The Money Answer Book: Quick Answers to Everyday Financial Questions

The Money Answer Book: Quick Answers to Everyday Financial Questions

by Dave Ramsey


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This question and answer book is the perfect resource guide for equipping individuals with key information about everyday money matters.

Questions and answers deal with 100+ of the most-asked questions from The Dave Ramsey Show—everything from budget planning to retirement planning or personal buying matters, to saving for college and charitable giving. This is Dave in his most popular format—ask a specific question, get a specific answer.

Product Details

ISBN-13: 9781404187795
Publisher: Nelson, Thomas, Inc.
Publication date: 05/18/2010
Series: Answer Book
Pages: 176
Sales rank: 314,786
Product dimensions: 4.90(w) x 6.90(h) x 0.50(d)

About the Author

Dave Ramsey is America’s trusted voice on money and business. His five New York Times bestselling books—Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership, and Smart Money Smart Kids—have sold more than 7 million copies combined. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations and iHeartRadio.

Read an Excerpt



Thomas Nelson

Copyright © 2010 Dave Ramsey
All right reserved.

ISBN: 978-1-4041-8779-5

Chapter One


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 you're desperate ... or maybe you're just trying to make sure you don't end up that way. Regardless, if you've picked up this book, you're interested in putting money to good use.

In The Total Money Makeover and my other books, I've guided people on a journey to improve their financial situations, achieving success in personal finance is a long-term process, not an overnight fix. But in The Money Answer Book, I'm offering you a different approach. Instead of walking you through the chronological steps, I've created a Q&A to help you find your topic-specific answers in an easy, concise format.

I only have one very simple message-be 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, it's 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 isn't rocket science!

Whether you are selling something or whether you want to gain control of your personal finances ... it's all about behavior adjustments. You can't walk through the mall if you have a spending problem-it's like a drunk hanging around at a bar.

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

What are the baby steps?

Leaping financial hurdles doesn't 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 pre-tax retirement plans and ROTH IRA, if eligible

5. College funding

6. Pay off home early

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

What counts as taxable income?

Among the things that typically count as income are:

Anything from your employer


Odd jobs


Profit on sale of stocks and other investments

Profit on sale of property


Social Security

Some retirement savings

Settlements from lawsuits

Lottery or gambling winnings

Among the things that usually don't count as income are:


Inherited money (the estate already paid taxes on this)

Life insurance payouts

Does the national economy really affect my personal economy?

The 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 don't 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 God's and Grandma's way of handling money. Debt-free living on a plan (a budget), saving for emergencies, investing for long-term goals, living on less than you make, and agreeing with your spouse on spending makes you prosperous-not tomorrow, but over time. Getting rich quick doesn't work.

Wake up-you'd 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!

What's the most important financial principle? (The answer might surprise you.)

The 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 we've 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.

Contentment. That's right, contentment. Contentment brings peace. Not apathy. Not the deadhead fog of Prozac or Valium. Only contentment brings peace. We live in the most marketed-to society in the history of the world, and the very essence of marketing is to disturb your peace. We say things to ourselves like, "I'll be happy when I get that boat;" or, "I'll be happy when I get that china cabinet;" or, "I'll be happy when I get that house." Or, or, or, or!!!

NOT TRUE. Happiness is sold to us as an event or a thing, and consequently, our finances have suffered. Fun can be bought with money, but happiness cannot.

We live among a bunch of people who are deeply in debt and have no money saved because their emotions were tricked. Just like drug addicts, people have been conned into believing that happiness will come with the next purchase. So, Daddy works hundreds of overtime hours and Mommy works forty-plus hours a week, all in the name of STUFF.

You probably think I am writing about someone else, but I'm not. I am writing about you. I know because I suffer from the same disease-but I am recovering and so are many of you. The human spirit was not created to attain peace, contentment, or fulfillment by gathering more stuff.

You can get out of debt, save money, and get on a budget, but until your intellect forces your emotions and your spirit to accept that STUFF does not equal CONTENTMENT, your finances will always feel stressed. At our office we counsel every week with folks who are making $25,000 per year as well as folks making $250,000 per year. These people share a common problem: they all suffer from some level of "stuffitis," the worship of stuff. Change your focus and change your life for the better.

What's the deal with debit cards and credit cards?

A debit card looks like a credit card. It may have the same logos as a credit card, and most places will let you use it just like a credit card. But it's not a credit card.

The main difference is that when you use a debit card, the money comes directly out of your account, instead of coming from the credit card company for you to pay back later with interest. You're spending money you already have, not money you hope you'll have.

The danger in using a debit card is that you are still using plastic, which takes the emotion out of spending. For day-to-day purchases, I still recommend using cash because it hurts more to let it go.

If you lose your debit card-call the card issuer and report the loss immediately. If unauthorized use occurs before you report it, the amount you can be held liable for depends upon how quickly you report the loss. For instance, if you report the loss within two business days you will not be responsible for more than $50 for unauthorized use.

If you lose your credit card-call and cancel it immediately. You don't need a replacement. Consider the loss a good opportunity to stop feeding the credit shark, although you may be liable for fees for any unauthorized use.

A better idea is not to wait until you lose your credit card; cancel it today.

The haves and have-nots can pften be traced back to the dids and did-nots. D.O. Flynn

Do I need separate accounts for checking and savings?

You definitely need to separate your checking and savings accounts.

This is especially important when it comes to your emergency fund. It is so easy to write a check that dips into your emergency fund, which will defeat the original purpose. The separation is a mental note to yourself that you've reached your spending boundary.

But your savings account does need to have check writing privileges, just in case you need that emergency fund to cover an emergency.

If you want to learn about success, listen to someone who has succeeded. H. W. Arnold

Chapter Two


Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs. The Bible says, "The borrower is servant to the lender." If you're in debt then you're a slave; you do not have the freedom to use your money to powerfully change your family tree.

Debt is normal! So why be normal? Do you want to be like 70 percent of all households that live paycheck to paycheck? It takes a lot of will, discipline, and courage to slay the debt monster. But it can be done. Think-how much could you put toward retirement if you didn't have a car payment?

The concept of credit itself is "new" to the personal finance scene. What? Yes, that's right. The idea of using credit as a significant aspect of one's personal financial plan is less than fifty years old. After the 1950s, credit became a marketing tool for companies that wanted to convince consumers to buy even affordable items on credit. The message of credit is, "Enjoy now and pay for it later."

The average household gets six new credit card offers every month, and the average college student gets one new offer every few days! Some people are more protective of their credit rating than of any other thing, when credit is the monster that's destroying their future and sending them down the road to bankruptcy. Even the sound of that word sends chills up the spine. But if you're facing the prospect of bankruptcy, or if you're in the middle of it right now, it's a living nightmare. It's scary. It can devastate your job and your marriage.

The first thing you need to know is that you can make it. I was there personally at age 24. I lost it all. I know the shame, the pain, the hurt, the fear, and all the other emotions that come with bankruptcy. There really is hope.

If you are considering bankruptcy you also need to know that I recommend bankruptcy about as often as I recommend divorce-almost never! There are options most people have never examined that could actually prevent bankruptcy.

Debt is dumb, and credit destroys. But you don't have to fall into the traps. Welcome to the real world!

How do I get the ball rolling to get out of debt?

We've developed a little process called the "Baby Steps" to do one thing at a time and keep it simple. The principle is to stop everything except minimum payments, and focus on one thing at a time. Otherwise nothing gets accomplished because all your effort is diluted.

First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using the debt snowball. You attack the smallest debt first, still maintaining minimum payments on everything else. Do what is necessary to focus your attention. Keep stepping up to the next largest bill.

After the credit debt is taken care of, work to build the emergency fund up to three to six months of expenses.

Now start putting 15 percent of your income into retirement funds. Then save for your kids' college expenses, and then go to work on paying off the house. Once that is finished, investing is very easy to do. It's all just a matter of doing it.

I have been broke. I know how scared I felt, and I know how fast I wanted to get away from debt. I know how you feel, and I have learned that what really works is unbelievably fierce, focused intensity.

Why should I pay off my smallest debts first instead of starting with the highest interest rates?

The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20 percent head knowledge and 80 percent behavior. You need some quick wins in order to stay pumped enough to get completely out of debt. When you start knocking off the easier debts, you will start to see results and you will start to win.

You don't drown by falling in the water, you drown by staying there. Edwin Louis Cole


The Debt Snowball

List all your debts from smallest to largest. Start working the snowball and watch your victories grow!


$300 Big Store $25 Jan. 21, 2005 $8,483 Visa $200 Aug. 2, 2005 $17,850 Dealership $400 SELL CAR

How badly do you want to be out of debt?

Many hard-working people get into debt because of mistakes. I work with those people every day. I'm talking about them-those who are willing to keep working hard-when I promise that there's hope for a financially peaceful future.

But then there are lazy people. Laziness is a character flaw. You need to be willing to work in order to fix the situations that you created with your own irresponsibility. If you are not willing, then you cannot be helped.

Are you willing to get another job and work a few 80-hour weeks? If you are in financial stress because of something you've done, you need to get yourself out of the mess by working. If you think that is too hard, you will never get out of the debt that you brought upon yourself. Laziness is a sickness, and it will get you absolutely nowhere in life. We all make mistakes, but the question is whether you are willing to take responsibility for your mistakes! You need to learn from your mistakes or you-and your children-will be doomed to repeat the cycle.

How badly do you want to be out of debt?

Isn't some debt good?

Some financial advisers, economists, columnists and other so-called experts keep saying that some loans are necessary, or that living without any debt at all is just plain impractical. These people believe that you receive great benefits by going into debt.

Give me a break! These guys are idiots. What's more, they're probably broke idiots. Do you want to take money advice from broke people? No!

You are not "simple" or "emotional" if you believe in being debt-free. What we have been taught about "good debt" is what brings us to the pathetic financial state that this economy is in.

The only good debt is debt that is paid off.

Debt is normal. But the truth is that you should not want to be normal. You need to be willing to be weird. Weird is when you live sacrificially in the present, pay off your past, and invest in a financially peaceful future.

Is it okay to buy stuff while I'm still in debt?

I recommend waiting. Sometimes things are necessities, but most things are not. If you want to purchase a leather couch, you should wait until you pay off all your debts. The couch is not something you need. Being out of debt so that your family can live and save is more important than buying the leather couch. I look at priorities. As long as you have what you need to physically survive, very few things are more important than getting out of debt as quickly as possible.

Sometimes people borrow money to pay off debt, and they just go deeper and deeper into debt. When you have more money going out than there is coming in, you are simply borrowing to pay your bills.

This is the point where you need to take the bull by the horns. You need to be sacrificial, crazy, and you need to make some painful decisions. You need to sell the car, the house, have a garage sale, and so forth. These are not pleasant things, but you need to make these decisions yourself or someone will make them for you.

Isn't there a positive use of credit cards? Like rebates and airline miles?

Responsible use of credit cards does not exist. There is NO positive side to credit card use. You WILL spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! You are falling for a lie.

Think about the rebates. If you were using a credit card at 5 percent, you would have had to have spent $160,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot. That is not a good deal.

When you pay in cash, you can "feel" the money leaving you. This is not true with credit cards. Flipping a card up on a counter registers nothing emotionally. If you use plastic instead of cash you will spend 12 percent to 18 percent more. This is money you could have saved.


Excerpted from THE MONEY ANSWER BOOK by DAVE RAMSEY Copyright © 2010 by Dave Ramsey. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents


The Basics....................     1     

Debt, Credit & Bankruptcy....................     15     

Relationships & Money....................     53     

Budgeting....................     85     

Saving & Investing....................     95     

Twentysomethings, College & Student Loans....................     114     

Stewardship....................     123     

Insurance....................     129     

Retirement & Estate Planning....................     135     

Automobiles....................     147     

Real Estate & Mortgages....................     158     

More Resources....................     166     

About Dave Ramsey....................     168     

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The Money Answer Book: Quick Answers to Everyday Financial Questions 4.3 out of 5 based on 0 ratings. 50 reviews.
Jeff_McCann More than 1 year ago
At 26 years of age, David Ramsey experienced fortune to the tune of a four million dollar real estate portfolio and lost it by the age of 30. Years later, he restored his financial status and now through his nationally syndicated call-in radio show, dispenses financial wisdom daily to millions of listeners. Now with his new book, the Money Answer Book, you can have Dave Ramsey's sound financial advice in your purse, computer bag or backpack! Dave has taken all the toughest and most popular questions regarding money, budgeting, credit cards, mortgages, loans and bankruptcy and compiled them into an amazing little book. The most important aspect of this book is that it is written in short, question and answer style divided by topic and chapter. The delivery is what everyone comes to expect and love about Dave Ramsey, no nonsense, honest and to the point. If there was ever a starting point to getting control of your money and beginning a better financial future, it's with this new book by David Ramsey, The Money Answer Book.
reading_to_kids More than 1 year ago
I have heard great things about Dave Ramsey. They're all true. This guy really knows his stuff. He is very good at financial advice, the kind that actually helps. The Money Answer Book is just what the title proclaims: a book with answers to questions about money. It has 11 chapters that each cover a different topic in relation to money. Some include: The basics, Budgeting, relationships and money, insurance, real estate and mortgages, and more. I love the way Dave talks bluntly. And I say "talks" because it really does feel like he is talking to you, not that you're reading it. If you've heard about Dave Ramsey, it's possible that you've heard his idea for an envelope system. This was one of the concepts covered in the book (through the answering of a question or two) that I thought was interesting. Before, when I heard about the idea, I thought it was nuts. After reading the whole book (which isn't very long, it's great bathroom material because it has short segments of questions and answers) I realized that it's pretty smart. Instead of using a credit or debit card, which we are less attached to, you use cash. It feels a lot more painful to hand over a wad of cash then to swipe a card through a machine. Many questions are geared towards folks who are struggling economically, but the book is also a great resource for "rich" people, and average people. Dave's main point: debt is normal, and we don't want to be normal! Get out of Debt! I would highly recommend this book to anyone who has any money and wants to keep it, or who has no money and wants to get some. **I was given a complimentary copy of this book from BookSneeze online review program.**
Shasta_Matova More than 1 year ago
"Personal finance is 80% behavior and only 20% head knowledge" according to the quote on the back of the book. The Money Answer Book by Dave Ramsey helps you gain the 20% knowledge and helps you work on your 80% behavior so you can straighten out your finances. It's a small book, 170 pages, which is formatted in short, bite-sized question and answer sections, and very easy to read language. Taking care of money isn't hard, but you do have to be willing to make the effort. It is a good beginner book for people who haven't focused on their finances, and need to start from the basics. He creates guiding principles that should work for most people, so that there is a framework upon which to base your financial actions. The rest of the chapters contain more details, even though there isn't in depth detail on any particular topic. Since the book is for everyone, and not customized it to the individual, it does have some advice that might not be as sound for each person. For example, he says to pay off your smallest debt first. This way there is a win, and you can see progress. Personally, I don't need the small win, and paying off the highest interest rate loan would pay off all the debt faster. Some people are able to see the long term effects (and are geeky enough to create spreadsheets to see how many months they are shaving off the loan.) But paying off debt is a good thing, no matter the order, and depending on the size of your small loan, having one less debt to keep track of could help too, especially if it saves you the cost of another stamp and prevents the possibility of another late fee. This would be a good book to gift to a newly married couple, or to a young person just starting out life on their own. Even if they don't read the whole book, they could get enough questions answered without having to admit to anyone that they don't know something. I got the book for free from Thomas Nelson publishers in exchange for an unbiased review.
Anonymous More than 1 year ago
Great Organization, Relevant and useful!
mnleona on LibraryThing More than 1 year ago
The Money Answer Book by Dave Ramsey.Great books for all ages. I requested this book because I have heard Dave Ramsey on the radio and I have seen him on the Fox Business Network.A short but simple book on managing your money and how to do it. Follow the money rules and you should be able to make it. Dave Ramsey is against spending more than you have and does not like the use of credit cards.There are chapters for debt, saving and investing, automobiles, insurance, college, real estate and more.The author uses quotes from the Bible as well as many known and (to me) unknown people. Some quotes: "More people talk themselves into failure then talk themselves into success" Zig Ziglar, "Well done is better well said" Benjamin Franklin, "Many a man has failed because he had his wishbone where his backbone should have been Ronald Reagan and "Those who work hard will make a profit, but those who only talk will be poor" Proverbs 14:23.This is an excellent book for a wedding present but better yet, one to give as a shower gift. It would also be a good graduation present for a high school or college graduate.As far as Dave Ramsey is concerned, you should start young to begin to learn how to use your money and he has topics for parents.He has a list of web sites in the back of the book for additional resources.Everyone will learn something.Leona OlsonDisclosure of Material Connection: I received this book free from Thomas Nelson Publishers as part of their book reviewers program. The opinions are my own.
ElnEm on LibraryThing More than 1 year ago
I regard this book as a collection of philosophical snippets worth reviewing to help people stay focused on getting or staying debt free. Yellow "Money Action Steps" pages draw attention to the "Baby Steps," "The Debt Snowball,""My Hope Sheet,"A Very Basic Budget," and more. A useful used book pick-up at your Barnes & Noble. I believe the title has been re-released with a new introduction or such under a different cover and almost no updated content save the location of the quotations used throughout the book so don't pay an extra couple of bucks for it.
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Anonymous More than 1 year ago
Many quick Q and A. This book hits all the highlights of the Ramsey concepts; however, I recommend reading Financial Peace University and/or Total Money Makeover first.
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Guest More than 1 year ago
A must read !
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MPadrelanan More than 1 year ago
In this age of economic downturn, it is very important to our lives and our future that we make the best decisions regarding our finances. Being a good steward of our resources is one of the Bible's most important lessons. Unfortunately, most of us don't know / don't understand much about taking good care of our finances. The Money Answer Book - Quick Answers for Your Everyday Financial Questions by Dave Ramsey is a very informative book on finances. Dave Ramsey honestly and fearlessly gives us direct answer to money questions that we have everyday. He tackles current money management issues such as debt, mortgage, student loans, budgeting, saving, investments, teaching children about money and the like. The issues are current. His answers are direct without any flowery language. As one who is truly challenged about the stewardship of resources, reading The Money Answer Book - Quick Answers for Your Everyday Financial Questions by Dave Ramsey is an eye-opener. Dave Ramsey knows how to challenge his audience to make wise decisions about their money. Although it is written with an American audience in mind, the issues are as real to us Filipinos as it is to Americans. In this book, one of the most important things I've learned is how to give priorities to my financial needs. It has opened my eyes to a new way of planning a secure, financial future. The best thing about this is that it is very easy to read. In fact, it is not even a big book, it's as small as a pocketbook that I can easily slip into my bag. Despite it's size, it is packed with essential nuggets in the wise management of the resources that God gave us.