Dave Ramsey - The money answer book: quick answers to your everyday financial questions

Copyright 2004 by Dave Ramsey
Published by the J. Countryman division of the Thomas Nelson Book Group, Nashville, Tennessee 37214.
All rights reserved. No portion of this publication may be reproduced, stored in a retrieval system, or transmitted by any means electronic, mechanical, photocopying, recording, or any otherexcept for brief quotations in printed reviews, without the prior written permission of the publisher.

New Century Version (NCV). Copyright 1987, 1988, 1991 by Thomas Nelson, Inc. All rights reserved.
The New International Version of the Bible (NIV) 1984 by the International Bible Society. Used by permission of Zondervan Bible Publishers.

J. Countryman is a trademark of Thomas Nelson, Inc.

Project Editor: Kathy Baker

Designed by Brand Navigation, Sisters, Oregon

ISBN 0849996198

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www.daveramsey.com | www.mytotalmoneymakeover.com

DAVE RAMSEY

THE MONEY
ANSWER
BOOK

QUICK ANSWERS

......................................................................
TO YOUR EVERYDAY FINANCIAL QUESTIONS

TABLE OF CONTENTS

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No matter what
I dont borrow money.

No matter what
I give a tenth of my income to my local
church in the Name of the Lord.

No matter what
I have an emergency fund
of three to six months of expenses.

No matter what
I dont spend over $300 without
first talking to my wife.

Youve got to have some no matter whats
in your life.

It sounds weird doesnt it?
It used to be called common sense;
now its a highly rated talk radio show!

MONEY. We all need it, but few of us really understand it. If you listen to my daily radio show you know how desperate people are to get a handle on their finances. Maybe youre desperate... or maybe youre just trying to make sure you dont end up that way. Regardless, if youve picked up this book, youre interested in putting money to good use.

In The Total Money Makeover and my other books, Ive guided people on a journey to improve their financial situations; achieving success in personal finance is a longterm process, not an overnight fix. But in The Money Answer Book, Im offering you a different approach. Instead of walking you through the chronological steps, Ive created a Q&A to help you find topicspecific answers in an easy, concise format.

I only have one very simple messagebe responsible to God and family, sacrifice the unnecessary to gain the necessary, get rid of debt, and build a financially peaceful future. This message is the heart of all my radio shows, articles, seminars, and books, including this one.

In The Money Answer Book, its easy to find the answers; the challenge is applying them. You see,

PERSONAL FINANCE IS 80 PERCENT BEHAVIOR
AND ONLY 20 PERCENT HEAD KNOWLEDGE!

If things are going to change then YOU have to change. This isnt rocket science!

Whether you are selling something or whether you want to gain control of your personal finances... its all about behavior adjustments. You cant walk through the mall if you have a spending problemits like a drunk hanging out at a bar.

So, get on with it. Your future awaits the decisions you make today!

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TOP TWO WAYS TO BE
MONEY $MART

1. Say no to credit cards.

2. Write it down. Make a budget.
Give every dollar a name.

L eaping financial hurdles doesnt come easy or immediately. First you have to get your balance and learn to walk. Here are the Baby Steps.

1. $1,000 in an Emergency Fund

2. Pay off all debt (except the house) utilizing the Debt Snowball

3. Three to six months expenses in savings for emergencies

4. Fully fund 15 percent into pretax retirement plans and ROTH IRA, if eligible

5. College funding

6. Pay off home early

7. Build wealth! (Mutual funds and real estate)

MONEY ACTION

Im on Baby Step #

Ive been on this Step since

I want to get to the next Step by

Believe you can do this!

A mong the things that typically count as income are:

Anything from your employer

Tips

Odd jobs

Interest

Profit on sale of stocks and other investments

Profit on sale of property

Alimony

Social Security

Some retirement savings

Settlements from lawsuits

Lottery or gambling winnings

A mong the things that usually dont count as income are:

Scholarships

Inherited money (the estate already paid taxes on this)

Life insurance payouts

DOES THE NATIONAL ECONOMY REALLY AFFECT
MY PERSONAL ECONOMY?

T he news keeps telling us about the unemployment rate and jobs being lost. We hear about economic indicators that affect the stock market. When the government is concerned about the economy, it lowers interest rates in an effort to keep people spending. Debt is rising

So what is the truth? News reporters dont give the full truth. They bring the bleeding stories to us to get the ratings. Hardly ever do you hear positive news as a lead story.

The truth is that all those economic factors do affect you, but what you do in your own home will affect you far more.

The reality is that some people have lost jobs, but the beauty of the Baby Steps is that the system works both in good times and in bad times. It is Gods and Grandmas way of handling money. Debtfree living on a plan (a budget), saving for emergencies, investing for longterm goals, living on less than you make, and agreeing with your spouse on spending makes you prosperousnot tomorrow, but over time. Getting rich quick doesnt work.

Wake upyoud better start to prosper now! This is the best economy ever. If you cannot build wealth now, when can you build wealth? Get to work now!

WHATS THE MOST IMPORTANT FINANCIAL PRINCIPLE?
(THE ANSWER MIGHT SURPRISE YOU.)

T he Dave Ramsey Show and my company, the Lampo Group, have become very well known for teaching people how to get out of debt, save money, and get on a budget. All of us on staff here are very thankful for the response weve had to these concepts, but another financial concept is the hinge on which the door of successful personal finance swings. I have only begun to realize the full significance of this concept during the last year or so. When you understand this concept, all the other concepts work, and until you implement it, none of them will work. When you stick this concept deep in your soul, it becomes easy to save money, and even have money to invest. Getting out of debt happens quickly once you learn how to apply this concept in your life. Budgeting is made easier and your marriage or relationships regarding money are freed up and made smooth. This is the most important financial concept.