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Dave Ramsey is a personal money management expert, US national radio personality and author of the New York Times bestseller The Total Money Makeover. For more financial advice and a special offer to our readers, please visit or call 1-888-22-PEACE.

Graduate wonders what to pay off first

Dear Dave,

I'll be graduating college in December with a degree in elementary education, and I have a job waiting for me. It will be the first time in my life I've made more than minimum wage, and it will bring our household income up to about $75,000. I've got $15,000 in student loan debt, $6,000 to pay off from a repossession a while back and $3,000 in credit card debt. How should I handle this salary increase?

- Mickey

Dear Mickey ,

Congratulations on your degree and the decision to get serious with a plan for your money! And here's some more good news for you. If you guys keep living the way you have been and put the rest toward debt, you can have it knocked out in about a year.

But just because you're making some money doesn't mean you should double your entertainment budget or pick up a car payment. Sit down together and work out a written monthly budget. Give every dollar a name before you spend it, and don't forget to work the debt snowball, too. List your debts from smallest to largest, pay minimum payments on the two largest and then attack that credit card debt with a vengeance! Chances are you can get these taken care of in a month or two. Once you've paid that off, roll the money from that payment over and apply it plus any other cash you can scrape up toward the car repo. If that debt has any age on it you can probably work a deal for fifty cents on the dollar and get out paying just half.

Once you've done this you'll have a bunch of cash to throw at those students loans and get the debt off your back once and for all. Good luck, Mickey!

- Dave 

Husband left; wife wonders how to protect credit

Dear Dave,

My husband just left me after not working for months and developing a drug problem. We lived in an apartment together, so there's no mortgage to worry about. I love him and want him back and well, but I'm scared and wonder if I should protect the bank account and credit card. There's about $12,000 in the bank right now. Nothing is owed on the card, but it has a $20,000 limit.


Dear Heather,

This is a scary situation, and you need to protect yourself. Pull out at least half of the money that's in the bank today! Take your name off the account, and open a new one at another bank under your name only. Right now, you'll be liable if he runs up $14,000 worth of hot checks and your name is still on the account.

Call the credit card company, and get your name off that account, too. Send them a certified letter overnight — return receipt requested — stating that as of today you are no longer responsible for any charges on the card. Here's the thing. If either of these places tries to come after someone for money, they'll come for you. You'll be easier to find and harass than a druggie who's trying to run away from things.

Heather, I'm really sorry you have to go through this. But remember, even if you do the things I'm saying it doesn't have to mean the marriage is over. It just means that you protected yourself financially. Hopefully, he'll come back, come to his senses and get some help!


Getting a workplace medical flexible account just right

Dear Dave,

What is your opinion of workplace medical flexible spending accounts? I have one, and I like the pre-tax savings for medical bills. But I'm concerned about the possibility of losing the balance at the end of the year.


Dear J.B.,

You have every right to be concerned about losing what you don't spend at the end of the year, because that's exactly what will happen!

Basically, this type of plan is a pre-tax way to save money to cover your deductibles and the out-of-pocket portion of your medical bills. So estimate your spending very carefully, then set your savings up to be a little less than what you think you'll need.


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