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What To Do When You Can’t Pay Off Your Medical Debt
Whether you’ve had a minor health setback or a major health crisis, you still might be facing more medical debt than you’re prepared to handle.
Medical care is one of the biggest expenses people will face during their lifetime. The skyrocketing costs of medical care show no signs of stopping.
That leaves many of us vulnerable to finding ourselves in this situation. So what can you do when your medical bills are stacking up, and you can’t pay them all?
Don’t Ignore Them
It can be tempting to stick your head in the sand, but that’s the wrong approach to take. You have to face your situation head-on if you want to have any prayer of coming out unscathed.
So grab all your medical bills that arrive at your house and put them in a folder or a bigger envelope so they’re all grouped for easy access. It may help you to put them in order from the lowest amount owed to the highest amount owed.
If there are any lower amounts you can pay off with the money you have saved at that point, you should do that.
Examine the Bills
Being asked to look over medical bills can be like being asked to take a test in Spanish when you’ve never had a single lesson. It’s hard to crack the codes on some of these medical bills in order for you to determine if you’re being overcharged.
But look over the list and do your best anyway. You might find some errors that will cut down your bill some.
Do Some Bargaining
Try to bargain with your debtors to see if you can knock some money off of the bills you have been given. That may be easier if you don’t have insurance. If you have insurance, chances are your bills have already been lowered somewhat because insurance companies often get a discounted amount from medical providers.
Set Up a Payment Plan
If you know you aren’t going to be able to afford to pay a bill in full, call the billing department and ask to set up a payment plan as soon as possible. It’s in their best interest to do so, especially if you make it clear you won’t be able to pay the bill if you don’t get a payment plan.
Let them know how much wiggle room you have in your budget and what you can afford to send every month until the debt is clear.
Check on Assistance Programs
Some hospitals or doctor offices have programs in place to help the most economically challenged of their patients. If you are in the poverty level, you might have an easier time getting assistance. You can also take a stab at contacting national charities that may be able to help you.
Do Your Best
Once you commit to sending a certain amount of money to a doctor or hospital to clear up your debt, do your best to meet your obligations. It’s not fun to pay off medical debt, but you received the care so it’s only right you do the best you can.
What’s the Best Thing To Do With An Inheritance?
You’ve come into some money from an inheritance. Whether you’ve been expecting the money or it was a total surprise to you, you’re in the position to do something good for your finances if you react rationally instead of emotionally.
It can prove to be too tempting when people get a lot of money handed to them all once. They can make some bad decisions that can come back to haunt them.
To make sure you don’t become one of those people, you need to develop a strategy.
Think About Your Goals
You need to align this money with your core values and the goals you hope to accomplish financially and emotionally.
If you have a goal of working fewer hours, but you’ve found yourself trapped in a vicious cycle of working overtime each week to pay down your debt, it makes sense to use that inheritance to pay some of that debt off. Then you can reduce your workload a bit.
Or if your current finances were doing fine before the inheritance came along, you could use a bit of the money to indulge yourself in your dreams of traveling more.
Knowing your goals and what you want out of life is crucial to figuring out what to do with your inheritance, so it’s time to do some soul-searching.
Create an Emergency Fund
If you don’t already have an emergency fund, now is the perfect time to do it. Use part of the money to set one up.
If you hate the idea of parking that money in a savings account that barely draws any interest, you could put a couple thousand in the savings account and use a money market account for the rest of the emergency fund money.
It will draw more interest than a standard savings account will and there will be more restrictions on when you can use it. You’ll still be able to access the money in a true emergency, but you’ll be less likely to tap it when it’s in a money market account.
Pay Off Credit Card Debt
If you have credit card debt, that’s the absolute first debt you should retire with your inheritance. The high APR you’re paying can sink your financial goals, so it makes sense to take care of that debt first. After it’s gone, try to avoid credit card debts at all costs.
Tackle Other Debt
After the credit card debt is gone, use your inheritance to pay off any car loans or even your mortgage if there is enough left. It will help you reduce how much money you have to shell out monthly. After you’ve reduced your overhead, make sure you bulk up your retirement savings to really put those lowered monthly payments to work for you.
Add to or Start Your IRA
Starting an IRA or bulking up the one you already have is a great strategy for long-term growth. This will help ensure your inheritance will continue to work for you in the future.
5 Reasons You Need an Emergency Fund Right Away
Everybody always talks about the importance of having an emergency fund. Ask any expert and you’ll get the same answer – start building your emergency fund as soon as possible.
But if you don’t understand the importance of having an emergency fund, you’ll never make it a priority. Let’s look at 5 of the biggest ways having an emergency fund can change your life.
It Will Help You Sleep Better At Night
Many Americans lose sleep over their finances. The majority of people feel their finances are controlling them, instead of them controlling their finances. That’s a pretty powerless position to be in.
Emergency funds can help shift that balance of power though. Imagine how much better you’d sleep at night knowing you had a hefty $5,000 or $10,000 sitting in the bank if you ever needed to tap into it.
That would be enough to help anyone sleep more soundly. The security and peace of mind an emergency fund can give you is one of the best reasons to have one. There’s enough to worry about in this world without adding money to the list.
It Can Protect Your Credit Score
Your credit score is one of the biggest deciding factors when it comes to whether you can land a loan and what the rate will be. An emergency fund can let you keep that credit score in the excellent category you need it to be in.
If you lose your job, your emergency fund will help you keep paying your bills on time until you can land a new job. That will keep your credit score intact.
It Can Help You Pursue a Life-Changing Move
If you’re offered the job of your dreams out of state in an expensive city, you might not be able to take that offer if you don’t have the funds saved up. That emergency fund can help you make the deposit and first month’s rent on a new apartment, hire a moving van to cart away all your possessions, and tide you over until you get your first paycheck.
It Can Open Up Medical Options
Do you have a medical condition that’s bothering you? It might not be severe enough for an emergency surgery, but your doctor has been warning you that you should take care of that hernia at some point? An emergency fund can let you get the surgery that’s going to make you feel better without creating a huge drain on your finances.
The beauty of an emergency fund is that you won’t have to go further into debt when you are facing a medical crisis.
It Can Let You Choose a New Career Path
Have you finally gotten tired of your one-dimensional job with the glass ceiling? If so, your emergency fund may come to your rescue.
Whether you’ve had it with your current career or you want to pursue something more lucrative, an emergency fund can be a great start toward pursuing the education you need to make your dream career a reality.
Shoot For a 50/30/20 Budget
If you have a hard time sticking to traditional budgets because they are far too much work and don’t give you enough flexibility in your purchasing decisions, you might want to check out the 50/30/20 budget, also known as the 50/20/30 budget.
Budgeting with this method can help you feel less deprived, which can help you stick to your budget.
Here is how it works.
The 50 Percent Portion
You’ll tally up all the after-tax money you have coming in during a month, including any part-time income you earn. Then you’ll calculate what 50 percent of that amount is. That’s what you’re going to have to work with when it comes to your essentials.
All your minimum payments on everything – credit cards, mortgages, car payment – go in this portion. It also includes necessities like utilities, garbage service, and basic food and clothing needs.
The goal is to keep this spending to under 50 percent of your overall budget. But for some people, it’s not going to be there at first. You might find it’s at 60, 70, or even 80 percent.
If you stick to this budget, it will gradually even itself out, but it will take time and discipline. If you don’t want to wait that long to get this budget fully operational, you might need to jumpstart your earnings by taking out a part-time job or side gig. You can use that money to pay down debt. As your debt is paid off, your percentage will naturally start to fall more in line with 50 percent.
The 30 Percent Portion
This is the fun part of your spending. This category is for your wants. The wants category covers everything you’d love to spend your money on if you didn’t have responsibilities and obligations. It can be used for that new fancy cell phone you’ve been eyeing or the vacation you’d love to take to Hawaii.
It also covers restaurant meals that go above and beyond your basic needs for food intake. Any expensive or designer clothes will also fall into this category.
Some people find it helpful to withdraw the money for this category and put it in an envelope in your house. It’s harder to overspend when you have to part with cold, hard cash. And every time you look into the envelope, it’s a reminder of how little money you have left for the month.
Once that 30 percent is gone for the month, you don’t get a penny more. And if you can’t keep your essentials to 50 percent, you might need to take additional money out of the 30 percent fun fund to cover it.
The 20 Percent Portion
This is the category that’s going to give you growth and improve your long-term financial position. For that reason, it’s a crucial category.
Any extra debt payments you make toward your credit card, house, or vehicle will come from this fund, as will any investments you make. If you want to give yourself an extra boost, don’t count the pre-taxed 401k money you are contributing at work in this category.
If you bring home $3,000, for instance, that will give you $600 for the 20 percent portion. You might want to stash $200 in your emergency fund each month until it’s fully funded and use the other $400 for extra debt repayments.
Before long, you’ll notice a lot more money in your accounts and less debt on those monthly statements. That’s a double win.
Make a Menu to Cut Dollars and Calories
Back in the day, those stay-at-home moms knew how to stretch their dollars. It was practically an art form. When women weren’t working outside the home, they did what they could to cut costs in any way they had at their disposal.
Since many women did the grocery shopping, clipping coupons was a smart way to save money. And that’s still an effective method to use today. But another tool women used to ensure they didn’t spend more than they had to at a grocery store was to plan a menu.
The weekly menu kept everything on track. Women didn’t have to worry about what they would make for meals from day to day. And when they went shopping, they had a list of all the groceries they would need for that menu. They didn’t buy anything that would sit in their refrigerator past its prime and eventually have to be thrown away.
Today, menus can be just as valuable. Instead of grabbing a sandwich at a fast food restaurant, you can go home after work with a firm plan of what you’ll do for a healthy meal. And menus can be real money savers. Here’s why.
No Waste
Many of us buy produce or even meat that we plan to eat. We put it in the refrigerator and forget about it until it resembles some kind of gross science experiment. Then we have to throw it away. And that’s literally like tossing dollar bills in the trash.
Buying just enough to cover your meals and using everything you buy will save you a lot of money just from avoiding the waste.
You Can Match Your Menu To Sales
Is there an incredible deal on chicken this week at your favorite store? If so, you can lock in those savings by planning a lot of your meals this week around that sales ingredient.
By looking at the sales flyer for the store ahead of time, you’ll be able to spot those sales. You can even turn it into a game of sorts in which you try to incorporate as many sales foods as possible into your menu.
You Won’t Be Eating Out
Many of us decide to order takeout after a long day at work because we’re tired and can’t face the thought of cooking. Or we aren’t really sure what we have at home to fix and we don’t want to have to stop by the store when we barely have the energy to press the gas pedal to get ourselves home.
If you have a simple fix for dinner ready to go at home, you’re going to save a small fortune by not eating out. You’ll also save a bit on the gas money you would have had to shell out to get to the restaurant.
Stay Away From Impulse Groceries
Without a firm menu in mind, it can be far too easy to splurge on groceries you know you shouldn’t be buying in the first place if you’re on a tight budget. Those steaks might catch your eye if you don’t have a plan when you enter the store. But with a menu in hand, you’ll walk right by and stick to the list.
Learn From Your Grandparents With These Money Tips
Many things have changed since your grandparents were young, but some things never go out of style – like solid financial tips.
By implementing some of their best money tips, you’ll find yourself in a much better financial position than by following what your peers are.
Pay Cash
Cash in hand is always the best policy when buying something. Back in the day, people saved up for things until they had the money to buy them. That kept them from overspending or getting in over their heads financially.
With today’s credit cards, it’s too easy to let things get out of control.
Don’t Treat Your Stuff Carelessly
We’re all guilty of this. We don’t take care of our stuff like we should, which leads to us having to replace it before we should have to. It happens all the time, we’re careless and do things like leaving our grill out uncovered in the elements without a cover to protect it. Doing basic maintenance on your stuff will extend its life and will keep money in your pocket.
Learning Skills
In order to save money, people back in the day were Jacks of all trades. They knew how to do a little of everything to help keep their costs lower. Whether it was doing their own car repairs, carpentry, or sewing, they knew they had to get by on their own accord.
Hiring an expert wasn’t always an option so they did what they could to solve their own problems.
Owning Instead of Renting
If you’re going to be paying for something anyway, you might as well own it instead of renting it. That gives you equity and builds your net worth.
Whether it’s a vehicle, land, or a house, renting doesn’t make as much sense as owning does. At the end of 30 years, if you rent an apartment, you’ll have to keep renting. You’ll be paying that same amount of money every month to your landlord. If you own a home, you’ll just have to pay the property taxes, insurance, and any repairs. By renting, you’re making your landlord rich. By buying, you’re making yourself rich.
Being Prepared for Hard Times
Having money set back for emergencies was a way of life for your grandparents. They didn’t expect their world would be all rosy. They knew they weren’t exempt from the hardships of life. While you’ll always have bad things happen, they won’t seem quite as insurmountable if you have a way to pay for them.
If you establish a savings account like your grandparents had, you’ll have more security and you’ll sleep better at night.
Grow Your Own Food
In recent years, there has been a return to growing crops in your own backyard gardens. Not only is this a tastier and more convenient way to get fresh produce, but it is also more cost efficient too. Your grandparents knew this and many people from this generation toiled in their own backyards for the betterment of their families and their bottom lines.
How To Give Yourself a Money Makeover
Your finances are a mess and you know it. It keeps you up at night and has you so worried you’re willing to do anything you can to clean them up. But you’re not even sure what to do first. You have credit card debt, zero savings, and you’ve never set up a retirement account. You’re starting from square one.
If this sounds like you, don’t worry. We’ll get you on the path to financial freedom. But you have to be willing to put in the work and make some sacrifices along the way.
Here are the steps you should take to get there.
Start An Emergency Fund
If you have no savings at all, you’re living paycheck to paycheck. Many Americans do, but it’s a scary place to be. You need to get a bare minimum set up in a savings account. You should shoot for at least $1,000 to begin with.
That can seem like a crazy amount to save up when you’re starting from nothing. But there are several ways to get there.
First off, if your company lets you, ask to pick up a few overtime hours. Make sure you only use that money for your savings, not for extra spending.
If you can’t get any extra hours, you might want to think about getting a part-time job for a while. I know it’s not fun to work all day at your full-time job and then spend a couple evenings working more, but it will help you breeze through your emergency fund. With a part-time job, you can fund the first thousand in a couple of months.
If you don’t want to work extra, you’re going to have to make cuts. The easiest place to do that is usually in food spending.
Hammer At That Credit Card Debt
Once your emergency fund is in place and you’ve committed not to touch it for anything other than emergencies, you should start chipping away at your credit card debt. That can take a long time depending on how much you have and how devoted you are to tackling it.
You might need to sell some of your stuff, continue on with your part-time job, or make steep cuts to your budget to clear it up. It might take months or it might take years, but you’ll feel so happy every time you get that statement and see the amount lowering.
Start Your Retirement Account
Some experts will tell you to clear up your credit card debt before you open a retirement account. But you don’t want to put your retirement savings on hold indefinitely. If you struggle with clearing up that debt, you don’t want to lose years when you could have been saving for your retirement.
Here’s what you can do instead. Take a month or two to get a good start on that credit card debt before opening a retirement account. That will at least give you the confidence to know that you can do it when you see the balance dropping.
Then open a 401k at work and put in at least enough to take advantage of all the matching money your company offers. If you don’t, you’ll be leaving money on the table.
Using Your Finances to Buy Your Freedom
There is arguably no better use of your money than to give yourself the gift of freedom. By saving carefully and creating passive streams of income, you’ll be the master of your own destiny. Whether you want to check out of the workforce in your 40s, or even before, there are some key rules you’ll have to adhere to, unless you’re expecting a big inheritance.
Save At Least 20 Percent
If you want to have the financial freedom to do what you please with your life, you have to get used to saving big money. It’s more about what you save than what you earn. You can have a big paycheck each week, but if you don’t set some of it aside, you’ll be a slave to your job forever.
If you’re hoping to retire early, you need to be aggressive with your savings. Shoot for a minimum of 20 percent per year and do more if you can. It might seem too strict, but you’ll be glad you did it when your coworkers are desperately hating having to get up each morning for work. You’ll be able to set your own schedule, and for many people, that’s well worth having to scrounge and save for years.
Write Out Your Goals
A good plan is a written plan. To end up where you want to eventually be, you can’t just wing it. You have to define where you want to be and by when.
Make a list of goals, stating how much you want to have in the bank and attach a specific date to it. Then do some calculating and figure out how much you have to save to get there.
Be specific about your plans – the best plans aren’t just ideas. They are ideas with key details included.
Be Willing to Think Outside the Box
To be financially independent, you’d be wise to create some passive revenue streams. Those are sources of income that require little to no work on your part. You could become a landlord by buying an investment property. But the key to some money-making opportunities is that you have to have some money set aside to make money.
With real estate, for instance, you need to be able to afford to put a chunk down on your property and make the payments on time. That can require some savings. And that’s why being a good saver is so important to your financial freedom plan.
Keep Your Debts and Spending Low
You’ll find it much easier to be financially free if you don’t overspend. You need to decide what’s more important to you – having total control over your time or having designer clothes, a high-end car, and a nice, big house.
Are you willing to live in a smaller house, with inexpensive clothes if it means you don’t have to worry about working to pay your bills?
Make Sure You’re Protected
Your assets should be diversified. You should have some cash on hand to handle emergency expenses, and you should be adequately insured for any possible bad luck that’s headed your way.
Your Biggest Money Mistakes Uncovered
Even the most money-savvy of us make big financial mistakes sometimes. The key is learning from them and moving on. But if you don’t want to lose sight of your financial goals by making a mistake, you’d be better off learning from someone else’s mistakes than your own.
Let them make the errors and you can benefit from their wisdom. If you’re a young adult, you might not have made these common money blunders yet. So there’s still time for you to avoid them if you pay attention to this list.
Credit Card Debt
Nothing can set you on a path toward financial destruction quite like credit card debt. As soon as you turn 18, you’ll start receiving these card offers in the mail. While having a credit card is a great way to build up your credit score, it can also create a debt load and a cycle of overspending that you’re not able to control yet.
So if you want to build your credit score without racking up thousands of dollars in outstanding balances, there is something you can do about it. When you receive your credit card in the mail, call the number on your card and ask them to lower your limit if they’ve given you more than you think you can comfortably handle.
Even a limit of $1,000 will allow you to build up your credit rating without sinking too far into the quicksand of credit card debt. If you are a subprime cardmember, however, keep in mind that you should try to avoid carrying much of a balance at all. Lenders will look at how much of your limit you’re using and you can be penalized if you’re using too high of a percentage of your available balance.
Skimping on Retirement Savings
Retirement is going to be the biggest expense you ever face – more so than student loan debt or even your mortgage.
You need to take it seriously. But far too many people put off saving for retirement until they are in their 40s and by then you’ve left your best years behind you when it comes to accumulating interest.
The sooner you begin your retirement savings, the better off you’ll be.
Buying More Car Than You Can Afford
Yes, transportation is necessary, but that doesn’t mean you have to travel in style. You just need something that gets you from Point A to Point B. Anything else is a luxury that you might not be able to afford.
And even if you can swing that $500 car payment, should you? There are so many other places you could be sticking that money, especially when you might be able to get by just as well on a $250 car payment. That extra $250 a month could go a long way toward paying off credit card debt, your mortgage, or funding your retirement.
Not Having a Clear-Cut Plan
Having control of your finances doesn’t just happen accidentally. It takes work. You need to plan for it.
Sit down for an hour this week and picture what you want your finances and your life to look like in 5 years and in 10 years. You’re the only one who can make that vision happen.
So if you want to be out of debt in 5 years, make a plan for how it will happen. Commit to setting aside money each week to make extra payments, either by cutting back on your current spending or adding a side job.
Save Money on Your Prescriptions
It’s bad enough you have to pay high premiums for health insurance, but you get doubly frustrated when you have to shell out a lot of money for prescriptions on top of that.
But there are ways to save money on those prescriptions if you look hard enough. Here are some simple ways to do it.
Search for Coupons
Even medications occasionally issue coupons. EpiPens, for instance, routinely give you coupons you can use to take up to $100 off each set you buy. While they can be expensive to buy, if you have a life-threatening allergy you have to have one to potentially save your life.
But those coupons can save you a chunk of change each time you use them.
Look for Generics
Everyone seems to think name brands are better, when it comes to clothes, food, and even medication. But the truth is many generics are just as good as the name brand medications they’re imitating.
Let’s pick on EpiPens again. There are generic epinephrine injectors that are a fraction of the cost of EpiPens. Ask your doctor to rewrite your prescription to include a generic epinephrine injector and you’ll save hundreds of dollars.
Never be shy about asking for generics – otherwise you’ll be practically flushing your money down the drain.
Maintain a Good Weight
This may seem like a surprising thing to include on this list. But your weight is important because it can influence how much medication you take. If you’re overweight, you might need medication for Type 2 diabetes or you might develop high blood pressure.
Those extra pounds can really add up. By getting some exercise daily and watching your portion sizes, you might be able to drop or reduce your medication levels. That would not only save you money but also make you feel better about yourself.
Eat Healthy
By eating healthy you can influence how much medicine you take. Your cholesterol levels are impacted by what you eat, in addition to any heredity factors that might make you prone to increased bad cholesterol levels.
Fruits and vegetables are known to lower cholesterol levels and so is eating fish a couple times a week. By cleaning up your diet, you might be cleaning up your financial worries as well.
Don’t Use Insurance
This tip might shock you, but sometimes you can buy your medications cheaper without using insurance.
Next time you fill a prescription, ask the pharmacist how much it would cost if you weren’t carrying any health insurance. For some of the medications, the cash, uninsured price will be cheaper. It may seem crazy, but it’s true.
To better protect yourself from this type of price gouging, you should learn to ask questions and educate yourself as a consumer. If you wait for companies to do the right thing and play fair, you may lose a small fortune before that happens.