Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Henderson | Lakes | McCracken | Webster
Impressions pre-reset: 420826 Clicks pre-reset: 872

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.

3/13 - 16
button coupons
3/13 - 16
3/13 - 16
button classifieds

In Other News...

Muhlenberg County Public Libraries Food for Fines /Pay It Forward

MUHLENBERG COUNTY, Ky. (11/24/14) — This holiday season the Muhlenberg County Public Libraries will be collecting… Read More

KSP Pursuit Leads to Multiple Charges

CADIZ, Ky. (11/24/14) — According to a Kentucky State Police report, on Nov. 23, 2014, at 12:08 a.m., Trooper Daniel… Read More
3/13 - 16

Most Read This Week

November 21, 2014 6068

Man Accused of Assaulting Coach During Basketball…

in Local (Muhlenberg) Top News by Rita Dukes Smith, SurfKY News Director
November 18, 2014 5290

Couple Charged for Concealing Food in Infant Car…

in Local (Hopkins) Top News by Madisonville Police Department
November 22, 2014 3706

One Injured in Two Vehicle Collision in Greenville

in Local (Muhlenberg) Top News by Miria Thomas
November 21, 2014 3699

Crashing Dump Trucks in Work Zone Cause Pennyrile…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
November 19, 2014 3675

Two Killed When Vehicle Becomes Airborne, Strikes…

in Local (Owensboro) Top News by Daviess County Sheriff's Office
November 19, 2014 3631

Is Bankruptcy Your Best Option?

in General News For All Sites by SurfKY News
November 18, 2014 3598

Area Talent to Film Music Video at Merle Travis…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
November 19, 2014 3145

Three Injured in Two-Vehicle Collision on South…

in Local (Hopkins) Top News by Gwen Smith
November 21, 2014 2937

Muhlenberg District Court Fines Handed Down

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
November 21, 2014 2687

Madisonville Police Arrest Reports - Nov. 21, 2014

in Hopkins News by Madisonville Police Department

Stories Trending Today

November 22, 2014 1473

Kentucky Filmmaker to Release New Horror in March

in Top News For All Sites by Amber Averitt, SurfKY News
November 23, 2014 1346

Motor Fuels Tax Rate to Decline by 4.3 Cents Per…

in Top News For All Sites by James Isaman
November 24, 2014 1294

Two Charged for Possession of Meth After…

in Local (Muhlenberg) Top News by MCSO/PIO Alex Piper
November 23, 2014 1262

Light of Chance, Inc. Re-Launches New, Innovative…

in Hopkins News by Eric Logan
November 23, 2014 1212

Flavorful Twist on a Sunday Brunch Staple

in General News For All Sites by SurfKY News
November 23, 2014 1186

KSP Post 2 Thanksgiving Holiday Enforcement

in General News For All Sites by Trooper S. C. Recke
November 23, 2014 1083

Holiday Menu Planning for First-Time Hosts

in General News For All Sites by SurfKY News
November 23, 2014 956

Legislator's Log - Week of Nov. 23, 2014

in General News For All Sites by Brent Yonts
November 23, 2014 954

Wreaths to Honor the Fallen at State Veterans…

in General News For All Sites by Lisa Aug
November 23, 2014 903

Dave Says - Nov. 23, 2014

in General News For All Sites by Dave Ramsey

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