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

Dave Says – Nov. 3, 2013

dave says1KENTUCKY (11/3/13) – This week Dave discusses 'When do I need umbrella insurance?' and 'Debt snowball and rental property'

Dear Dave,
At what level of net worth should someone consider umbrella insurance? - Matt

Dear Matt,
I think it’s something you should consider if you have a net worth of $500,000 or greater. But first you should be clear on what net worth really means.

Net worth is what you own minus what you owe. So the fact that you make a million dollars a year is not the determining factor in whether or not you’re a millionaire. The only people who use that definition are the financially uninformed and politicians who twist things around and throw out catch phrases designed to further their own agendas.

That being said, I would get umbrella insurance, which is extra liability insurance, when you reach the half-million mark in net worth. Prior to that I’d suggest carrying $500,000 worth of liability on your homeowner’s, car insurance and any other policies that have liability attached to them. Once you reach and cross that $500,000 threshold in net worth, however, I’d advise picking up another $1 million in liability insurance, called an umbrella policy, that attaches to the top of that and covers everything for an additional $1 million.

It’s a great buy, Matt. You can get it for about $200 a year in most states. - Dave

Dear Dave,
Should rental property debt be included in the debt snowball? - Matthew

Dear Matthew,
No, it should not. The debt snowball is Baby Step 2 in my plan, where you stop saving and pay off all debt except for your home—and I would include rental properties in there—from smallest to largest. Prior to this, you should start with Baby Step 1, which is saving up a starter emergency fund of $1,000.

As a reminder, Baby Step 3 is going back and fully funding your emergency fund with three to six months of expenses. Notice that I said expenses, not income. After that, Baby Step 4 is investing 15 percent of your household income in Roth IRAs and other pre-tax retirement plans, and Baby Step 5 means setting aside college money for the kids.

Baby Step 6 is where you pay off your home, and Baby Step 7 is when you relax, build wealth, and give. Again, Baby Step 6 would include any rental properties that weren’t bought and paid for with cash. My advice would be to pay off your home before taking care of the rental properties, and that’s simply a risk management perspective. Now, if you owe just $30,000 on your rental properties but still have a $3 million mortgage hanging over your head, you might go ahead and knock out the rental properties first.

Think about it this way, Matthew. Which would you rather lose in a worst-case scenario: your home or your rental properties? If they’re in the same general range of debt, I’m going to pay off the home first and the rental properties last. - 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.

Posted on 2/2/14
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Posted on 1/31/2014
2/6/2014 - posted
2/18 - 553 clicks
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Posted on 1/31/2014
2/6/2014 - posted
2/18 - 553 clicks
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Posted on 1/31/2014
2/6/2014 - posted
2/18 - 553 clicks

In Other News...

Crime Stoppers Fugitive of the Week – April 16, 2014

HOPKINSVILLE, Ky. (4/16/14) — The above photos are local fugitives that are currently being sought by local… Read More

Madisonville Police Arrest Reports ̶ April 15, 2014

MADISONVILLE, Ky. (4/15/14) — The Madisonville Police Department released the following arrest reports Tuesday, April… Read More
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Genovese - http://www.mchky.org/staff/bio.php?doc_id=35646&sub= Lewis - http://www.mchky.org/getpage.php?name=bracken_lewis Holt - http://www.mchky.org/getpage.php?name=drholt Napier - http://www.mchky.org/getpage.php?name=dr.napier_page Newman - http://www.mchky.org/staff/bio.php?doc_id=50353
Posted on 1/31/2014
2/6/2014 - posted
2/18 - 553 clicks

Most Read This Week (Site-Wide)

April 16, 2014 16716

UPDATE- Sheriff's Office Following Leads…

in Top Stories by Taylor Riley, SurfKY News Reporter
April 14, 2014 5435

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

in Top Stories by Rita Dukes Smith, SurfKY News Director
April 14, 2014 4987

Pedestrian Killed During Two Vehicle…

in Top Stories by Chris E. King
April 13, 2014 4237

One Dead in Two Vehicle Head On Collision

in Top Stories by Chris E. King
April 12, 2014 2690

One Injured in Two Vehicle Accident in…

in Top Stories by Rita Dukes Smith, SurfKY News Director

Most Read Stories from Hopkins County

April 14, 2014 4987

Pedestrian Killed During Two Vehicle…

in Top Stories by Chris E. King
April 13, 2014 4237

One Dead in Two Vehicle Head On Collision

in Top Stories by Chris E. King
April 12, 2014 2690

One Injured in Two Vehicle Accident in…

in Top Stories by Rita Dukes Smith, SurfKY News Director
April 15, 2014 2623

Police Searching for Sureway's 'Baby…

in Top Stories by Taylor Riley, SurfKY News Reporter
April 12, 2014 2059

Muhlenberg Man Injured in Hopkins County…

in Top Stories by Chris E. King

Most Read Stories from Owensboro

April 14, 2014 1385

Grow Garden Grow - Spring Has Sprung

in News by Barbara Cecil Russ
April 13, 2014 849

Two Daviess County Men Busted for…

in Top Stories by Scott Gibbs
April 15, 2014 774

Owensboro Police Investigate Auto Accident

in News by Michael Hathaway
April 15, 2014 616

Owensboro Parks Offers Tennis Lessons

in News by Britni Bunn
April 14, 2014 519

Owensboro Health Hosts Tours for…

in Top Stories by Dennis Beard, SurfKY News

Most Read Stories from Muhlenberg County

April 13, 2014 2361

Muhlenberg 4-H is Buzzing

in Top Stories by Janie Culton
April 14, 2014 1764

MCC Staff Shares Good News with…

in Top Stories by Paul McRee, SurfKY News Reporter
April 15, 2014 1030

Local MCHS Students Train at Job Corps

in Top Stories by Karen Robinson
April 15, 2014 1024

'Walk Right Back' An Everly Brother's…

in Top Stories by Paul McRee, SurfKY News Reporter
April 15, 2014 802

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