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.

LIKE SurfKY on Facebook - Click here to LIKE us now.

© 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 on social media.

In Other News...

Planning Commission Approves Zoning Amendments for Northside Drive, Hanson Road

MADISONVILLE, Ky. (4/25/15) — Hopkins County Joint Planning Commission met at its regularly scheduled meeting on… Read More

Focus on Hopkins County: Interview with Sheriff Matt Sanderson and Roneshia Evans

HOPKINS COUNTY, Ky. (4/25/15) — Tim Thomas speaks with Hopkins County Sheriff Matt Sanderson and Roneshia Evans with… Read More
1 DOW 18,080.14
+21.45 (0.12%)    
2 S&P 2,117.69
+4.76 (0.23%)    
3 NASDAQ 5,092.08
+36.02 (0.71%)    

Most Read This Week

April 17, 2015 12001

An Open Letter from an Addict

by Olivia Kirks
April 23, 2015 7567

Man Charged with Sodomy, Incest/Victim under 12

by SurfKY News
April 18, 2015 5798

Man Charged with Attempting to Coerce Minor for…

by Madisonville Police Department
April 20, 2015 4902

Nortonville Woman Charged with Meth Possession at…

by Madisonville Police Department
April 24, 2015 4169

UPDATE: Police Can't Substantiate Injured Man…

by Doreen Dennis, SurfKY News

Most Read This Month

April 17, 2015 12001

An Open Letter from an Addict

by Olivia Kirks
April 02, 2015 8820

UPDATE: Madisonville Man Injured in Head-on…

by Doreen Dennis, SurfKY News

Stories Trending Now

April 25, 2015 1212

Above and Beyond: Wade Simons

by Gary Gates, SurfKY News
April 24, 2015 982

Elementary Girls in Good GRACES with Unique…

by Tammy Holloway, SurfKY News
April 25, 2015 764

Planning Commission Approves Zoning Amendments…

by Tammy Holloway, SurfKY News
April 25, 2015 689

Focus on Hopkins County: Interview with Sheriff…

by Tim Thomas
April 25, 2015 568

Webster County Traffic Advisory

by Keith Todd
April 25, 2015 567

Superheroes ‘Bowl for Kids Sake’

by Tammy Holloway, SurfKY News
April 25, 2015 494

Tobacco Quitline Callers Eligible for Extra…

by Beth Fisher
April 25, 2015 455

Happenings and Meetings - Hopkins County

by Amber Averitt, SurfKY News
April 25, 2015 446

Keeping the Faith - 'To Die Trying'

by Ronnie McBrayer
April 25, 2015 417

Hooked on Science - 'Magnetic Money'

by Jason Lindsey