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Are you financially flummoxed?

Do you need a money makeover?

Just like your fashion tastes, your money management skills have to keep pace with your lifestyle. The same financial strategies that helped you survive college and your 20s don't work as well when you hit your 30s and 40s.

At this point you have (hopefully) more money and (unfortunately) more responsibilities. But if you're still playing by the same rules, chances are you're just as broke as you were in college.

"Personal finance is 80 percent behavior," says Dave Ramsey, author of "The Total Money Makeover: A Proven Plan for Financial Fitness." His prescription: First, pay the minimums on the credit cards and sock away $1,000 in an emergency fund -- fast -- "in one to two months," says Ramsey.

Next, Ramsey recommends paying off unsecured debts in order from smallest to largest to gain a sense of accomplishment. (Other experts say tackle the debt with the highest interest rate first, then move to the next highest.)

Third, when the debts are paid, increase that $1,000 rainy day fund to three to six months' living expenses, says Ramsey. And once you have that, start putting at least 15 percent of your salary into your retirement plan -- especially if your company provides matching funds, he advises.

The next steps on the list: Fund the kids' college accounts and pay off the house. "Then you can really save some money," says Ramsey. And, last but not least, "become very wealthy and give a lot of it away."

If you're already doing all that, you probably don't need a financial makeover. But if you're one of us that might have skipped a step or two, take this quiz to find out just what you do know about managing your money.

  1. A week before the rent is due, you're downsized. To keep the roof over your head you:

    Get a cash advance off the credit card. (Desperate times, desperate measures.)
    Get a loan. (Bank, credit union or Mom and Dad.)
    Put off the credit card payments and steer the money toward the rent.
    Raid the rainy day fund.
  2. Your old clunker is dying. You find a sleek, new, fully loaded luxury car -- the kind you've been lusting after since you bought your last car -- but the price is a little higher than you planned. You:

    Wait a little longer and save up the extra money. (You won't get that exact car, but you can get the same model and options.)
    Go from a 36-month loan to a 60-month note. (Payments the same, so what's the diff?)
    Keep shopping until you find something in your original price range.
    Lease the cream puff. (You get what you want for a few years -- and get to walk away when it's got a few miles on it.)
  3. Your company has decided it will no longer pay the premiums on group health insurance. Your spouse's job pays his/her premiums only -- and the two of you are strapped. You:

    Cross your fingers, hope you don't get sick and revisit the decision as soon as one of you gets a raise.
    Decline coverage, but start putting some money aside just in case.
    Cancel the cable, the magazine subscriptions, new clothes and dinners out -- and fork over your own hard-earned bucks to make the premiums.
    Think seriously about taking a second job.
  4. You need $2,000 in car repairs the same month you planned on treating yourself to that $3,000 plasma screen TV. Your solution:

    Pay cash for the car repairs. The TV will have to wait a few more months.
    Pay cash for the TV. Put the car on credit. (Cards are for emergencies, right?)
    Put both on credit, make the minimum payments, and pick up a new DVD player with the leftover bucks you saved.
    Pay cash for the car. Put the TV on credit. Pay off $1,000 when the bill comes and carry a balance on the rest.
  5. You find out that you and your spouse are going to be parents in seven months. You have health and life insurance and own a home. Your first priority:

    Picking a name.
    Outfitting the nursery. (Tiny furniture, enormous prices.)
    Socking away every dollar you can.
  6. You wake up one morning to find that you are carrying balances on all three of your credit cards and can't afford to pay any of them off in full. You:

    Put yourself on a money diet, pay the minimums and throw all your extra dollars at the balance on one particular card.
    Realize you need to be making more money and ask for a richly deserved raise.
    Realize you need to be making more money and take on a second job.
    Take out a home equity loan, pay off the cards and resolve to do better in the future.
  7. You're half of a one-income working couple. You need to carry life insurance on:

    The spouse working outside the home.
    The spouse not working outside the home.
    Both spouses.
    Both spouses and the kids.
  8. Putting aside money in an IRA or 401(k) is:

    Not important right now.
    Important, but not at the top of the list.
    A high priority.
    Something I wish I'd done, but it's too late now.
  9. Your rent keeps going up 10 percent each year. Meanwhile, your salary is climbing at half that rate. Your solution:

    Lobby the boss for a bigger raise.
    Start your own business on the side.
    Negotiate with the landlord for a smaller rent hike.
    Start shopping for a fixed-rate mortgage and a home to go with it.
  10. When it comes to your salary, you:

    Have a spending plan.
    Don't have a spending plan.
    Will make a budget as soon as there's leftover money.
    Will make a budget as soon as you get to a certain income level.

 

Bankrate.com's corrections policy
-- Updated: Aug. 31, 2006
 
 
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