Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Henderson | Lakes | McCracken | Webster

Dave Says – April 21, 2013

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 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.

button coupons
button classifieds

Most Read This Week

November 18, 2014 5017

Couple Charged for Concealing Food in Infant Car…

in Local (Hopkins) Top News by Madisonville Police Department
November 17, 2014 4545

Police Charge Woman for Drug Possession After…

in Local (Hopkins) Top News by Madisonville Police Department
November 21, 2014 4340

Man Accused of Assaulting Coach During Basketball…

in Local (Muhlenberg) Top News by Rita Dukes Smith, SurfKY News Director
November 17, 2014 3403

Bremen Woman Ejected From Vehicle During Kentucky…

in Local (Muhlenberg) Top News by Trooper S.C. Recke
November 19, 2014 3010

Three Injured in Two-Vehicle Collision on South…

in Local (Hopkins) Top News by Gwen Smith
November 15, 2014 2915

18-Year-Old Injured When Pickup Strikes Railroad…

in Local (Hopkins) Top News by Patrolman Falon Graham
November 19, 2014 2765

Two Killed When Vehicle Becomes Airborne, Strikes…

in Local (Owensboro) Top News by Daviess County Sheriff's Office
November 18, 2014 2702

Area Talent to Film Music Video at Merle Travis…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
November 21, 2014 2420

Crashing Dump Trucks in Work Zone Cause Pennyrile…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
November 15, 2014 2223

Two Injured in Two-Car Collision at East Center,…

in Local (Hopkins) Top News by Patrolman Russell Nichols

Stories Trending Today

November 21, 2014 4340

Man Accused of Assaulting Coach During Basketball…

in Local (Muhlenberg) Top News by Rita Dukes Smith, SurfKY News Director
November 21, 2014 2420

Crashing Dump Trucks in Work Zone Cause Pennyrile…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
November 20, 2014 1753

Commercial Truck Accident Closes Northbound Lanes…

in Local (Hopkins) Top News by Chris Rogers
November 21, 2014 1635

Muhlenberg District Court Fines Handed Down

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
November 21, 2014 1317

Madisonville Police Arrest Reports - Nov. 21, 2014

in Hopkins News by Madisonville Police Department
November 21, 2014 1286

Hopkins County Health Department Food Scores Thru…

in Hopkins News by Barry Franklin
November 21, 2014 1184

Muhlenberg's McKenzie Johnson Named Wendy's…

in Local (Muhlenberg) Top News by Steve LeMaster
November 21, 2014 1169

Swimming and Diving Closes Fall Season at Ohio…

in General Sports For All Sites by UK Athletics
November 21, 2014 1096

Mustangs Host Webster County During Scrimmage Game

in Local (Muhlenberg) Top News by Steve LeMaster
November 20, 2014 871

Governor Beshear Proclaims November Adoption…

in General News For All Sites by Cabinet for Health and Family Services

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