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Dave Ramsey: Making it through medical leave

By Dave Ramsey, Syndicated Writer
Published on Tuesday, April 16, 2013

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Dave Ramsey: Making it through medical leave
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

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