Dave Says

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Do you think having cancer insurance is a good idea? (July 2015)

Setting up the kid's car insurance (February 2015)

Check cashing for the unbanked (September 2014)

Keep the lifestyle simple (May 2014)

Should she have skin in the game? (September 2013)

Time to pay it off! (September 2013)

Making It Through Medical Leave (July 2013)

Should We Ever Buy A House? (January 2013)

Be Tightfisted Until The Crisis Is Over (January 2013)

Paying the parents (December 2012)

Sallie Mae vs. selling the car (December 2012)

Whatís the worst that can happen? (December 2012)

Letting them in on the secret (December 2012)

Not ready to combine finances (November 2012)

What The Law Will Allow (August 2012)

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Baby comes first! (August 2012)

Get the brother-in-law out! (August 2012)

Trust Broken After Cosigning (April 2012)

Review The Research (April 2012)

The Investing Makes Her Nervous (April 2012)

Lifestyle Changes (April 2012)

Do I Tithe On An Inheritance (March 2012)

No Credit Score, No Mortgage? (March 2012)

Where Do Toys Fit In The Baby Steps? (March 2012)

Guilt and Cynicism (March 2012)

Where Does Debt Go When Filing Bankruptcy? (December 2011)

Where Does The Donation Go (December 2011)

Ready to Buy (December 2011)

Intensity Hurting The Marriage (December 2011)

Hobby Car? (November 2011)

Not Quite Dearly DepartedÖ (November 2011)

Enough For Retirement? (November 2011)

Itís Just Another Gimmick (November 2011)

Will Paying Early Help? (November 2011)

Bargain Master! (November 2011)

Sisters Should Have Asked! (August 2011)

Buy Now Or Wait? (August 2011)

So, He Knows How To Manage Money? (August 2011)

Girlfriendís Money Problems (August 2011)

Smaller Down Payment? (August 2011)

Why Canít She Get Another Job? (August 2011)

Landlord Wants Protection (June 2011)

Prepping Kids For Healthy Habits (June 2011)

Switching To Company Debit Cards (June 2011)

Should I Reduce My Tithe? (June 2011)

Closing The Account (February 2011)

Dishonesty Is Not The Best Policy (February 2011)

Piles of Cash? (February 2011)

New Car In A Bad Situation (February 2011)

Drop Coverage? (November 2010)

Can't Pay For Her Wedding (November 2010)

Does Pride Keep Us In Debt? (November 2010)

Not Time For A Reunion (November 2010)

You're Being Hoodwinked! (November 2010)

Buying Used or New? (November 2010)

Is There A Recommended Vacation Percentage? (July 2010)

Donít Do it for the Gas Mileage (July 2010)

Investing Strategy for Retirement (April 2010)

Insurance? (April 2010)

Triple Play Investing (February 2010)

How Do I Get Started in Real Estate (February 2010)

Published: January 2013
Be Tightfisted Until The Crisis Is Over  

Dear Dave,

Recently, my husband had to quit his job due to an old back injury. We have $25,000 in debt, but Iíll 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. Youíre 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 donít 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, Iíd cash it in a heartbeat. But itís not $380,000 or $3.8 million. Itís easy to develop a false sense of security if youíve 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 itís 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 wonít need surgery, heíll find a job pretty soon, and you guys wonít 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!

óDave

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