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.

Most Read This Week

November 24, 2015 10245

Distillery to Operate in Old Graham School…

by SurfKY News
November 21, 2015 8915

Injuries Result from Beulah Road Accident

by Doreen Dennis, SurfKY News
November 23, 2015 7768

Relative Charged with Murder, Arson in Deaths of…

by SurfKY News
November 24, 2015 4880

Ohio County Most Wanted - Top 10 - November 24

by SurfKY News
November 24, 2015 3451

Man Injured When Vehicle Collides with Deer

by SurfKY News

Most Read This Month

November 17, 2015 16374

Ohio County Most Wanted - Top 10 - November 17

by SurfKY News
November 18, 2015 14591

Runaway Teen Returns on His Own

by SurfKY News

Stories Trending Now

November 27, 2015 3128

Madisonville Man Charged with Attempted Murder…

by SurfKY News
November 28, 2015 3019

Woman Charged with Counterfeit Money Leads to…

by SurfKY News
November 28, 2015 2914

Local Teen Hospitalized after Officer-Involved…

by Doreen Dennis, SurfKY News
November 28, 2015 2244

KSP Arrests Ohio Co. Man on Drug Charges

by SurfKY News
November 27, 2015 1656

First United Bancorp Set to Purchase Town &…

by SurfKY News
November 27, 2015 1191

Farm City Breakfast Recognizes Importance of…

by Tammy Holloway, SurfKY News
November 27, 2015 1122

Hooked on Science - Pinecone Hygrometer

by SurfKY News
November 27, 2015 896

Webster County Man Injured in Two-Vehicle Crash

by SurfKY News
November 27, 2015 810

Salvation Army Rings in Official Christmas…

by Tammy Holloway, SurfKY News