dave says1KENTUCKY (10/20/13) – This week Dave discusses 'Life insurance vs. 529' and 'Better car, better gas mileage?'

Dear Dave,
An insurance salesman told me it’s better to use a life insurance policy for college savings rather than a 529 plan because the child can use it for anything instead of just college. Is that true? - Rusty

Dear Rusty,
Of course that’s what he told you. He’s an insurance salesman!

He was right on one point. If the kid doesn’t go to college, the savings inside an insurance policy can be used for anything. But here’s the catch: There won’t be much waiting for you, because you saved it inside a life insurance policy. The returns stink! Savings inside a life insurance policy won’t get you anywhere near the cash you’d have by investing in a 529 plan.

If you’re going to save for your kids’ college fund, there needs to be lots of talk around the house about actually going to college. It’s not really brainwashing them so much as it’s letting them know the importance of a good education. And they need to know, on no uncertain terms, that the money you’re saving for them is for one thing: college.

What you experienced, Rusty, was an insurance salesman trying to sell insurance. Stay away from it when it comes to saving up for college! - Dave

Dear Dave,
Is it a good idea to sell your car in order to get one that gets better gas mileage? - Trey

Dear Trey,
Only if the other car is really cheap, or cheaper than the one you’re selling. I think it’s funny when people run out and upgrade on their $7,000 car to buy a $30,000 Prius to save gas. Think about it. That’s an extra expenditure of $23,000 to save gas. Where are you planning on driving, to the moon?

Actually saving money is a much better plan than some of the ideas people dream up in the name of saving money. When it comes to things like this, you need to sit down and do the math. Crunch some hard, cold figures and see what happens. “Well, if we got this kind of gas mileage, instead of what we’re getting now, how much money would we save?” But if you spend $5,000 more to save $50 it will take forever to get back the money you’ve already spent.

Getting better gas mileage is good thing, but I wouldn’t recommend spending any more than the value of the car you’re currently driving to make it happen. Moving down in car but up in mileage is a great plan. If you do that, you’ll really start making headway with your money.

This kind of scenario is a simple math thing, Trey. The problem is lots of times people’s emotions get caught up in stuff, and next thing you know they think they have a real reason to buy an expensive, new piece of automotive technology. I call that car fever, and it’ll wreck your finances in a hurry! - 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.

e-max.it: your social media marketing partner

LIKE SurfKY on Facebook - Click here to LIKE us now.

© Copyright 2015 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 on social media.

Posted on 2/2/14
1 DOW 18,040.37
+29.69 (0.16%)    
2 S&P 2,111.73
+4.34 (0.21%)    
3 NASDAQ 5,082.93
+12.90 (0.25%)    

Most Read This Week

May 27, 2015 7338

VIDEO: Sparks Fly Over Hanson Rezoning Issue

by Tammy Holloway, SurfKY News
May 30, 2015 6573

Study of Virus Attack on Cancer Sees Success

by Julie Heflin
May 28, 2015 6438

Four Charged with Burglary for Entering Elderly…

by SurfKY News
May 27, 2015 4185

Midnight Ride on Rabbit Ridge Ends in Jail

by SurfKY News
May 26, 2015 3964

Mandarin House Gearing Up to Open Soon

by Gary Gates, SurfKY News

Most Read This Month

May 15, 2015 11260

New Madisonville Business In Full Operation Soon

by Tammy Holloway, SurfKY News
May 23, 2015 8994

Missing 5-Year-Old Boy Found

by Doreen Dennis, SurfKY News

Stories Trending Now

May 31, 2015 1304

Hot Button Item Draws Hanson Crowd to Zoning,…

by Tammy Holloway, SurfKY News
May 30, 2015 1214

Rods for Relay Raises Funds for ACS Relay for Life

by Tammy Holloway, SurfKY News
May 31, 2015 1147

YMCA Summer Food Service Program

by Kelly Forbes
May 31, 2015 982

Hopkins District Court Fines Handed Down

by SurfKY News
May 31, 2015 952

Survivors, Caregivers, Supporters Gather for…

by Tammy Holloway, SurfKY News
June 01, 2015 835

Authorities Discover Meth Lab While Assisting…

by SurfKY News
May 31, 2015 716

Hopkins County Traffic Advisory

by Keith Todd
May 30, 2015 679

Whitfield Announces Congressional Art Contest…

by Ed Whitfield
June 01, 2015 657

Madisonville Police Arrest Reports Released -…

by SurfKY News
May 31, 2015 597

LG&E and KU Unveil New Outage Texting Option…

by LG&E and KU News