Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Fayette | Henderson | Lakes | McCracken | Warren | Webster
Davis Motor Sales banner ad

Dave Says – October 13, 2013

dave ramsey turq 300KENTUCKY (10/13/13) – This week Dave discusses 'How much term do I need? and 'Budgeted fun'
 
Dear Dave,
Should term life insurance be purchased based on your current earnings or future, projected earnings? - Dan

Dear Dan,
I usually recommend people have 10 to 12 times their current annual income in a good, level term life insurance policy. However, if you have a solid reason to project your income jumping significantly in the near future, there’s nothing wrong with basing your amount of life insurance coverage on that figure—as long as you can afford it.

Now, when I say a solid reason, I’m not talking about having an attitude of, “I’m smart. So, I’m going to make tons more money soon.” That’s ego, not reason. But if you’re in a residency finishing your medical degree, you can realistically look at making $40,000 to $50,000 for another year or two then making the jump to $200,000. That’s the kind of logical thinking and planning I’m talking about. In that scenario, a huge jump in income is almost assured. There’s nothing wrong with going ahead and getting more coverage.

The purpose of life insurance is to take care of your family if something unexpected should happen to you. You don’t want to go nuts and buy too much unnecessarily, but you should have enough to ensure that they’re well taken care of when you’re not around. - Dave
 
Dear Dave,
My husband and I are debt-free except for our house. I’ve been having a discussion with a coworker over how much money to allow for fun in your budget. I think $100 for a bottle of wine is okay, but she says something like that is unreasonable. What do you think? - Elizabeth

Dear Elizabeth,
It depends entirely on your financial situation. Paying $100 for a bottle of wine is pretty dumb if you make only $20,000 a year. But what if you make $200,000 a year? Quit worrying and buy the wine! When you have a great income-to-asset ratio—and you’re living debt-free, have control of your money, and are saving and investing for the future—that’s the time to relax and enjoy a few things.

You’ve got to take the whole picture into account. Otherwise, you’ll get caught up in the whole envy and jealousy thing. I know a guy who makes $15 million a year, and recently he bought a $400,000 car. Now, I grew up in a small town in Tennessee. I can’t wrap my head around the idea of a $400,000 automobile. But as a ratio, that’s a very small part of his income. It would be like someone who makes $150,000 a year buying a $400 car.

That’s a good rule of thumb for determining if something constitutes an outrageous purchase. If it’s a big-enough percentage of your income to rock your world and mess with your finances, then you’re spending too much. But to say that a certain item is too expensive or an irresponsible purchase based on price alone, that’s kind of silly. - Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
 

Disclaimer: The content supplied by columnists and letters to the Editor on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such content, statement, or opinions therein. SurfKY News does not necessarily adhere to or endorse content provided by outside non-staff sources.

© Copyright 2014 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, or rewritten without permission. SurfKY News encourages you to share this story by using one of the social media links below.

In Other News...

‘God is Real’ Services Held at Covenant Community Church

MADISONVILLE, Ky. (4/18/14) — Covenant Community Church held its first of five Easter Services Thursday night. Dr.… Read More

Meet The Hopkins County Magistrate Candidates

HOPKINS COUNTY, Ky. (4/10/14) — Sixteen people are running for the office of Hopkins County Magistrate. Read More

Most Read This Week (Site-Wide)

April 16, 2014 18910

UPDATE- Sheriff's Office Following Leads…

in Top Stories by Taylor Riley, SurfKY News Reporter
April 14, 2014 6350

U.S. Bank Hanson on Lockdown Due to Bomb…

in Top Stories by Rita Dukes Smith, SurfKY News Director
April 14, 2014 5259

Pedestrian Killed During Two Vehicle…

in Top Stories by Chris E. King
April 17, 2014 3436

KSP Nabs St. Charles Man Wanted by U.S.…

in Top Stories by Trooper Stu Recke
April 15, 2014 3039

Police Searching for Sureway's 'Baby…

in Top Stories by Taylor Riley, SurfKY News Reporter

Most Read Stories from Hopkins County

April 14, 2014 5259

Pedestrian Killed During Two Vehicle…

in Top Stories by Chris E. King
April 17, 2014 3436

KSP Nabs St. Charles Man Wanted by U.S.…

in Top Stories by Trooper Stu Recke
April 15, 2014 3039

Police Searching for Sureway's 'Baby…

in Top Stories by Taylor Riley, SurfKY News Reporter
April 15, 2014 2699

Multi-Agency Investigation Leads to Drug…

in Top Stories by Lori Blakeley
April 15, 2014 1045

State Approves $500K for Hopkins Archery…

in Top Stories by Rebecca Hanchett

Most Read Stories from Owensboro

April 14, 2014 2060

Grow Garden Grow - Spring Has Sprung

in News by Barbara Cecil Russ
April 15, 2014 1597

Owensboro Police Investigate Auto Accident

in News by Michael Hathaway
April 15, 2014 1264

Owensboro Parks Offers Tennis Lessons

in News by Britni Bunn
April 15, 2014 882

Happenings and Meetings Owensboro

in News by Dennis Beard, SurfKY News
April 14, 2014 669

Owensboro Health Hosts Tours for…

in Top Stories by Dennis Beard, SurfKY News

Most Read Stories from Muhlenberg County

April 16, 2014 2896

Sheriff's Deputies Nab Central City…

in Top Stories by Sheriff Curtis McGehee
April 14, 2014 2516

MCC Staff Shares Good News with…

in Top Stories by Paul McRee, SurfKY News Reporter
April 15, 2014 1898

'Walk Right Back' An Everly Brother's…

in Top Stories by Paul McRee, SurfKY News Reporter
April 15, 2014 1734

Local MCHS Students Train at Job Corps

in Top Stories by Karen Robinson
April 15, 2014 1413

Thumbpickers Unite at Mose Rager Day

in Top Stories by Paul McRee, SurfKY News Reporter

SurfKY News Group, Inc. Central Office & Printing Division
1125 Nebo Rd.  •  Madisonville, KY 42431  •  270.452.2249 (fax)
Main Number: 270.452.2727 (phone)  •  Printing Division Direct Line: 270.821.8600 (phone)

SurfKY Owensboro News Bureau
920 Frederica St. / Suite 210  •  Owensboro, KY 42301  •  270.683-8060 (phone)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social 06social 21social 22social 04social 03