Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Fayette | Henderson | Lakes | McCracken | Warren | 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.

In Other News...

McConnell, Grimes Lead Off Red, White and Blue Picnic

OWENSBORO, Ky. (8/27/14) — Despite the blistering heat, a moderate sized crowd turned out Tuesday evening for the… Read More

Owensboro Police Conduct Investigations

OWENSBORO, Ky. (8/26/14) — Owensboro Police are conducting the following investigations: A report of second degree… Read More

Most Read This Week (Site-Wide)

August 22, 2014 6057

Two Busted for Meth in Central City

in Top Stories by Martha Clark
August 25, 2014 4135

14-Year-Old Suffers Gunshot Wound; Air…

in Top Stories by Ami Clayton, SurfKY News
August 25, 2014 3588

Flooded Central City Church's Seven Day…

in Top Stories by Paul McRee, SurfKY News
August 25, 2014 3156

Camper Stolen in Utica Recovered in…

in Top Stories by Martha Clark
August 25, 2014 2659

Daviess County Health Department…

in News by Dennis Beard, SurfKY News

Most Read Stories from Hopkins County

August 25, 2014 4135

14-Year-Old Suffers Gunshot Wound; Air…

in Top Stories by Ami Clayton, SurfKY News
August 24, 2014 2231

Two Injured in Two-Vehicle Collision…

in Top Stories by Officer Jeff Miller
August 25, 2014 2229

Former Co-Workers Trying to Raise Money…

in Top Stories by Rita Dukes Smith, SurfKY News Director
August 25, 2014 2221

Two Injured in Two-Vehicle Collision Near…

in Top Stories by Trooper Stu Recke
August 26, 2014 1621

Two People Injured When Vehicle Overturns…

in Top Stories by Matt Sanderson

Most Read Stories from Owensboro

August 25, 2014 2659

Daviess County Health Department…

in News by Dennis Beard, SurfKY News
August 25, 2014 2628

44th Mount Saint Joseph Picnic is Sunday,…

in News by Jennifer Kaminski
August 25, 2014 2489

GRADD Seeking Ombudsman Program Volunteers

in News by Woody Maglinger
August 26, 2014 1719

Owensboro Board of Commissioners…

in News by Beth Cecil
August 26, 2014 1377

City Street Closures on Strawbridge and…

in News by Abby Shelton

Most Read Stories from Muhlenberg County

August 22, 2014 6057

Two Busted for Meth in Central City

in Top Stories by Martha Clark
August 25, 2014 3588

Flooded Central City Church's Seven Day…

in Top Stories by Paul McRee, SurfKY News
August 25, 2014 3156

Camper Stolen in Utica Recovered in…

in Top Stories by Martha Clark
August 25, 2014 2237

Mustangs Marching Classic

in Top Stories by Charles W. Riley II, SurfKY News
August 25, 2014 2135

Job Corp Celebrates 50th Anniversary

in Top Stories by Charles W. Riley II, SurfKY News

SurfKY News Group, Inc. Central Office & Printing Division
1125 Nebo Rd.  •  Madisonville, KY 42431  •  270.452.2249 (fax)
Main Number: 270.452.2727 (phone)  •  Printing Division Direct Line: 270.821.8600 (phone)

SurfKY Owensboro News Bureau
920 Frederica St. / Suite 210  •  Owensboro, KY 42301  •  270.683-8060 (phone)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social 03social 04social 22social 21social 06