• This is a partial transcript from "Your World with Neil Cavuto," October 17, 2005, that was edited for clarity.

    NEIL CAVUTO, HOST: If everyone's worried about expensive winter heating bills, what can you do now to save yourself some cold cash? I want to bring on my buddy Dave Ramsey (search). He's the personal finance author, best-selling guy. His books live on the best-seller list.

    (LAUGHTER)

    CAVUTO: He makes no room for anyone else. I'm talking about the host of "The Dave Ramsey Show."

    Dave, good to see you.

    DAVE RAMSEY, FOUNDER, FINANCIAL PEACE UNIVERSITY: Good to be back, Neil.

    CAVUTO: Everyone is worried about this, these high-energy prices. What do they to compensate?

    RAMSEY: Well, and I think Mr. Raymond didn't say, but he did say, they're coming. I could hear it between the lines. And you could, too.

    CAVUTO: Right.

    RAMSEY: And regardless of the political or geopolitical discussion, it's coming. There's a storm on the horizon.

    CAVUTO: Even worse than now?

    RAMSEY: I don't know.

    I'm not an economist. But I think that, just as a personal finance guy, I can look at this, common sense, Joe regular guy, and say, hey, I need to get ready. I need to get an umbrella.

    CAVUTO: What do they do?

    RAMSEY: It's coming.

    CAVUTO: How do they get ready?

    RAMSEY: Well, I think just the things those folks were talking about in that package that just rolled.

    And I think you have got to do the common sense things. I predict the demand for Starbucks (search) will probably go down, because they're probably going to cut out things like $5 lattes in order to pay their heat bill. And, so, we are going to see some of the luxury items, that have been booming in our market, are probably going to go by the wayside a little bit, because people are going to heat their homes.

    I had a guy call me on my radio show this week from Grand Rapids, Michigan. He said, Dave, do I borrow $6,000 to put in a wood furnace because my gas load this year for my propane is probably going to go up $2,000 in one year?

    CAVUTO: What did you say?

    RAMSEY: Well, you know, I'm not going to tell the guy to borrow money.

    CAVUTO: Right.

    RAMSEY: But I did tell him to go get an extra job and pay for it.

    CAVUTO: Yes. Your view is that debt kills you and, if you have a debt load going into times like these, it kills you all the more.

    RAMSEY: Well, you know, that much more is pinching.

    But we are always talking about the emergency fund, the dreaded, you know, grandma's rainy day fund of three to six months of expenses. And when the boss comes in Monday morning and he says, you know, we're going to lay off a bunch of people in about four, five weeks, what do you do?

    Well, you back off on everything and you pad the cellar full, right? I mean, you get some money set aside. Well, that's what just happened. The boss just said, some people are going to get laid off. We're going to have energy prices going up in the next four or five weeks.

    We are going to see that. Now, when I fill up my car, I see it. When I fill up the propane tank, I see it. And, so, we have got to get ready. It's a budgeting thing.

    And the good news is, is, it makes you pay attention to your finances. And when you pay attention to your finances, you can win with them.

    CAVUTO: But you're saying that we all live beyond our means, and we have got to cut that out. What did you mean by that?

    RAMSEY: Well, we all do. I mean, we live in a wonderful world. We really have a lot of really nice things. And I'm not one of these financial guys that says you ought to live in a cave and collect lint and only come out on triple coupon Thursday.

    CAVUTO: Yes, you do. You are pretty cheap.

    RAMSEY: I'm not anywhere near as cheap as you.

    (LAUGHTER)

    CAVUTO: But, no, your view is that, look, if you can't afford it, don't buy it. And you extend that to homes, right?

    RAMSEY: If you can't afford it, don't buy it.

    CAVUTO: Right.

    RAMSEY: Especially when there are storm clouds on the horizon.

    CAVUTO: But what if interest rates have been so low up until recently? It almost behooves you to buy something, right, because the value of the property has gone up, right?

    RAMSEY: Well, and now we have got payments.