Question: Misty wants to know if she should cash out her 401k to pay off her car and free up money in the budget. Absolutely not, as Dave explains.

Dave Ramsey's advice: No, you need to sell the car! You don't cash out your retirement plan to pay off a stinking car because they will charge you a 10% penalty plus your tax rate. So you're going to lose 30% to 50% of your money to the government. That's like borrowing your money at 40%! If you can't pay off the car quickly to make room in the budget, you should probably sell the car.

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Dave reads a story of a man who wasn't able to buy a Jeep ... even though he had $24,000 in cash. Think we're kidding?

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Question: Josiah is 22 and in the military. He and his wife are trying to get out of debt and owe $13,000 on a car at 14.5%. He's concerned with building his credit so they can refinance their car, so they got credit cards. They make $20,000 a year. Dave knows a quick fix that will really get some money flowing.

Dave Ramsey's advice: That car owns you! Your entire life is revolving around trying to keep a car you can't afford. I'm not trying to smack you around; I'm giving you the truth. Now you're getting credit cards so you can refinance the car. This is about 2 or 3 stupid things in a pile.

Get yourself a beater car and give your wife a hug. This stresses your marriage. You'll make plenty of money in your life, and when your income rises, get yourself a nicer car. Credit hasn't been a blessing to you.

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