Dave Says - Examine your business needs carefully

Dear Dave,

I own a small company, and we lease the building we operate from. As an entrepreneur, how do you know when it is time to stop leasing and buy a place of your own?

Peter

Dear Peter,

You should only buy a building when you have solid track record of success, and a really good idea of what your building needs will be. A growing business is always a good thing, but you don’t want to focus too much on real estate and not enough on generating revenue and managing that growth intelligently. You would also want to make sure you’re going to be in anything you buy for a good, long while.

I’m a big fan of leasing the first few years after starting your own business. It’s even better if you can work out of your home, but I understand that’s not always practical. Down the road, you can choose to lease with an option to buy, or in the right situation, just buy a building.

Remember, make sure you do it all with cash. Don’t add debt to the equation!

—Dave

Dear Dave,

Life insurance is one of those things I always said I would get around to buying someday, but for various reasons I just haven’t done it yet. Is there ever a time when it is too late to get life insurance?

Angie

Dear Angie,

First of all, I only recommend level term life insurance. It’s fairly easy to get until around age 70, depending on your overall health situation. Once you get into your seventies and beyond, however, it can be more difficult to find reasonably priced coverage.

I recommend that most people have 10 to 12 times their annual income in term life insurance. To be honest, though, you really shouldn’t need life insurance if you’re 70 or older. At that point, if you’ve saved and invested wisely over the years, you can be self-insured. By this, I mean you’ve got enough money in savings and investments to cover funeral expenses—plus enough for a spouse to live on comfortably after you’re gone.

Don’t wait any longer, Angie. Take care of this today!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.