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

December 16, 2014 11155

Coal Miner Fatally Injured in Underground Mining…

in Top News For All Sites by Dick Brown
December 17, 2014 8062

Elderly Couple Found Shot to Death in Muhlenberg

in Local (Muhlenberg) Top News by Trooper Stu Recke
December 17, 2014 6936

Three Men Charged with Burglary

in Local (Hopkins) Top News by Madisonville Police Department
December 19, 2014 5025

Armstrong Mine to Layoff 39 by End of Day

in Top News For All Sites by Rita Dukes Smith, SurfKY News Director
December 19, 2014 4720

Dawson Springs Man Charged with Sexual Abuse of…

in Local (Hopkins) Top News by Detective Sean McCance
December 16, 2014 4331

Highway Crews Pre-Treating Roadways for Potential…

in Hopkins News by Keith Todd
December 18, 2014 4304

Cat Scratching over Dog Ownership Escalates

in Local (Hopkins) Top News by Amber Averitt, SurfKY News
December 19, 2014 4290

Woman Flown to St. Mary's after Two-Car Collision

in Local (Hopkins) Top News by Trooper Stu Recke
December 16, 2014 4058

KFWC Proposes 2015-2016 Deer Season Dates and…

in General News For All Sites by Department of Fish and Wildlife
December 19, 2014 3642

Vehicle Fire Causes Traffic Back-Up on Pennyrile

in Local (Hopkins) Top News by Doreen Dennis

Stories Trending Today

December 20, 2014 2120

KET’s Kentucky Life Segment to Feature Old…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
December 22, 2014 1805

Earlington Church Toy Drive Blesses Community…

in Local (Hopkins) Top News by Tammy Holloway, SurfKY News
December 21, 2014 1773

UK Family Doctor Gives Back, Stays Grounded…

in General News For All Sites by Allison Perry and Elizabeth Adams
December 21, 2014 1563

Final 'Frozen' Performance Set for Tonight at LWC

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
December 21, 2014 1563

AG Conway Announces 2014 Keep Kentucky Kids Safe…

in General News For All Sites by Daniel Kemp
December 21, 2014 1394

Edumedics LLC to Expand Louisville Headquarters,…

in General News For All Sites by Office of the Governor
December 21, 2014 1347

Follow Safe Sleep Recommendations for Infants

in General News For All Sites by Beth Fisher
December 21, 2014 1341

NCM Motorsports Park to Break Ground on Kimberlee…

in General News For All Sites by National Corvette Museum
December 21, 2014 1158

Legislator's Log - Week of Dec. 21, 2014

in General News For All Sites by Brent Yonts
December 21, 2014 1147

Dave Says - Dec. 21, 2014

in General News For All Sites by Dave Ramsey

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