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 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
3/13 - 16
2/6/2014 - posted
3/13 - 16
button coupons
2/6/2014 - posted
3/13 - 16
2/6/2014 - posted
3/13 - 16
button classifieds
2/6/2014 - posted
3/13 - 16

Most Read This Week

December 16, 2014 9199

Coal Miner Fatally Injured in Underground Mining…

in Top News For All Sites by Dick Brown
December 14, 2014 8357

Muhlenberg Pays Homage to U.S. Armed Forces

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
December 12, 2014 7958

Man Allegedly Threatening Medical Staff with…

in Local (Muhlenberg) Top News by Wes Miller
December 17, 2014 5920

Elderly Couple Found Shot to Death in Muhlenberg

in Local (Muhlenberg) Top News by Trooper Stu Recke
December 17, 2014 5880

Three Men Charged with Burglary

in Local (Hopkins) Top News by Madisonville Police Department
December 15, 2014 4749

Hopkins County Woman Charged Second Time in Two…

in Local (Hopkins) Top News by Charles W. Riley II, SurfKY News
December 12, 2014 4677

Man Allegedly Hits Brother with Pickup Truck…

in Local (Muhlenberg) Top News by Wesley Miller
December 15, 2014 4259

Woman Leads Police on High-Speed Chase in Stolen…

in Local (Hopkins) Top News by Madisonville Police
December 12, 2014 3769

Man Accused of Public Intoxication, Stealing…

in Local (Hopkins) Top News by Madisonville Police Department
December 15, 2014 3234

Vehicle Careens down 150 Foot Embankment with…

in Local (Hopkins) Top News by Madisonville Police Department

Stories Trending Today

December 17, 2014 5920

Elderly Couple Found Shot to Death in Muhlenberg

in Local (Muhlenberg) Top News by Trooper Stu Recke
December 17, 2014 5880

Three Men Charged with Burglary

in Local (Hopkins) Top News by Madisonville Police Department
December 17, 2014 2076

Madisonville Police Arrest Reports - Dec. 17, 2014

in Hopkins News by Madisonville Police Department
December 17, 2014 1674

KSP Charges Grayson County Man with Crimes…

in General News For All Sites by Sherry H. Bray
December 17, 2014 1529

Harney-Led Lady Mustangs Top Ohio County

in Local (Muhlenberg) Top News by Steve LeMaster
December 17, 2014 1519

KYTC Announces Winners of 2014 Adopt-a-Highway…

in General News For All Sites by Lisa Tolliver
December 17, 2014 1430

Mustangs Earn District Win over Ohio County

in Local (Muhlenberg) Top News by Steve LeMaster
December 17, 2014 1260

Princeton Road Drug Investigation Results in…

in Local (Hopkins) Top News by Madisonville Police Department
December 17, 2014 926

Change to Holiday Schedule for LBL Administrative…

in Local (Lakes) Top News by Land Between The Lakes
December 17, 2014 900

MFD Summoned to Seminary Street for Garage Fire

in Local (Hopkins) Top News by SurfKY News

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 © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social fbsocial twsocial yt
social gpsocial flrsocial rss