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

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. your social media marketing partner

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.

3/13 - 16

Weather Sponsored by

1 DOW 16,472.37
+200.36 (1.23%)    
2 S&P 1,951.36
+27.54 (1.43%)    
3 NASDAQ 4,707.77
+80.69 (1.74%)    

Stock Report Sponsored by

3/13 - 16

Most Read This Week

September 30, 2015 10213

Dawson Woman Dead After Princeton Factory…

by SurfKY News
October 01, 2015 6930

UPDATE: Madisonville Woman Charged after Bank…

by Doreen Dennis, SurfKY News
September 29, 2015 6049

UPDATED: Witness Describes Crash at Dawson…

by Doreen Dennis, SurfKY News
September 28, 2015 4571

Woman Charged with Methamphetamine Possession…

by SurfKY News
September 30, 2015 4277

Four Arrested After Allegedly Exposing Children…

by SurfKY News

Most Read This Month

September 16, 2015 12210

Mining Accident Fatality - Update

by Doreen Dennis, SurfKY News
September 30, 2015 10213

Dawson Woman Dead After Princeton Factory…

by SurfKY News

Stories Trending Now

October 03, 2015 1425

Happenings, Meetings Listed for Following Week

by Tammy Holloway, SurfKY News
October 03, 2015 1084

Chemotherapy: New Advances, A New Age

by KET
October 04, 2015 1025

Learning More About Childhood Cancer

by KET
October 03, 2015 1012

Hopkins District Court Fines Handed Down

by SurfKY News
October 03, 2015 810

Weather Folklore - Persimmon Seeds, Woolly Worms

by SurfKY News
October 03, 2015 791

ColorFall Kicks off Fall Color Season in Kentucky

by SurfKY News
October 03, 2015 763

Proposed Restaurant Tax Would Promote Tourism,…

by Doreen Dennis, SurfKY News
October 03, 2015 586

Hooked on Science - 'Singing Rod'

by SurfKY News
October 04, 2015 580

Dave Says - Oct. 4, 2015

by SurfKY News
October 04, 2015 526

Outdoor Truths - Oct. 4, 2015

by SurfKY News