Dave Ramsey Chapter 2 Test

Which of the following steps is the First Foundation?

• Get out of debt

• Build wealth and give

• Save a $500 emergency fund

• Pay cash for your car

Instead of borrowing money for large purchases, you should set money aside in a ________ over time and pay with cash.

• Emergency fund

• Sinking fund

• Credit card fund

• Mortgage fund

What does it mean to have a negative savings rate?

• Saving for something that is a want instead of a need.

• Having a fully funded emergency fund.

• Having no savings at all.

• Spending more money than you make and acquiring debt.

The saving habits of Ben and Arthur best illustrate which principle of saving?

• The length of time money is invested matters.

• The amount of the initial investment is the key

• Rate of return matters.

• Both A and C.

This principle suggests that a certain amount of money today has a different buying power than the same amount of money in the future. This is due to both the opportunity to earn interest on the money and because inflation will drive prices up, thereby changing the "value" of the money.

• Opportunity cost

• Time value of money

• Interest rate

• Inflation

For which of the following should you save?

• Purchases

• Wealth building

• Emergency fund

• All of the above

Using the sinking fund approach, how much do you have to save each money to buy a $4800 car one year from now?

• $400

• $300

• $275

• $500

At your age, a fully funded emergency fund should be:

• $500

• $5000

• $100

• $1000

Which of these is NOT a key to saving money?

• Focus

• Making saving a habit and a priority

• Your income

• Discipline

Which of the following is a reason that people don't save money?

• They lack discipline

• They do not live in a budget

• They lack focus

• All of the above