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Ask Dave

Very Sick, Still Saving

Megan faces a mountain of medical debt, but also has some cash. How should she use it to get started?

QUESTION: Megan is permanently disabled because of a very rare illness. She’s got $215,000 in medical debt, $30,000 in cash and owes $92,000 on her $128,000 house. Now she has Social Security income for her disability, and doesn’t know what to do with her cash.

ANSWER: From your cash reserve, set up $5,000 to $10,000 in an emergency fund, and then invest the rest and leave it alone. If you invest $20,000 in a good growth stock mutual fund, it will grow to about $200,000 in 10 years. You’ve done well with saving money, especially given the issues you’ve faced. Keep it going.