Davis Motor Sales banner ad

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.

© 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
springhour

In Other News...

Snow Routes and Street Maintenance

OWENSBORO, Ky. (3/5/15) — City Street Department maintenance crews have been busy clearing roads. The City of Owensboro… Read More

Owensboro Transit System – Route Information / Routeshout

OWENSBORO, Ky. (3/6/15) — The Owensboro Transit System route maps are available for download. In addition, the… Read More

Most Read This Week

March 02, 2015 9634

Madisonville Teen Faces Numerous Drug Charges

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
March 03, 2015 5877

Three Arrested during Traffic Stop

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
March 05, 2015 4612

State of Emergency Declared for Hopkins County

in Local (Hopkins) Top News by Leslie Curneal
March 05, 2015 4453

UPDATE: I-24 Open Between 50-45 MM

in Top News For All Sites Touching Hopkins by Keith Todd
March 03, 2015 4037

Sacramento Man Charged with Rape, Sodomy

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
March 02, 2015 3824

HCSO, MPD Join to Bust Alleged Drug Trafficking…

in Local (Hopkins) Top News by Hopkins County Sheriff's Office

Most Read This Month

February 12, 2015

UPDATE: Name of Pennyrile Fatality Officially…

in Top News For All Sites Touching Hopkins by Doreen Dennis, SurfKY News
February 16, 2015

UPDATE: State of Emergency Declared for Kentucky

in Local (Hopkins) Top News by Rita Dukes Smith, SurfKY News Director

Stories Trending Today

March 05, 2015 4612

State of Emergency Declared for Hopkins County

in Local (Hopkins) Top News by Leslie Curneal
March 05, 2015 4453

UPDATE: I-24 Open Between 50-45 MM

in Top News For All Sites Touching Hopkins by Keith Todd
March 05, 2015 2746

Deep Snowfall Stalls Western Kentucky

in Top News For All Sites by SurfKY News
March 05, 2015 2140

Muhlenberg Issues State of Emergency Under…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
March 05, 2015 1713

Dyno Nobel Makes $1,600 Donation to Want Not…

in Top News For All Sites Touching Hopkins by Tammy Holloway, SurfKY News
March 05, 2015 1517

Governor Declares State of Emergency

in Top News For All Sites by Office of the Governor
March 05, 2015 1329

KYDOT Believes as Many as 200 Vehicles Stuck on…

in General News For All Sites by Keith Todd
March 05, 2015 1265

UPDATE - Lady Mustangs Trample Lady Tigers in…

in Local (Muhlenberg) Top News by Steve LeMaster
March 04, 2015 1254

I-24 Traffic Backed Up From 46-65 MM Due to…

in Local (Lakes) Top News by Keith Todd
March 04, 2015 1222

Gov. Beshear Warns Kentuckians to Prepare for…

in General News For All Sites by Office of the Governor