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Dave Says

By Dave Ramsey
Author, The Total Money Makeover – Financial guru Dave Ramsey answers questions about wise financial decision-making.

How Do I Get Started in Investing?

Dear Dave,
My husband and I are in the process of paying off our debt. We also have a 3-year-old daughter who is severely handicapped. We’d like to begin investing toward her future, even though there’s little chance she’ll go to college. What can you recommend?

Dear Judy,
I’m a big fan of mutual funds that have solid five- to 10-year track records. For my money, they’re the best long-term investment out there. And you’re right to think about this now. Even if she doesn’t go to college, it sounds like your daughter may need help well into the future.

Mutual funds are great in lots of ways. Not only do they generate a great return on your investment, but they’re easy and inexpensive to get into. You need only $250 or $500 for an initial lump sum investment with lots of them. If you’d rather give to the fund monthly, you can do that for as little as $25 with several that are out there.

If you’re planning to contribute less than $10,000, I’d suggest a calm growth and income fund. But if you plan on really pumping this thing full, you’ll want to spread your investments out a bit. I’d put 25 percent in each of the following categories: growth, growth and income, aggressive growth, and international.

How Do You Get a Product to Market?

Dear Dave,
How do you get a product to market?
– Jim

Dear Jim,
Well, it depends completely on what the product is you’re talking about. But first you need to determine what your target market is and decide if there are potential buyers.

Once this is established, I would meet with some of the people or businesses that make up your target market. This is called a focus group. Find out where they would be most likely to buy your product or service, what type of advertising would attract their attention, and what distribution method would work best.

Your focus group can tell you a lot about the best ways to position your business!

Emergency Fund or Pay Off Debt?

Dear Dave,

I was wondering if I should save up three to six months of expenses, Baby Step Three, before I pay off my debt with the debt snowball – Baby Step Two. I’m self-employed and work on a contract basis. My current contract will be up in a few months, and I’ll have to find another contract.

Dear Pat,
In a sense, you’re going to be laid off in a few months. It would be wise to prepare for that in advance.

Just paying the minimum payments on your debt for now and saving up three to six months of expenses would be one way to plan for that event. However, the day you get your next contract, I want you to take that emergency fund back down to $1,000 because you’ll have gotten your stability back at that point.

The good news is that you have a little while to be looking for another contract. That’s a luxury that not many people have when they lose a job.

After you bring your emergency fund back down, I want you in attack mode on the debt snowball. Every extra dime you can find needs to go to paying off debt. Sell some things if you have to, but get out from under the debt as soon as you can, and don’t ever borrow again!

Think of how quickly you could save three to six months of expenses if you had no debt at all. You could change your family tree and save like crazy!


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Dave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt, and build wealth that will last a lifetime and beyond.

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