Thursday, January 29, 2015
Davis Motor Sales banner ad
Posted on 2/2/14

davesays300 green2KENTUCKY (4/21/13) – This week Dave discusses Making it through medical leave and You lose control with repossession.
 
Dear Dave,
I’ve been on medical leave from my job due to an injury. My doctor recently advised extending the leave another six months, but during this time I wouldn’t be paid. My husband makes $75,000 a year, and we owe $40,000 on our cars. This includes a $30,000 note on one of them. Should we take money out of our 401(k) to make it through the additional time off? - Crystal

Dear Crystal,
Absolutely not! You guys have dug a hole for yourselves, and borrowing from one place to fix another will only make that hole deeper. In cases like this you have to address the core issue. Your income has dropped significantly, so you need to cut your lifestyle to match your new income level.

My advice would be to sell the cars, at least the $30,000 one. There’s no justification for $40,000 worth of vehicles in your garage when you’re living on $75,000. It makes me think you don’t have any savings, either, if you’re talking about raiding your 401(k). Financially speaking, you have no room to breathe right now.

Serious situations call for serious actions. You’ve got to get your lifestyle down to a manageable level until you’re able to work again. And even then, there’s no reason to raise your lifestyle up to your income. Live on less than you make, Crystal. That’s what enables you to save money and be prepared when Murphy comes knocking on your door! - Dave
 
Dear Dave,
I’m having trouble making my auto payment. I owe $20,000, and the car is worth $17,000. Should I allow the bank to repossess it, and could they take a lien against my house if they do? - Jose

Dear Jose,
You bet they could slap a lien on your home. You never want to go through repossession if there’s any way to avoid that scenario. If they repossess, not only does your credit take a huge hit, you also lose control of the price of the car.

After a repo, the lender will sell the car and sue you for the difference. But if you sell the car, you might be able to work out a higher price, leaving you a lesser amount you’d owe for the difference. Chances are if your loan is with General Motors, they won’t work with you on the $3,000 difference. In that situation, you can either negotiate with the bank or go to another bank or credit union and get a small loan for the difference. Just make sure you pay the loan off as quickly as possible.

Keep in mind, too, that even if the car is worth $17,000, it won’t bring that much on the repo lot. More than likely it would sell for about $11,000, leaving you $9,000 in the hole. By giving up control, you’d create a much bigger financial mess. I wouldn’t do that. - 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.

2/6/2014 - posted
3/13 - 16
1 DOW 17,416.85
+225.48 (1.31%)    
2 S&P 2,021.25
+19.09 (0.95%)    
3 NASDAQ 4,683.41
+45.41 (0.98%)    
2/6/2014 - posted
3/13 - 16

Most Read This Week

January 28, 2015 16075

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 23, 2015 9866

Local Church's Faith Restored; 71 Souls Saved…

in Video by Gary Gates, SurfKY News
January 26, 2015 6766

KSP Arrests Two on Child Porn Charges; MPD…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
January 25, 2015 6641

Dean’s List Announced

in Top News For All Sites Touching Hopkins by Joyce Riggs
January 23, 2015 6074

Parents Face Charges after Marijuana Joint Falls…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Jail
January 28, 2015 5809

Nortonville Man Accused of Meth Possession,…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
January 23, 2015 4853

Nortonville Woman Charged for Meth Possession

in Local (Hopkins) Top News by Hopkins County Sheriff's Office/Hopkins County Detention Center
January 26, 2015 4476

School Board Votes 3-2 for Utility Tax

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News

Most Read This Month

January 08, 2015 21689

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

in Top News For All Sites by Madisonville Police Department
January 15, 2015 21426

UPDATE: Fatality Victim's Name Officially Released

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

Stories Trending Today

January 28, 2015 16075

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 28, 2015 5809

Nortonville Man Accused of Meth Possession,…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
January 28, 2015 3716

Tax Recall Committee Formed Day After School…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 28, 2015 2496

Madisonville Police Arrest Reports - Jan. 28, 2015

in Hopkins News by Madisonville Police Department
January 27, 2015 2333

Whitfield Works to Combat Prescription Drug Abuse

in General News For All Sites by Marty Irby
January 28, 2015 2058

Muhlenberg District Court Fines Handed Down

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 29, 2015 2042

UPDATE - Students Have until Jan. 31 to Enter…

in General News For All Sites by James R. Comer
January 28, 2015 1755

Hopkins County Sheriff's Reports Released

in Hopkins News by Hopkins County Sheriff's Office
January 29, 2015 1523

Man Charged with Sexual Abuse of Child

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 28, 2015 1325

Old City Hall Space to be 'First United Bank…

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 28, 2015 1281

Letter to the Editor - Month of Mentors

in Hopkins News by Mallory D. Johnson
January 28, 2015 1270

Kentucky Lottery Results for Tuesday Jan. 27, 2015

in General News For All Sites by Kentucky Lottery