Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Henderson | Lakes | McCracken | 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 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 by using one of the social media links below.

button coupons
button classifieds

In Other News...

Wade Retires from Murray-Calloway County Hospital after 44 Years of Service

MURRAY, Ky. (1/24/15) — When Kathy Wade started at Murray-Calloway County Hospital as a switchboard operator in 1970,… Read More

MCCH Offers Free Screenings at the Love Your Heart Health Screening Event on Feb. 6

MURRAY, Ky. (1/25/15) — Murray-Calloway County Hospital encourages you to Love Your Heart in recognition of American… Read More

Most Read This Week

January 19, 2015 8717

Two-Year-Old Child Dies after Being Struck by…

in Top News For All Sites by Paul Ray
January 19, 2015 8611

UPDATE - Lady Mustangs Fall to South Warren

in Local (Muhlenberg) Top News by Steve LeMaster
January 23, 2015 6908

Local Church's Faith Restored; 71 Souls Saved…

in Video by Gary Gates, SurfKY News
January 22, 2015 6724

Nortonville Man Accused of Selling Drugs near…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail
January 20, 2015 6449

Bridal, Prom, Pageant Expo Planned for February…

in Hopkins News by Dana Brown
January 23, 2015 5249

Parents Face Charges after Marijuana Joint Falls…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail
January 21, 2015 5068

KYDOT Pre-Treating Roads Thursday in Antipation…

in Top News For All Sites by Keith Todd
January 21, 2015 4638

Man Arrested after Allegedly Nodding off on Baby…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail
January 22, 2015 4464

MCEA Head: Further School Mergers Might Ease…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
January 18, 2015 4120

Single Vehicle Injury Collision On Cleaton Road

in Local (Muhlenberg) Top News by Stu Recke, KSP

Stories Trending Today

January 23, 2015 1599

School Board Hears Public Comments Regarding…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 24, 2015 1268

Five Injured in Two-Vehicle Collision

in Local (Muhlenberg) Top News by Chris E. King
January 24, 2015 1119

Happenings, Meetings Listed for Hopkins County

in Hopkins News by Amber Averitt, SurfKY News
January 24, 2015 1007

Spelling Bee Contest Winners Announced

in Local (Hopkins) Top News by Joyce Riggs
January 24, 2015 924

Kentucky 2014 Highway Fatality Figures Released

in General News For All Sites by Keith Todd
January 24, 2015 878

PSC Bars $54 Million in Kentucky Power Fuel Cost…

in General News For All Sites by Andrew Melnykovych
January 24, 2015 850

Keeping the Faith - 'What It's Good For'

in General News For All Sites by Ronnie McBrayer
January 24, 2015 790

Burrough: Tech Center Construction on Schedule

in Local (Hopkins) Top News by Tammy Holloway, SurfKY News
January 24, 2015 779

Busting the Myths of Leadership

in General News For All Sites by David Taylor
January 24, 2015 759

Hooked on Science - Feather Balance

in General News For All Sites by Jason Lindsey

SurfKY News Group, Inc.
Corporate Office & Studio
1125 Nebo Rd.  •  Madisonville, KY 42431
270.452.2727 (phone)
  •  270.452.2249 (fax)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2015 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social fbsocial twsocial yt
social gpsocial flr subscribevideoitunessocial rss