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Ask Dave: Prepping for an emergency

Sept. 3, 2011 at 4:03 a.m.


By Dave Ramsey

My husband needs a liver transplant within the next two years because he has Hepatitis C. We make about $70,000 a year, but we have $25,000 in debt. He's still able to work right now, and we have health insurance, but how can we prepare for the operation and medical bills? - Nikki

God bless you guys. It's going to be tough because you're going to face a lengthy loss of income, and sky-high medical bills even if everything goes well. I'm really sorry you have to go through this. Life can be hard enough without major health issues knocking you for a loop.

The good news is that there's something you can do about all this, and it all starts with saving. First, set aside an emergency fund of three to six months of expenses as quickly as you can. In your case, I'd recommend leaning toward the six month side. Second, you guys need to have no life for the next year or two, and get very serious about paying off as much debt as possible, after you get your emergency fund in place. I'm talking about following a very strict budget, and living on rice and beans. Bottom line? The less debt you have, the better off you'll be.

Wouldn't you love to be debt-free and have six months of expenses in the bank before they perform this operation? You can do it, if it becomes important enough to make it priority one.

I attend a small church with about 100 members. There is a $97,000 mortgage at 8.75 percent on the building, and the note was signed only by the pastor. In the event of default, are the members of the congregation liable? - Charlene

Unless you signed the note, you are not liable. If the pastor signed the note personally, or on behalf of the congregation, it would actually depend on the wording in the note as to who is liable in case of default.

But this whole situation is kind of silly, and I'll tell you why. If everyone in the congregation gave an extra $83 a month in their tithe - that's only about $20 more every Sunday - you could have this mortgage knocked out in a year. There's absolutely no reason for your church to be in debt 12 months from now.

This is a prime example of what happens when a church adopts the same mentality as the rest of the world. The Bible itself warns us that the borrower is slave to the lender.

For financial help, visit daveramsey.com.

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