Posted on 01/22/2013 7:27:28 AM PST by Kaslin
Dear Dave,
Recently, my husband had to quit his job due to an old back injury. We have $25,000 in debt, but Ill be receiving a $38,000 inheritance in a couple of weeks. Should we use the money to pay off our debt, or hold on to it in case he needs surgery?
Kristen
Dear Kristen,
Now is the time to keep the cash piled high. Youre in the middle of an emergency, and that means you push the pause button on your Total Money Makeover and stop paying extra on debt. Surgery is a possibility at this point, plus you may need some of that money to live on until his job situation improves.
Then, the moment he returns to work and things are stabilized, you jump back into getting control of your finances. Use whatever is left of the $38,000 to pay off debt that very day. But right now you dont need to worry about becoming debt-free, only to turn around and be in a mess in the event he has trouble finding another job.
Let me give you a warning too. Thirty-eight thousand dollars is a great gift. If someone handed me a check for that amount, Id cash it in a heartbeat. But its not $380,000 or $3.8 million. Its easy to develop a false sense of security if youve never received a check of that size. This kind of money is enough to keep the wolf away from the door for a while, but its nothing to retire on.
This little nest egg is a real blessing, Kristen. Just make sure you handle it wisely, and take into account all of the possibilities over the next couple of months. In a best-case scenario your husband wont need surgery, hell find a job pretty soon, and you guys wont have to dig in to the inheritance money. Hang on to as much as possible, though. This sounds like a time of personal and professional transition for you both, and having that kind of extra cash around could be a lifesaver!
Dave
Dear Dave,
My husband and I are on Baby Step 2 of your plan. We move every two or three years due to our jobs, so would it ever make sense in our situation to buy a house?
Janelle
Dear Janelle,
In most cases like this it doesnt make sense to buy a house, especially if the real estate market in your area is lethargic. Some markets have bounced back and are doing very well, while some are worse than slow. It all depends on where youre moving.
Heres the big question: Can you get the place sold quickly the next time you have to move? Another thing to consider is whether or not you can sell it for more than it cost when the time comes. If not, youll be writing a check for home ownership, and thats not a good plan.
As a general rule, a two- to three-year window is not enough time to own a home. There are rare exceptions to this rule, places where you have a hot, escalating price market. But if youre not careful youll end up leaving behind a rental property and playing landlord, whether you want to or not!
Dave
What, is he nuts?
Blow it all and enjoy yourselves! Obamacare will cover him no matter what
PARTY LIKE THE END IS NEAR! because it is.
Dave Ramsey Ping!
Thank you Kaslin for posting his articles.
Dave Ramsey Ping!
Thank you Kaslin for posting his articles.
I’ll go w/Dave on this one. Being a landlord is the pits.
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