Dave Ramsey is a money management expert, national radio personality and best-selling author. His nationally syndicated radio program, The Dave Ramsey Show, is heard by 4.5 million listeners each week on more than 450 radio stations throughout the United States.
How do you feel about buying travel insurance when booking cruises and flights through websites like Expedia?
—Anna via Twitter
Dave Says: Travel insurance isn’t a bad idea if you’re sinking some serious bucks into a vacation. A few years ago, my wife and I went on a two-week cruise in and around Europe. It was a rather pricey adventure, so we bought travel insurance. It’s pretty cheap stuff. Plus, there’s always the chance something unexpected—like an illness, or the death of a loved one—could occur. Things like that would be bad enough without losing a big chunk of money you’d already put down on a really nice trip.
I don’t bother with travel insurance, though, when it comes to little things like booking a flight or renting a car. So really it comes down to a matter of ratios. What amount of money constitutes a big, hairy deal in your life?
If a $3,000 cruise is a lot of money to you, then you should get the travel insurance. If booking a $200 flight is a big deal, you should probably just forget about flying for a while!
Your house is an asset
Why do you recommend saving before paying off your mortgage? I’ve always thought of a house as a liability that should be paid off as quickly as possible.
—Mark in Columbus, Ohio
Dave Says: You’re off base on this one. The truth is that a house is an asset, and the mortgage is a liability. That’s straight from the pages of Accounting 101. There are folks out there who will try to tell you a house is a liability because it costs you money. In most instances, that house will make you more money than it cost when you sell it, so it’s usually considered an asset.
I’ve met 70-year-olds with houses that are paid for and no money in the bank. It’s a really sad situation. That’s why I want people to work on having an emergency fund and 15 percent of their income going into retirement first. Then, take everything above that and put it toward paying off the house as fast as possible.