Help with Ruby on Rails and mysql - I just don't get the terminal...

Let me just start by saying I'm pretty new to using the terminal and unix commands. I've been trying to teach myself how to use Ruby on Rails (ror) over the pasy couple of days and have had some luck but I'm struggling with the terminal.
For instance, when starting a new ror project I need to use the terminal to creat a new database schema (I think this the right terminology) within mysql. The tutorials I'm using suggest that I use the terminal to create the database with a command like:
mysqladmin -u root -p create expenses_development
no matter how I try I cannot seem to find the way to make this work. I contunue to switch directories in the terminal, but am not getting anywhere. Can someone shed some light on where I could be going wrong?
thanks in advance
MacBook Pro Core 2 Duo 2.33 Mac OS X (10.4.8) 2 GB RAM

okay, that helped. Here's what I get:
erik-petersons-computer:/usr/local/mysql/bin erikpeterson$ ls
comp_err mysql_zap
makesharedlibdistribution mysqlaccess
makewin_bindist mysqlaccess.conf
makewin_srcdistribution mysqladmin
msql2mysql mysqlbinlog
myprintdefaults mysqlbug
myisam_ftdump mysqlcheck
myisamchk mysqld
myisamlog mysqld_multi
myisampack mysqld_safe
mysql mysqldump
mysqlclienttest mysqldumpslow
mysql_config mysqlhotcopy
mysqlconvert_tableformat mysqlimport
mysqlcreate_systemtables mysqlmanager
mysqlexplainlog mysqlshow
mysqlfindrows mysqltest
mysqlfixextensions mysqltestmanager
mysqlfix_privilegetables mysqltestmanager-pwgen
mysqlsecureinstallation mysqltestmanagerc
mysql_setpermission perror
mysql_tableinfo replace
mysqltzinfo_tosql resolvestackdump
mysql_upgrade resolveip
mysqlupgradeshell safe_mysqld
mysql_waitpid
erik-petersons-computer:/usr/local/mysql/bin erikpeterson$
How would I create a new database from here?

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