Thursday, January 29, 2015
Davis Motor Sales banner ad

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.

Started 11/8/2013
Started 11/8/2013

In Other News...

Henderson County Squads Remain Second in State Polls

LOUISVILLE, Ky. (1/27/15) — Each Henderson County basketball team remains ranked second in this week's Kentucky… Read More

Letter to the Editor - Month of Mentors

HOPKINS COUNTY, Ky. (1/28/15) — January is National Mentoring Month. We would like to acknowledge our volunteers to let… Read More
Started 11/8/2013
Started 11/8/2013

Most Read This Week

January 28, 2015 13623

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 23, 2015 9648

Local Church's Faith Restored; 71 Souls Saved…

in Video by Gary Gates, SurfKY News
January 22, 2015 7550

Nortonville Man Accused of Selling Drugs near…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail
January 21, 2015 7190

KYDOT Pre-Treating Roads Thursday in Antipation…

in Top News For All Sites by Keith Todd
January 22, 2015 6798

MCEA Head: Further School Mergers Might Ease…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
January 25, 2015 6095

Dean’s List Announced

in Top News For All Sites Touching Hopkins by Joyce Riggs
January 26, 2015 6046

KSP Arrests Two on Child Porn Charges; MPD…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
January 23, 2015 5974

Parents Face Charges after Marijuana Joint Falls…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail

Most Read This Month

January 08, 2015 21005

Woman Claiming to be 'Lady Gaga' Tours Town in…

in Top News For All Sites by Madisonville Police Department
January 15, 2015 20842

UPDATE: Fatality Victim's Name Officially Released

in Top News For All Sites by Doreen Dennis, SurfKY News

Stories Trending Today

January 28, 2015 13623

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 28, 2015 4773

Nortonville Man Accused of Meth Possession,…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
January 26, 2015 3939

School Board Votes 3-2 for Utility Tax

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 27, 2015 3669

Hopkins County Grand Jury Indictments

in Local (Hopkins) Top News by Karen McKnight, Hopkins Circuit Clerk
January 28, 2015 2541

Tax Recall Committee Formed Day After School…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 27, 2015 2000

Madisonville Police Arrest Reports - Jan. 27, 2015

in Hopkins News by Madisonville Police Department
January 27, 2015 1570

NHRA North Central Division Names Dallas Jones…

in Local (Muhlenberg) Top News by Telia Butler
January 27, 2015 1568

Whitfield Works to Combat Prescription Drug Abuse

in General News For All Sites by Marty Irby
January 27, 2015 1550

Power of a Positive Attitude

in General News For All Sites by SurfKY News
January 27, 2015 1522

Restless Legs Syndrome Affects Many

in General News For All Sites by SurfKY News
January 28, 2015 1261

Madisonville Police Arrest Reports - Jan. 28, 2015

in Hopkins News by Madisonville Police Department
January 27, 2015 1209

Practice Weather-Related Pet Safety

in General News For All Sites by SurfKY News