Got Financial Questions? Dave Ramsey Has Answers
June 3, 2010 — -- Finance guru Dave Ramsey appeared on "Good Morning America" to talk about how people can get out of debt.
He gave some tips for how people can manage their finances and pay down their debts.
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Viewers have written in to ask Ramsey about their individual finance questions. Here are their questions and his answers.
Patricia McFarlin from Las Vegas, Nev., wrote:
Hello, I would like to know: I work for the federal government and every payday I buy EE and I savings bonds. In your opinion is this a good investment or should I put my money only in TSP [Thrift Saving Plans] investment funds?
Answer: TSP is better. Make sure you are debt-free and have three to six months of expenses in an emergency fund. If you're debt-free with cash in the bank, you can totally focus on investing. Sell the bonds and put the money in a TSP.
Kymberlee Ricke from Chicago, Ill, wrote:
I've heard that negative items on your credit report that are more than seven years old can be removed. Is this true and how can I do it?
Answer: You can only have inaccuracies removed from your credit report. The credit report clears all credit information seven years from the date of the last activity. If a debt is unpaid it will be on your credit report until the creditor stops reporting it.
Roopa wrote:
I have two kids -- a 9-year-old and 7-year-old. I want to put aside money for their education. Currently I am putting aside $400 every month, in a regular savings account in my name. I have gotten conflicting advice about 529 education plans and custodial accounts. How should I save for my kids' education?
Answer: I recommend Educational Savings Accounts, ESAs, funded in a growth-stock mutual fund. ESAs grow tax-free when used for higher education. Some 529s are good but the ESA is better.
Joyce Fowler from Monrovia, Calif., wrote:
What affects the CD rates and when do you foresee them going up? I feel like this is the only safe place to put my cash but the return is ridiculous.
Answer: The bank determines the CD rate. I call them certificates of depression because they are terrible investments. CDs are OK for short-term savings but money market accounts are better. For long-term investing, mutual funds are still the way to go.
