Personal money management expert, Dave Ramsey, opened up to Soldiers magazine about how Soldiers can be financially fit.

AcaEUR"A(th)$ What are some of the major issues you see when it comes to Soldiers and financial fitness'

Money issues have become a major readiness issue for military personnel. I see many Soldiers getting ready to be deployed who donAca,!a,,ct have a plan for their money and when they leave, their spouse is left to make all the decisions. You need to be able to deploy for whatever length of time and not have to worry about what is happening financially on the home front. If you and your spouse create a plan together, you will be prepared no matter what situation comes your way. A plan will allow you or your spouse to know what decision to make and not feel pressured because of your situation.

AcaEUR"A(th)$ How should Soldiers organize their financial affairs/insurance to protect their families in case of their death'

The most important thing to have to protect your family is a will. It doesnAca,!a,,ct matter how much money you leave behind, if you donAca,!a,,ct have a will your loved ones will be short-changed. Go to an attorney or go online today and create a will so that you do not leave an absolute disaster behind when you die.

AcaEUR"A(th)$ Do you have guidance for surviving family members when it comes to using/saving/investing the life insurance and death gratuities they receive'

I teach Aca,!A"Seven Baby StepsAca,!A? to get your finances in order and on track, and you should apply these baby steps if you receive money from life insurance or an inheritance. Your first goal is to have a $1,000 emergency fund in the bank, which is what I call Baby Step 1.

Baby Step 2 is using the debt snowball to become debt free, except for the house. List your debts, smallest to largest according to the balance, and put every extra dollar you have towards your smallest debt, while continuing to pay minimum payments on the others. When that debt is paid off, move to the next smallest and so on until youAca,!a,,cve paid off the last debt.

Baby Step 3 is a fully funded emergency fund of three to six months of expenses. Invest 15 percent of your income (Baby Step 4); begin saving for your childrenAca,!a,,cs college (Baby Step 5); pay off the house (Baby Step 6); and finally, give like never before (Baby Step 7).
Depending on how much money you receive from life insurance or an inheritance and where you are in the Baby Steps, you may be able to only do Baby Step 1, or you may be able to get all the way through Baby Step 3. Either way, it is important to stick to these steps and not go spend the money you receive on a new car or stuff you donAca,!a,,ct need.

AcaEUR"A(th)$ How does this plan differ from other financial management plans'

This is a straight-forward game plan for completely making over your money habits. It is a step-by-step process based on results and common sense. More than 750,000 families have benefitted from it since 1994. The average family pays off $5,300 in debt and saves $2,700 in the first 91 days using these Aca,!A"Baby Steps,Aca,!A? and is completely out of debt, except for the mortgage, in 18 to 24 months.

AcaEUR"A(th)$ What are some good investment tips'

First, you need to work through your first three Aca,!A"Baby Steps.Aca,!A? Once youAca,!a,,cve done that, youAca,!a,,cre ready to start investing 15 percent of your income. ThatAca,!a,,cs Baby Step 4.

We recommend that military personnel participate in the Thrift Savings Plan. The TSP is a strong retirement plan for servicemembers. Specifically, I recommend that Soldiers put 60 percent in the C Fund, 20 percent in the S Fund, and 20 percent in the I Fund. I donAca,!a,,ct recommend the F, G, or L Funds at all. They just havenAca,!a,,ct performed that well.

I should also mention that servicemembers should always roll their TSP funds into an IRA when they leave the military. This gives you a lot more options in the open market. If you can pay the taxes out of pocket when you do the transfer, IAca,!a,,cd roll the TSP money into a Roth IRA so that it will grow tax-free. If you canAca,!a,,ct pay the taxes out of pocket, just roll it into a traditional IRA.

AcaEUR"A(th)$ What are some things Soldiers should watch out for in todayAca,!a,,cs economy'

Soldiers need to watch out for all the doom and gloom from the media. If they are overseas they may not be able to find out whatAca,!a,,cs actually going on in the economy due to lack of resources. ItAca,!a,,cs important to stay positive and not listen to all the fear and rhetoric that is being broadcast.

The solution to this economy is to believe again. As people start believing in our economy, houses will start to sell, cars will start to sell, and jobs will be created. We the people are the healing agents of this economy.

AcaEUR"A(th)$ What should Soldiers do differently in a recession versus a strong economy'

The key is to live on less than you make and get on a plan so that you are okay no matter what the economy is like. I hope that this economic downturn has been a wake up call for people. WeAca,!a,,cre in this mess because, for the last few decades, people have progressively been spending and borrowing more than they could afford. ItAca,!a,,cs your responsibility to take care of your family first. DonAca,!a,,ct go into debt to buy more stuff and donAca,!a,,ct rely on your credit cards to get you through this tough economic time.

AcaEUR"A(th)$ Should Soldiers set up IRAs,TSPs or other investments during this economy'

If you are completely out of debt and have a fully funded emergency fund of three to six months, absolutely. The key is to think long-term. One hundred percent of the 15-year periods in the stock marketAca,!a,,cs history have made moneyAca,!"including the years after the Great Depression. Keep investing steadily and think long-term.

AcaEUR"A(th)$ Can you talk about financial planning for deployments'

If you work on a plan with your spouse and discuss different situations that may arise and how to handle them, your spouse should feel prepared to take care of the finances while you are away. Remember that you both must agree on the plan so that you donAca,!a,,ct return to find your spouse has changed the plan or made a decision you donAca,!a,,ct agree with.

Today, we are blessed with tons of technology that allows couples to communicate while one is overseas. If an emergency should arise, you may be able communicate about the situation and decide on a solution together.

There is also important information available about the Servicemembers Civil Relief Act. This is something every servicemember needs to understand. This is an important piece of legislation that provides several provisions for our Soldiers and their families, including restrictions on interest rates, mortgage and rent payments, credit card debt, bankruptcy, foreclosure and collection practices.

AcaEUR"A(th)$ What are some of the financial implications of a deployment'

Depending on where you are in the Baby Steps, deployment pay can be used to help pay off debt, fully fund your emergency fund, or for investments. Being deployed may also interfere with your civilian employment, so this may be needed for your familyAca,!a,,cs basic living expenses while you are gone. Either way, make sure that you and your spouse discuss how the money will be spent before you leave.

AcaEUR"A(th)$ How can Soldiers and families develop long-term financial goals/plans'

It is very important to have long-term financial goals. Long-term goals are those that you plan on completing at least three years from now. These types of goals can include debt elimination, retirement, college funding, etc.

Sit down with your spouse and decide when you want to be debt free, how much money you want to have when you retire, and how much money your kids will need for college. Many of these goals will most likely be necessities and you will need to factor them into your budget.

AcaEUR"A(th)$ How can Soldiers assess their financial readiness for major events and/or purchases'

If you are planning on having a child, look at your income and your budget to see if you are financially ready to provide for a child and what extra items you will need to cut out so you will be able to supply food, shelter and clothing for your child.

I believe in buying used cars. The money saved by buying a used car is because of depreciation. Used cars have already depreciated (60 to 70 percent in the first five years). Buying used allows the person who bought the car when it was new to eat the cost of the depreciation. The person who buys the car used can get a great car for much less than the new wholesale prices.

If you know that you will be purchasing a car in the future, start paying yourself car payments so that youAca,!a,,cll be able to pay cash for the car on the spot. I have more people call my show telling me that they are barely able to make ends meet and then I find out that their car payment is half of their income. Car payments are not the way to win with money!

Military personnel face a different situation when it comes to buying a home. If you buy a home in every city you are relocated to, youAca,!a,,cll end up being a landlord by default with properties all over the nation.

This can also be the case if you were to be deployed. This is a situation that you never want to be in, but with an even softer housing market right now, you really donAca,!a,,ct want this to be where you are investing your money! Continue to rent a home if you are in a position where you frequently move or there is a chance you will be deployed.

If you are in stationary position and thinking about purchasing a home, there are some guidelines you should follow if you are not able to pay cash. When taking out a mortgage, never take more than a 15-year, fixed-rate loan, and never have a payment more than 25 percent of your take-home pay. That is the most you should ever borrow.

AcaEUR"A(th)$ How can Soldiers plan for retiring or separating from the military'

Many of you are eligible for retirement at such a young age. Start by thinking about what else youAca,!a,,cve been called to do with your life and what your skills sets are. Consider the training youAca,!a,,cve had to date and where else it could take you. You need to think about retirement as an opportunity to do what you always wanted to do, and having enough money to do it. Make sure to use incoming retirement funds in a responsible way to live out the next chapter of your life.

AcaEUR"A(th)$ What advice do you have when it comes to saving for college, for both Soldiers and their family members'

First, do some research on the cost of attending college so you know how much youAca,!a,,cll need to save. If you are saving for your college tuition, there are literally hundreds of vocational and professional schools that accept G.I. Bill funds. This should always be one of your first questions when looking at a school. Some states extend in-state tuition benefits to dependents of servicemembers.

The G.I. Bill benefits cover approximately 60 percent of the average cost of a college education. However, about a third of eligible veterans fail to use their benefits. There are also many scholarships available for servicemembers and their spouses.

If you are saving for your childrenAca,!a,,cs college, I suggest using an Educational Savings Account, funded in a growth-stock mutual fund. This will grow tax-free for higher education.

AcaEUR"A(th)$ WhatAca,!a,,cs the easiest way to save money every month'

The easiest way to save money every month is to make it a priority. We all know we need to save, but most people donAca,!a,,ct save like they know they need to. Why' Because they have competing goals. The goal to save isnAca,!a,,ct a high enough priority to delay that purchase of the pizza, DVD player, new computer or china cabinet. So we purchase, buy, consume all our dollars away or, worse yet, go into debt to buy these things.

You will only save money when it becomes an emotional priority. When you are ready to save, set up a written budget where you spend all your money on paper, every month. Before you spend a penny on anything else, you could first tithe and then save. Do these first and then pay everyone and everything else.

AcaEUR"A(th)$ Is it better to save money or pay off credit cards first'

Remember, the first Baby Step is to save $1,000 and put it in the bank as an initial emergency fund. ItAca,!a,,cs going to rain so you need a rainy-day fund. Obviously $1,000 isnAca,!a,,ct going to catch all the big things, but it will catch the little ones until the emergency fund is fully funded.

We do this first so that youAca,!a,,cll have a little cash to cover anything that comes along and we wonAca,!a,,ct use a credit card. No more borrowing! Once you have your $1,000 in the bank, then start to pay off your debt using the debt snowball.

AcaEUR"A(th)$ When should Soldiers use a credit card or get a loan'

I never recommend getting a credit card or borrowing money. However, mortgage debt is the only kind of debt I donAca,!a,,ct yell about.

AcaEUR"A(th)$ WhatAca,!a,,cs a realistic budget for a junior enlisted Soldier' What percentage should he or she spend on rent/food/car/other bills versus saving/investing'

A realistic budget varies for each person, depending on his or her income and expenses. Where you are in the Aca,!A"Baby StepsAca,!A? will determine how much money you put towards expenses versus how much money you are saving or investing.

I normally recommend spending 10 to 15 percent of your income on charitable gifts, five to 10 percent on savings, 25 to 35 percent on housing, five to 15 percent on food (depending on the number of children), and five to 10 percent on utilities.

AcaEUR"A(th)$ Why should a Soldier not go to a payday lender and what are other options'

Cash advance, payday loans, title pawning and tote-the-note car lots are examples of rip-off, predatory lending that only benefit the owners of the companies making the loan. These businesses line up at the entrance to military installations. Before the DOD regulated out-of-control interest rates for these establishments, the average payday interest rate was 400 percent.

If you want to stay on the bottom, keep dealing with these guys. If you use payday loans, tote-the-note, and rent-to-own, please understand that you are being destroyed financially. They prey on servicemembers and offer quick fixes at unbelievably bad terms and conditions.

AcaEUR"A(th)$ If a Soldier is already in over his/her head with a payday loan company, how can he/she get out of trouble'

One in five active-duty personnel borrows from a payday loan company. Overall, this results in more than $80 million a year in fees, interest and related costs. If you are involved with a payday loan company, sell everything in your house and take on extra jobs when you can until you get those things paid off this weekend. You have to do this very, very fast and get these people out of your life.

AcaEUR"A(th)$ How does someone know if theyAca,!a,,cre truly living within their means'

If you have a written budget and are spending more than you make, you arenAca,!a,,ct living within your means. You must limit your style of living, because you can always spend more than you make. Make sure that you stick with your budget so that you are able to save, give and have a life without going into debt.

You must figure out what your actual income is, and then proceed to live as far below that mark as possible.

AcaEUR"A(th)$ Why shouldnAca,!a,,ct Soldiers make big purchases on their credit cards'

There is no positive side to credit card use. Even if you pay the card off in full each month you are not beating the system. When you pay cash you actually feel the money leaving your hand. With credit cards nothing registers emotionally, and because of this, youAca,!a,,cll spend more when using them. When making a large purchase, you should save money until you have enough cash to buy it.

We Americans like Aca,!A"stuff,Aca,!A? and when we use a credit card to buy everything we start to have Aca,!A"stuffitis.Aca,!A? All of sudden, we need everything and we need it now. You have to be disciplined and learn to save for things you really need, not use credit cards for things you want. Not to mention the deals you can get when you go into a store and pull out the cash you plan on spending!

AcaEUR"A(th)$ Where can Soldiers go to get help' What free services are available for Soldiers and families'

Military Saves is a great resource for Soldiers. It promotes financial readiness by encouraging military members to start an emergency fund, make savings automatic, invest in a TSP and eliminate debt.

Dave Ramsey, a personal money management expert, is a national radio personality, and author of the New York Times best-sellers, The Total Money Makeover, Financial Peace and More Than Enough. On Oct. 15, 2007, Ramsey added television host to his resume when Aca,!A"The Dave Ramsey Show on Fox Business NetworkAca,!A? debuted nationally. Ramsey knows first-hand what financial peace means in his own lifeAca,!"living a rags-to-riches-to-rags-to-riches story. By age 26 he had established a $4 million real estate portfolio, only to lose it by age 30. He has since rebuilt his financial life and now devotes himself full-time to helping ordinary people understand the forces behind their financial distress and how to set things rightAca,!"financially, emotionally and spiritually. He resides with his wife Sharon and their three children in Nashville, Tenn.