Dave Ramsey Ch 2 Saving Latest Update Graded A+

Dave Ramsey Ch 2 Saving Latest Update Graded A+ ompound Interest Interest paid on interest previously earned Emergency Fund Five hundred dollars saved to be used ONLY in the event of an emergency. Interest rate % paid to a lender for the use of borrowed money or % earned on invested money. Sinking Fund Saving money over time for a specific large purchase. Inflation The persistant rise in the price of goods and services over a period of time. Interest- Bearing Account An account that generates interest income on the available balance in the account. 1st Foundation Save $500 2nd Foundation Get out of debt, and stay out of debt 3rd Foundation Pay cash for a car (sinking fund) 4th foundation Pay cash for college 5th foundation Build wealth and give Negative Savings Rate Spending more money than you make and going into debt 2 components to saving Time and rate of return Time value of money the idea that $100 today will not buy the same amount as in the future due to inflation and interest. 3 reasons to save purchases, emergency fund, wealth building Keys to saving focus, making it priority and habit, discipline People who don't save money often lack focus and discipline, and have no budget Why emergency fund and spending money should be kept separate To make sure its only spent for emergencies and not as easy to access and spend it. the purpose of fully funded emergency fund