Skip to comments.Dave Says Let Your Employer Pay
Posted on 06/05/2012 11:10:41 AM PDT by Kaslin
I bought a car a few years ago and purchased new wheels for $1,100 on credit. I havent paid the bill, and now collectors are trying to settle with me. I think the statute of limitations has expired. Should I still pay the debt?
I always look at things like this through two or three lenses. One has to do with your credit. Another is the legal aspect, and the third is this: Whats the right thing to do?
The right thing to do is pay the debt. You took the wheels, so you need to pay for them. You could probably scratch together $1,100 and make this whole thing go away. Im pretty sure a lot of legal and collection costs, as well as interest, have been added over the years. But at this point, you can probably get them to settle for the original amount owed.
Now, can they still chase you under the statute of limitations? Thats a matter of state law, and since Im not an attorney, Im not up to speed on every law from state to state. Besides, I dont like the idea of using that kind of argument to get someone out of debt.
Honestly, this is the real world were talking about, Brian. Youre going to have to deal with this, because even if there is a statute of limitations, most collectors will still try to chase you to the ends of the earth. And for $1,100 you can get them out of your life and erase a big black mark from your credit. Its always better to have a transaction listed as bad debt that has been settled rather than simply bad debt.
And by the way, its also the right thing to do!
Im a doctor, and Ive been at my current job for six months. Im scheduled to make $190,000 this year, and my husband and I will be debt-free in a few months. My employer provides disability insurance free of charge, but if I stop working for this company Ill no longer have the insurance. Should I get my own policy instead of the one at work?
Unless you become seriously ill, its easy to get long-term disability insurance. You could find it through some of the medical associations, or you could find it the way your employer found the policy you have nowthrough an independent broker who shops and makes a market for you.
But at this point, I wouldnt run out and buy another policy. If youre getting it free of charge, let your employer handle the work. Then, if you ever sense things are going downhill at your job, you can start shopping for a long-term disability policy at that point. Right now, theres no reason to pay out of pocket or have a second one.
She should possibly look into personal individual disability income coverage to supplement the employer’s benefit. It is likely the employer coverage is capped at $5,000/month. At $190,000 of salary, and possibly retirement plan contributions being made by the employer, she is maybe covered for 40% or less of her income. She should be able to get up to about 70% of her income in coverage. She can elect a longer waiting period of 6 months or a year to bring the cost down. Also, the coverage provided by the employer would cause the benefits to be taxable, whereas any individual coverage would not be taxable income.
Sorry Dave, but that was a terrible answer on the disability question. The first thing she should do is ask the employer if the premium is being deducted. If it is her claim is taxable and she will face quite a shortage. If it is then she should DEFINITELY buy more individually.
It’s always better to tax the seed than the harvest! Pay for disability insurance with after tax dollars, not pre-tax.
AFLAC has disability. And of course it’s paid in addition to any other payments irrespective of source.
Did you mean to say “pay with pre tax not after tax dollars”?
No, you want to pay for disability insurance with after-tax dollars, not pre-tax dollars. If you pay with pre-tax dollars, then the benefits are taxable. Presumably the monthly income benefit on claim is A LOT more than the premiums paid in over time. If the employer pays for the disability insurance premiums, and there is no income to the employee for the premium cost, then the benefits are taxable. One should always take advantage of the employer’s benefits package, but if there is an upper limit to the benefit that is nowhere near a person’s actual income, then it is good to look into getting additional coverage.
Especially in the situation shown in the thread post - if the doctor gets disabled and cannot work, and her employer coverage is limited to, say, 40% of her income, AND the benefits are taxable, (maybe nets her 30% or less of her income), then they still have the loan payments to make, and have much less money available to live on.
If you work for a sweat shop like Chase, you aren’t allowed to have supplemental insurance like AFLAC. (I imagine the coming Obamacare has something to do with this.)
Hogwash. Supplemental insurance is not medical insurance. Anyone who wants can buy it - just like a candy bar.
You don’t work at Chase. My girlfriend does. She was told (by AFLAC) There’s no secondary insurance of any kind at Chase.
Absolutely not!! If you pay the premium with pre-tax dollars you make the benefit taxable if you go on claim. If you pay with after-tax dollars and you go on claim the benefit is TAX-FREE.
NEVER pay a disability premium and deduct it as a cost of business!!
No offense intended.
But AFLAC can be bought off the street just like a candy bar. There is no necessary connection to an employer. You don’t even have to be employed. You just have to pay for the product.
So, while I do not work at Chase, I do know that Chase cannot prevent her from buying it. You may be confused by the method of delivery of the product. It is not via the employer.
We see cars like that all the time around here; scarcely need to look to know what sort of dumb@$$ is driving them...
Dave Ramsey ping
The dicotomy of the two questions is astounding. One wants to know how to get others to carry his water and the other is wondering what is the best way to care for themself!
Thanks Altariel for the ping and thank you Kaslin for keeping with the articles.
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Usually on these threads we get a couple of folks that jump on Dave’s advice, however those are generally based on some kind of emotional hatred of Dave.
I wanted to thank you for your postings. They are very well thought out and do make a lot of sense. I don’t doubt that Dave is mistaken in his advice...heck no one can know everything about everything!
You are a good reflection of why I come to FR, there is always something to learn!
Also, there are numerous other insurance carriers that offer disablity income insurance to individuals. Principal, UNUM, Ameritas - also many others.
Thank you for your kind words.
I think Dave just did not take it far enough. His points of (1) take anything you can get free from the employer and (2) aggressively pay down/off debt are very valid.
Yes, I cannot tell you how many times I have some question, and my first thought is that someone on FR would know about that subject.