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.

Faces & Stories: The People of Land Between the Lakes

In Other News...

Large Crowd Turns Out for Annual Kiwanis BBQ

MADISONVILLE, Ky. (10/31/14) — Many turned out Thursday to support Kiwanis, as the oldest civic organization in… Read More

Golden Arches Added to City’s Eastern Skyline; Proximity to I-69 Favored

MADISONVILLE, Ky. (10/30/14) — The famous 'Golden Arches' has opened another location in Madisonville, adding to its… Read More

Most Read This Week

October 29, 2014 9108

UPDATE: Medical Examiner's Official Report…

in Local (Lakes) Top News by Dennis Thomas
October 27, 2014 6227

Earlington Woman Charged With Burglary for…

in Local (Hopkins) Top News by Madisonville Police Department
October 29, 2014 4450

UPDATE: Two More Arrested for Meth at Area Motel

in Local (Hopkins) Top News by Trooper Stu Recke
October 27, 2014 4448

Baptist Health Madisonville Performs Baptist…

in Local (Hopkins) Top News by Kristy Quinn
October 28, 2014 4297

UPDATE: 'Runner' Ran Home; Family Happy

in Hopkins News by Lisa Crook
October 29, 2014 4238

Central City Businessman Indicted by Grand Jury…

in Top News For All Sites by Charles W. Riley II, SurfKY News
October 28, 2014 3643

UPDATE: Extended to Wednesday; Heaven's Gates and…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
October 27, 2014 3441

Woman Charged for Domestic Assault with Scissors,…

in Local (Hopkins) Top News by Madisonville Police Department
October 28, 2014 3339

Hopkins County Grand Jury Indictments

in Hopkins News by Karen McKnight
October 30, 2014 3031

Three Injured When Pickup Truck Overturns

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

Stories Trending Today

October 30, 2014 3031

Three Injured When Pickup Truck Overturns

in Local (Hopkins) Top News by Rita Dukes Smith, SurfKY News Director
October 30, 2014 2648

UPDATE: Missing Elderly Couple Found

in Local (Hopkins) Top News by Chief William C. Crider
October 30, 2014 1800

Man Charged with Criminal Abuse of 2-Year-Old Girl

in Local (Hopkins) Top News by Lt. Charles Young II
October 30, 2014 1724

Man Accused of Using Bass Guitar to Strike…

in Local (Hopkins) Top News by Madisonville Police Department
October 30, 2014 1424

Madisonville Police Arrest Reports - Oct. 30, 2014

in Hopkins News by Madisonville Police Department
October 30, 2014 1307

Political Races Affecting Hopkins County

in Local (Hopkins) Top News by SurfKY News
October 30, 2014 1267

Man Charged for Criminal Trespassing at Cross…

in Local (Hopkins) Top News by Madisonville Police Department
October 30, 2014 1116

Bond, Conditions Set for Central City Man Accused…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
October 30, 2014 1084

Golden Arches Added to City’s Eastern Skyline;…

in Local (Hopkins) Top News by Tammy Holloway, SurfKY News
October 30, 2014 1083

MCTI to Present 'Anne of Green Gables'

in Local (Muhlenberg) Top News by Paul McRee, 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