First of all, I'M reading the book "Microsoft XNA Game Studio 2.0". I understand the error I'M getting but I don't know what to do about it. The error says I can't use backgroundColor before it has been declared. I'M following along with the book so I don't see why I would be having these problems to begin with.

using System;
using System.Collections.Generic;
using System.Linq;
using Microsoft.Xna.Framework;
using Microsoft.Xna.Framework.Audio;
using Microsoft.Xna.Framework.Content;
using Microsoft.Xna.Framework.GamerServices;
using Microsoft.Xna.Framework.Graphics;
using Microsoft.Xna.Framework.Input;
using Microsoft.Xna.Framework.Media;
using Microsoft.Xna.Framework.Net;
using Microsoft.Xna.Framework.Storage;

namespace MoodLight
{
    /// <summary>
    /// This is the main type for your game
    /// </summary>
    public class Game1 : Microsoft.Xna.Framework.Game
    {
        GraphicsDeviceManager graphics;
        SpriteBatch spriteBatch;

        public Game1()
        {
            graphics = new GraphicsDeviceManager(this);
            Content.RootDirectory = "Content";
        }

        /// <summary>
        /// Allows the game to perform any initialization it needs to before starting to run.
        /// This is where it can query for any required services and load any non-graphic
        /// related content.  Calling base.Initialize will enumerate through any components
        /// and initialize them as well.
        /// </summary>
        protected override void Initialize()
        {
            // TODO: Add your initialization logic here

            base.Initialize();
        }

        /// <summary>
        /// LoadContent will be called once per game and is the place to load
        /// all of your content.
        /// </summary>
        protected override void LoadContent()
        {
            // Create a new SpriteBatch, which can be used to draw textures.
            spriteBatch = new SpriteBatch(GraphicsDevice);

            // TODO: use this.Content to load your game content here
        }

        /// <summary>
        /// UnloadContent will be called once per game and is the place to unload
        /// all content.
        /// </summary>
        protected override void UnloadContent()
        {
            // TODO: Unload any non ContentManager content here
        }

        /// <summary>
        /// Allows the game to run logic such as updating the world,
        /// checking for collisions, gathering input, and playing audio.
        /// </summary>
        /// <param name="gameTime">Provides a snapshot of timing values.</param>
        protected override void Update(GameTime gameTime)
        {
            // Allows the game to exit
            if (GamePad.GetState(PlayerIndex.One).Buttons.Back == ButtonState.Pressed)
                this.Exit();

            // TODO: Add your update logic here

            base.Update(gameTime);
        }

        /// <summary>
        /// This is called when the game should draw itself.
        /// </summary>
        /// <param name="gameTime">Provides a snapshot of timing values.</param>
        protected override void Draw(GameTime gameTime)
        {
            GraphicsDevice.Clear(backgroundColor);

            // TODO: Add your drawing code here
            Color backgroundColor;
            backgroundColor = new Color(0, 0, 0);
            GraphicsDevice.Clear(backgroundColor);
            base.Draw(gameTime);
        }
    }
}

Modify the method to be like this

protected override void Draw(GameTime gameTime)
        {
            // TODO: Add your drawing code here
            Color backgroundColor;
            backgroundColor = new Color(0, 0, 0);
            GraphicsDevice.Clear(backgroundColor);
            base.Draw(gameTime);
        }

The error was exactly correct. you were trying to use backgroundColor's clear method before it has been declared (Color backgroundColor or initialised ( backgroundColor = new Color)

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