Dave says

Selling your car and the right way to pay off debt.

Getting rid of the car

Dear Dave,

How do you sell a vehicle with a lien amount that’s higher than the actual value of the car?

—Michael

Dear Michael,

First, you need to find a way to cover the difference between the amount of the lien and what you can get for the car. Let’s say the car is worth $12,000, and you owe $15,000. That would leave you $3,000 short.

The bank holds the title, so unless you give the bank the payoff amount of $15,000, you’re not getting the title. The easiest and simplest way would be if someone buys the car for $12,000, and you had $3,000 on hand to make up the difference. If you don’t have the money to make up the difference, you could go to a local bank or credit union and borrow the remaining $3,000.

I really hate debt, but being $3,000 in the hole is a lot better than being $15,000 in the hole. Then, you could turn around and quickly pay back the $3,000 you borrowed.

You’d give the total amount owed to the bank, which would give you the title, and you would sign it over to the new owner. Hope this helps!

—Dave

Stop spending completely?

Dear Dave,

My mom and dad are following your advice and working hard to get out of debt. I was wondering, is it OK to buy things while you’re paying off the debt you already have?

—Leslie

Dear Leslie,

I’m glad you’re paying attention to the finances around your house. Of course, there are some things you must have. We call these “necessities.” Most things are not necessities, though. If your air conditioning breaks down or you have car repairs, those are things for which you must spend money to fix. Things like new furniture, vacations, and eating at restaurants are not necessities. They’re things you might want, but they’re not necessary—especially when you’re trying to pay off debt.

I always recommend people take a hard look at their priorities, and remember there’s a difference between wanting something and needing something to survive. It can be hard, and it may mean everyone has to go without a few things they want for a while. But if your parents are serious about getting out of debt, they’ll do it. And it really won’t take all that long.

Great question, Leslie!

—Dave

About the writer

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including “The Total Money Makeover.” “The Dave Ramsey Show” is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.