) and Debt Snowball form back to class next week.

IBe consistent in checking the budget assignments!
Depending on where this week falls on the calendar, it might be time
to write the budget for next month. Always make sure your class has
a new budget completed before the first of the month—every month!

†† Stress the importance of next week’s lesson,The Role of Insurance, by saying:
Next week’s lesson is called The Role of Insurance, and it is one
of the most important lessons of the whole class. One mistake in
the world of insurance can literally destroy your entire financial
plan. Do not miss this lesson!

†† Remind everyone that if they miss a class they can view lessons online at FPU Central.
†† Encourage everyone to be gracious guests.

Return the chairs to their original places and make sure any garbage is removed.
†† Class dismissed!

After Class

†† Complete the items on the After-Class Checklist on page 17 of this guide.

126 Coordinator Only

This Week’s Homework

Personal finance is 20% head knowledge and 80% behavior. Take charge of
your financial behaviors by completing the following tasks this week. Be sure
to work with your spouse or accountability partner where noted!

Define “major purchase.”
What would make up a “major purchase” in your world?
Singles, run this by your accountability partner to get their
feedback. Married couples, commit to not make a major
purchase without following the rules outlined in this lesson.

Discuss your zero-based budget.
Singles: Talk to your accountability partner about how easy or
di icult it has been to live on your zero-based budget the past
two weeks.

Married Couples: Call a quick Budget Committee Meeting and
discuss how easy or di icult it has been to live on your zero-
based budget the past two weeks. Are there any adjustments
that need to be made? If so, be sure to make the changes
together as a team!

Do a marketing self-assessment.
Look around your home and pay attention to the kinds of
things you normally purchase. What marketing techniques are
working on you? What do you regret buying? What purchases
have you truly enjoyed? Making a mental note of these things
will really help your buying decisions in the future.

Reading Assignment: Read the “Buyer Beware” chapter in
Dave Ramsey’s Complete Guide to Money.

Extra Credit: Read the “That’s Not Good Enough” chapter in
Dave Ramsey’s Complete Guide to Money and watch the free
one-hour lesson online at FPU Central.

Prepare for next week.

Get ready by reading ahead to next week’s lesson!

Coordinator 127
Buyer Beware 79

FINAL WORD

7 Things You Don’t
(Really) Need
Do you know the di erence between your needs and your wants?

EVERY DAY, the marketing world 1 Cut the cable. many in HD—with a set of rabbit-
tells you that you need this or A normal cable bill can ear antennas.
you need that. The hype machine approach $100 a month after all
never stops turning. But you the special introductory rates have 2 Ditch private schools.
would be amazed at the number expired. Don’t get sucked into the This should really go without
of things you don’t actually need, three-month specials, because saying, but too many people
things you won’t realize you don’t when those wear off, you’ll find think it’s just a fact of life to put
need until you’re forced to go yourself paying a hefty cable bill their kid through an elementary
without them. to watch shows you can probably school that’s more expensive

If you can get to the point “What are some things you are
where you can see through the
marketing hype, you’ll begin to currently spending money on that
realize that a lot of your needs are
simply wants. you don’t really need?”

To help you get started, here’s a watch online anyway. Television than college. How does that make
list of some common things that is not a necessity. It’s a luxury. sense? Don’t buy into the hype
you can live without while getting Besides, you can probably get all of keeping up with the Joneses
out of debt. the local channels in your area— or thinking your kid will be a

128 Coordinator
80 Buyer Beware

deadbeat if he goes to public school. laser beam attachment. Are these KEY TERMS
Use that money to get out of debt, really things that you must have,
then start saving for college. considering that, just a few years ago, Brand Recognition: Consumer
no one had them? Take a breath. awareness about a particular
3 Take a break from vacation. Your goal is to get out of debt, not to brand; generally tied to specific
No! Not vacation! Yes. Vacation. get the newest toys every month. marketing techniques
The brochures are so pretty. The Buyer’s Remorse: Feeling of
websites are so descriptive. And, after 6 Quit buying the hottest name- regret about a purchase soon
all, don’t you deserve a vacation? brand new clothes. after making it
Yes, you do . . . when you’re out of You might be shocked at how many Caveat Emptor: Latin term
debt. You can take a couple of years people go into thousands of dollars of meaning “let the buyer beware”
off from lounging in the sand while debt because of an addiction to buying Financing: Purchasing an item
you get your financial life in order. shoes, purses or suits. This goes for using debt; attractive terms
The beach isn’t going anywhere. and conditions often used as a
Plus, you can always make plans for both men marketing technique
some cheap getaways or even have and women. Impulse Purchase: An item
a “staycation!” You don’t that is purchased without any
have to look consideration of the long-term
4 Stop eating out. like a fashion effects
The more kids you have, the more magazine Markup: The difference
expensive it gets to eat out. Multiply cover model between the wholesale price
that by a couple of times a week, and while you are getting out of debt. Make and retail price
you can spend a crazy amount of do with what you have until you’re in a Negotiating: Act of bargaining
money on restaurants each month. better situation with your money. for a lower price
But here’s the thing: Grocery stores Walk-Away Power: The
have food too! And if you plan ahead 7 Sacri ice the expensive hobbies. emotional distance a buyer
(which is part of budgeting), then you Is it really necessary to spend has from the item; refers to
buy exactly what you need. Plus, you $200 a month on golf while you still the ability to walk away from a
aren’t left scrambling to make dinner have $20,000 in credit card debt? purchase if a good price cannot
plans at 5:30 every evening. Or a couple hundred a month on be reached through negotiation
yoga lessons? Really? You still need
5 Give up the gadgets. hobbies—so don’t cut those out of Coordinator 129
The newest digital tablet. The your life, even golf—but keep them in Buyer Beware 81
newest smartphone. The newest, check. Budget for it and only spend
biggest television with optional your hard-earned cash on hobbies
that you can afford.

Now that’s just a short list of stuff.
This list could probably fill up pages
of your workbook. Really, it’s just
about you taking an honest inventory
of your financial life and figuring out
what you can live without—just for a
little while.

So think about your own life. What
are some things you are currently
spending money on that you don’t
really need?



Financial Peace University Coordinator Guide

THE ROLE
OF INSURANCE

VIDEO TIME: 66 MINUTES

Expect This
This week’s lesson explores the seven types of insurance that everyone should
have, and it discusses several common insurances to avoid.

This lesson is a bit longer than normal, as it includes a special video story at the
end, right before the One-Minute Takeaway. The ending is powerful, so it is not
uncommon for some class members to have an emotional reaction.

This week’s class activities include a breakout group exercise in which class
members will break into smaller groups to work through three insurance case
studies. Take some time before class to work through the case studies yourself so
you can be available to help your members during class.

Do This
Review the Before-Class Checklist on page 16 of this guide.



Financial Peace University Coordinator Guide

WELCOME & REVIEW

Do This (3 minutes)

†† Welcome everyone back!
Stress how important this week’s lesson is to their overall financial plan.

†† Budget check!
Repeat the same budget-check process you’ve done the past few weeks. Start by saying:
Take out your Monthly Cash Flow Plan and Debt Snowball forms. I’m
going to come through and check them all just like I did last week.

†† Instruct everyone to turn to page 84 of their Member Workbook.
†† Circulate the FPU Attendance Sheet for members and guests to sign during the video.

Start the Video

The following pages match the Member Workbook so you can follow along with your class.

Coordinator Only 133

Tell Your Story

Week 6
What insurance policies do you currently
carry? How and why did you select them?

DAtE

THE ROLE

OF INSURANCE

PROTECTING YOUR HEALTH, FAMILY AND FINANCES

Insurance? Yikes! This is a topic that few people really enjoy, and
yet it is an area that impacts your finances more than you could
possibly imagine! Can you explain how your life insurance
works? If your spouse were suddenly widowed, how much
would he or she need to survive? How does health insurance
work? Are specialty plans, such as cancer policies, a good deal?
Let’s find out!

In The Role of Insurance, Dave walks you through the seven types
of insurance that every adult needs, and he reveals how to avoid
the traps in the insurance industry that can leave you—and your
heirs—flat broke!

Basic Types Understanding Insurance
of Insurance:
The purpose of insurance is to TRANSFER risk.
• Homeowner’s or
Renter’s Without proper insurance, certain losses can

• Auto BANKRUPT you.
• Health
• Disability Auto Insurance
• Long-term Care
• Identity theft If you have a full emergency fund, raise your

Protection DEDUCTIBLE .
• Life

Carry adequate LIABILITY .

LohooIktwaomtfutyceohnurllioaaobukitsloitliiynkseyuotruahnicscu:rer1pe0on0lt/i3clyy00ct/ao1r0sr0ye.e. Consider dropping your COLLISION on
older cars.

136 Coordinator
84 The Role of Insurance

Homeowner’s and Renter’s Extended Replacement
Cost has become more
Homeowner’s coverage should be guaranteed common with the
big-name insurance
REPLACEMENT cost if at all possible. companies. However,
Extended may not pay
If you’re in an apartment or other rental arrangement, enough to actually
replace your home and
you need RENTER’S insurance. possessions. Always
know exactly what the
An UMBRELLA liability policy is a good buy maximum benefit is in
relation to the value of
once you begin building wealth. your home.

Health Insurance

Increase your DEDUCTIBLE and/or

coinsurance amount to bring premiums down.

Increase your STOP - LOSS but never
decrease the MAXIMUM pay.

Decreasing either of these to save on premium costs is
a horrible idea. You would take on way too much risk!

See if an HSA —a Health Savings Account—would

make sense for your specific situation.

The HSA is a TAX - SHELTERED savings

account for medical expenses that works with a high-

deductible insurance policy.

Coordinator 137
The Role of Insurance 85

mTWehdiitiscchaamalraenbkfiHelulSslsAmy,woeyiudtoihuac’ayrwloeiuscproeanroyswaiunnnmgdmetrom.hnoeerye. HSA BENEFITS INCLUDE:
• Deposits are 100% tax-deductible.

• You can save up to 100% of your deductible in the
savings account.

• You can pay most medical expenses with tax-
free dollars.

• Unused money stays in the account and grows
interest on a tax-favored basis to supplement
retirement, just like an IRA.

If your company Disability Insurance
provides a long-term
disability insurance Disability insurance is designed to replace
option alongside your
company health care INCOME lost due to a short-term or
plan, you should buy
it. It will almost always permanent disability.
be cheaper that way
than you’ll find on the Try to buy disability insurance that pays if you cannot
open market. perform the job that you were educated or

138 Coordinator TRAINED to do.
86 The Role of Insurance
That is called OCCUPATIONAL , or “own

occ,” disability. Many times, this is only available for
two years.

Beware of SHORT -term policies covering less

than five years.

Always buy long-term disability insurance with after-tax
dollars. This way, disability benefits will be tax-free.

Your coverage should be for 65 % of your

current income.

A LONGER elimination period will
LOWER your premium cost.

The ELIMINATION period is the time

between being declared disabled and when the
payments actually begin.

Long-Term Care Insurance home, Baby Boomers are
now hitting retirement
Long-term care insurance is for NURSING age for the first time.
The number of elderly
assisted living facilities and in-home care. Americans will double in
the next 20 years.
This is a must-have for anyone 60 years old or older. Even if it’s not time for
you to get long-term
Among people turning 65 today, 69% will need some care coverage, it might
form of long-term care! be time to have “the talk”
with your parents.
Identity Theft Protection
23 million Americans
Don’t buy ID theft protection that only provides credit had their Social Security
number, driver’s license
report MONITORING . number, medical records
or financial accounts
GOOD protection includes restoration services exposed last year. You
need some protection!
that assign a counselor to clean up the mess.

Coordinator 139
The Role of Insurance 87

Life Insurance

Life insurance is to replace lost income due

to DEATH .

lReesmsoenm:b“eNrneofvtreuormnbduteyrhseatnBayunytdeh!r”inBgeywoauredo Most people have no IDEA what kind of life
insurance they OWN .

TWO TYPES OF LIFE INSURANCE:

• TERM insurance is for a specified period,

is substantially cheaper, and has no savings plan
built into it.

• CASH VALUE insurance is normally

for life and is more expensive in order to fund a

savings plan.

The most common insurance myth is that the need for

life insurance is a PERMANENT situation.

Twenty years from now, with the kids grown and gone,
when you’re debt-free (including that 15-year mortgage)
and you have substantial investments, you have become

SELF -insured. Your need for life insurance has

gone away.

the right type of life
insurance can be
summed up in a single
word: term.

—SmartMoney magazine

140 Coordinator
88 The Role of Insurance

The BIG Question About

LIFE INSURANCE

Joe is age 30 and spends $178 on life insurance each month.
What is the best way to spend his money?

BaD BEttEr BESt

Insurance $178 Insurance $13 Insurance $21
MoNtHLY
Investments ? MoNtHLY Investments MoNtHLY
MoNtHLY
$165Investments $157
MoNtHLY MoNtHLY

INSURANCE INSURANCE INSURANCE

$250,000 $250,000 $500,000

in Whole Life in 20-Year Term in 20-Year Term

CASH VALUES

50At AGE $34,483 50At AGE $164,859 50At AGE $156,866

70AT AGE $124,041 70AT AGE $1,960,603 70AT AGE $1,865,539

Insurance cost and cash value based on the average of four actual quotes. Investments assume a 12% rate of return.

The bottom line should be perfectly clear:

Buy term and invest the rest!

Don’t try to do any wealth Why Not Use Life Insurance for Investing?
building inside an insurance policy.
Returns are historically LOW .
It just doesn’t work.
When you die with cash value, the insurance company
A stay-at-home mom
brings enormous KEEPS the cash value.
economic value to the
home. If something were The FEES deducted from your return are
to happen to her, dad extremely HIGH .
would need the money
to replace part of what Life Insurance: What to Buy
mom does.
You need about 10 times your income. Invested at
Insurance can be an
intimidating, confusing a 10–12% rate of return, the growth would replace your
mess if you don’t know lost income.
what you’re doing. Be
sure to work only with Don’t forget your SPOUSE .
a qualified professional
with the heart of a Children only need enough for BURIAL expenses.
teacher.
If you need help, we can Make sure you have a new policy in place BEFORE
connect you with an
Endorsed Local Provider you cancel any existing cash value policies!
in your area who we
recommend. Insurance to Avoid

daveramsey.com/find-elp • CREDIT life and disability

142 Coordinator • CANCER and hospital indemnity
90 The Role of Insurance
• Accidental DEATH

• Pre-paid BURIAL policies ANSWER KEY

• MORTGAGE life insurance TRANSFER MONITORING
BANKRUPT GOOD
• Policies with fancy OPTIONS DEDUCTIBLE DEATH
LIABILITY IDEA
ú Return of premium COLLISION OWN
ú Waiver of premium REPLACEMENT TERM
RENTER’S CASH VALUE
LEAVING A LEGACY UMBRELLA PERMANENT
Loved ones should know how to find your insurance DEDUCTIBLE SELF
information, will and important records in case of STOP LOSS LOW
emergency. Leave them a “Legacy Drawer.” MAXIMUM KEEPS
HSA FEES
daveramsey.com/fpu/legacy TAX SHELTERED HIGH
INCOME 10
TRAINED SPOUSE
OCCUPATIONAL BURIAL
SHORT BEFORE
65% CREDIT
LONGER CANCER
LOWER DEATH
ELIMINATION BURIAL
NURSING MORTGAGE
60 OPTIONS

Pssst...

The video is ending soon. Turn the page
to find out what happens next.

One-Minute Takeaway

What jumped out at you in this lesson? How can this affect your story?

Financial Peace University Coordinator Guide

DISCUSSION & ACTIVITY

Break Into Small Groups

†† If your class is larger than 20 people, split the class into multiple discussion groups with
a co-coordinator for each group.

†† Arrange the chairs in a circle for the small group discussion.

Small Group Discussion (5 minutes)

†† Take out the Question Cards numbered 1–2.
Distribute both cards to individuals in the group.

†† Direct everyone’s attention to page 92 of their Member Workbook and say:
I’ve passed out a few cards with numbers on them to help with
our small group discussion. Whoever has Card 1 will read the
first question, and we’ll all talk about it together. Then whoever
has Card 2 will read the second question. We’ve got about five
minutes, so let’s get started.

144 Coordinator Only

Small Group Discussion

true life-change happens when you open up and work through this material
tmoagteetrhiaelr.tBogreeatkheurp. Binretoakduispcuinstsoiodnisgcruosuspiosnogf raobuopust o15f npoeompoleretothtaalnk 2th0rough
tpheeofpolellotwo itnaglkqtuhreosutigohnst.hBeefohlolonwesintginqyuoeusrtiaonnssw. Beersh!onest in your answers!

1 We just watched a powerful, sobering story about why having the
right kind of life insurance is so important. Take a few minutes to
respond to the Steve Maness story. What, if anything, does this
inspire you to do regarding your own insurance plans?

2 Having the correct types of insurance is vital to the physical and
emotional health of your family. What would happen to you and
your family if a catastrophic event happened and you had no or
insu icient insurance coverage in one of the key areas of insurance?

92 The Role of Insurance Coordinator 145
The Role of Insurance 92

Financial Peace University Coordinator Guide

BREAKOUT GROUP EXERCISE

It’s time for another breakout group exercise! This allows smaller groups
within your class to take the material a step further with practical application.

Insurance Case Studies (14 minutes)

†† Instruct your small group to break into groups of 4–5 people.
Married couples should stay with their spouse in these breakout groups.

†† Give instructions.
Tell the group what they’ll be doing by saying:
Let’s apply what we’ve just learned by working through three
insurance case studies. Turn to page 93 in your Member
Workbook and get started. I’ll be walking around the room if
anyone has any questions. We’ve got about 15 minutes, so let’s
get started.

†† Have each group complete the three case studies on pages 93–96 of the Member
Workbook and respond to the discussion questions for each one.

†† You should walk around the room as they complete the activity.
Help anyone as needed. If time allows near the end of the activity, call the groups back
together and have each group report on their findings.

†† Wrap up the exercise.
Get some feedback from the groups by asking:
Did this help you identify any areas in your own insurance plan
that need some adjustment?

146 Coordinator Only

Breakout Group Exercise

Break into smaller groups of 4 5 people to work through the following activity.
Choose a leader to read through the exercise aloud and keep the group on
task. Your coordinator will call the groups back together to report your indings.

Case Study 1

Corey is a recent college graduate who needs help figuring out which insurance
policies he needs. He lives in a two-bedroom apartment with his wife, Laura,
who is currently not working as she finishes up school. The couple lives on
Corey’s $41,000 salary, they are debt-free, and they share one car.

Corey already has the following policies in place:

Renter’s Insurance

Auto Insurance

Cancer Insurance

Discuss which policies Corey and Laura should keep, cancel and add:

POLICIES POLICIES POLICIES
TO KEEP TO CANCEL TO ADD
Renter’s Health
Cancer
Auto Long -Term Disability

ID Theft Protection

Life

Coordinator 147
The Role of Insurance 93

BREAKOUT DISCUSSION

Case Study 2

Vickie has been driving for 12 years without any major auto accidents—
until today. It was pouring rain when she left the office, and within
minutes of leaving she was forced to make an evasive maneuver
that caused her to go into a spin on the wet road. After knocking an
expensive, high-end luxury car down an embankment, Vickie came to a
stop by smashing into the side of a mid-range sedan.

She was found to be at fault in the accident, so let’s look at the extent of
the damage she caused:

Luxury car: This car was totaled at $95,000.

Sedan: This car will need $4,000 in repairs.

Hospital bills: The driver of the luxury car had $15,000 in
medical bills for a broken arm, while his passenger had
$185,000 in medical bills for emergency surgery and recovery.

Like many Americans, Vickie carries a 100/300/100 liability policy. Here’s a
basic look at what that covers:

1 Bodily Injury Per Person Mcaaktechsutrheisy.ou
The most your insurance will pay
100/300/100 (in thousands of dollars) for any
injuries you cause per person.
1 23
2 Bodily Injury Per Accident
The maximum combined amount
(in thousands of dollars) your
insurance will pay for any injuries
you cause per accident.

3 Property Damage
The most your insurance will pay
(in thousands of dollars) to repair
or replace any vehicles or objects
you damage during an accident.

148 Coordinator
94 The Role of Insurance

BREAKOUT DISCUSSION

DISCUSSION QUESTIONS
1. Using the summary of the accident, calculate the total dollar value of the

property damage Vickie caused.

$9t9o,t0A0L0

2. Does she have enough coverage to cover the damages? Yes No

3. How much per person and per accident will Vickie’s insurance pay for bodily
injury that she caused?

Bodily Injury Per Person: $1t0o0t,A0L00

Bodily Injury Per Accident: $3t0o0t,A0L00

4. Given the fact that Vickie does not have an umbrella policy in place, how much
of the remaining hospital bills for the passenger in the luxury car will she be
held personally responsible for?

$8to5,t0A0L0

Did something in this case study make you question whether or not you have
enough liability coverage? If you need to update your policy, do it immediately!
Accidents never happen on schedule. Call your insurance agent and take care of
this as soon as possible!

Coordinator 149
The Role of Insurance 95

Small GroupBREAKOUT DiscusDISCUSSION sion

Case Study 3true life-change happens when you open up and work through this material
together. Break up into discussion groups of about 15 people to talk through
the following questions. Be honest in your answers!
Bill and Katie want to save money on their monthly insurance expenses, but
they’re being careful not to make any big mistakes. They are both 32 years old
and in great physical health, and each has a $50,000 income. The couple took
FPU two years ago, and they’re now totally debt-free with a fully funded
emergency fund.

They have several insurance policies in place, but in this exercise, we’ll only
focus on these three:

Life: Bill and Katie each have a 20-year $500,000 term life policy.

Health: Each has a PPO plan with an 80/20 copay and $500 deductible.

Long-Term Care: Bill has a 10-year policy with a 180-day elimination period.

DISCUSSION QUESTIONS
1. Bill is trying to convince Katie to lower their term life policies to $250,000,

but Katie does not think the savings of $8 a month is worth it. Explain to
your group who you think is right and why.
2. Because Bill and Katie are in such great health, they have considered
dropping their health insurance altogether. Discuss how and why they
could come to regret this decision.
3. Identify three wise things Bill and Katie could change in their health
insurance policy that would lower their premium.
4. Is long-term care insurance a wise choice for Bill right now?
Why or why not?

150 Coordinator
96 The Role of Insurance