Economy Q & A With Dave Ramsey

March 19, 2009 — -- All week, "Good Morning America" has asked experts to answer viewers' economic inquiries. Today, radio host and author Dave Ramsey tackled questions viewers sent in via e-mail and Twitter. Check out his advice below.

My husband and I are getting a good chunk of money as a work bonus and tax return. What do we do with it? No. 1 Pay off a large-percent interest credit card. No. 2 Pay off a small school loan and medium car loan. No. 3 put it away as savings (we have none). Credit card is 0 percent through the end of the year.

Take at least $1,000 of that money and put it into an emergency fund. This will give you enough cushion for the unexpected events that will happen. Then, I would encourage you to use the debt snowball method to knock out the loans and credit cards.

Start by listing all your debts from smallest to largest — not according to the interest rate. Remember, this is not about math or you wouldn't be in debt in the first place. It's more like going on a diet.

In that first week, you need to lose a few pounds. The debt snowball method is about quick wins. Pay the minimum amount on everything except the smallest one. On the smallest debt you pay absolutely all you can! Any extra money from other sources goes to it until it's paid off.

When that's paid off, you take the money and roll it over toward the next smallest debt. Here's where you pick up steam. By the time you reach that last debt, you'll have an avalanche of money to pay it off.

My husband and I have been trying to pay off high-interest credit cards. We will use our tax return money. However we will not have enough return money to pay the full amount of each card. I have heard that credit card companies will settle for less than 100 percent of the total debt. Is this legal? How do you get your credit card company to agree to this?

If your credit card company agrees to settle for less I would get it in writing. Typically, a credit card company won't settle unless you are behind and they don't expect to get their money.

You can try renegotiating your interest rates. But the bottom line is: I would negotiate this yourself and not go through any sort of debt settlement company. Those places usually rip people off and rarely get you a better deal.

You're right to stop investing right now in your situation. But I would put that $100 a month into an emergency fund until it builds to $1,000.

If you're living paycheck to paycheck, I assume you have no savings -- so this will put a buffer between you and life.

Then I would take care of your basic needs: food, shelter, utilities, transportation and clothing. After you do these things, continue to pay on that debt. When you're debt-free, you'll have plenty of cash flow to catch up on that pension plan.

Should I stop my contribution to my 401K and put that money in something else?

That depends on your job situation. If you're uncertain about your job, I would temporarily suspend contributing to your 401k and put that money in savings.

If your job is fairly secure, I would say continue to invest if your employer is still matching. If not, put your money into a Roth IRA.

I want you to know that I'm still investing in my own 401k right now. The way I look at it, the market is on sale. It will recover, and when it does, you'll make almost an 80 percent return on investment given the current climate on Wall Street.

Should I clear out my savings to pay off a high interest car loan? Or leave a cushion in savings, and just make payments as usual?

Leave at least $1,000 in savings for emergencies, then take the rest and pay off the car. This minimizes your risk. Once you don't have car payments, you'll have even more money to put into savings.