by Hope
Without further ado, these are my current debt numbers…well, the closest I can estimate based on paperwork from my insurance company. I haven’t received actual bills on some of this yet, but I’m preparing and want to make sure I capture it all.
| Debt Description | Original Total (January, 2022) | Current Month Total | Goal to Payoff |
|---|---|---|---|
| Medical - COVID Hospital Stay | 5,129 | 5,129 | Jun, 2022 |
| Medical - Hearing Aids | 4,500 | 4,300* | Sept, 2022 |
| Medical - Testing #1 | 7,506 | 7,506 | Aug, 2022 |
| Medical - Testing #2 | 5,900 | 5,900 | Apr, 2022 |
| Mortgage | 97,850 | 97,850 | |
| Student Loan | 19,116 | 19,116 | |
| Total | $140,001 | $140,001 |
Since all of my interest rates are <3% I’ve prioritized the medical bills over my mortgage and student loans. I’d like to get rid of all the unsecured debt before I tackle my mortgage and then my student loans since if I were to die, they would die with me. (No, I’m not on death’s doorstep or anything, but that’s my reasoning for the priority.)
The plan
How will I do this? Well, I get paid from my corporate job twice per month. The first check will cover all my personal budgeted items that I listed in my last post. Done.
I’ve opened several new checking accounts to keep things in order and keep me from over-spending especially those amounts that are only deducted quarterly or twice yearly.
Anything left over will remain in my primary checking. When my second monthly check hits, the minimum payments on each debt will be made first. Then the remaining amount in that account will be sent to the priority debt beginning with my $5,900 medical bill.
I’ve been conservative with my payoff dates. But at the end of the month or really before that, my primary checking will be at $0.
And then I will start all over when my next check hits.
The numbers are scary
When I totaled this up for the first time (as I was working on this plan last week), I about choked. But here’s the deal. The total is less than my annual salary. And it includes my mortgage.
If I live on less than 1/2 my salary, I can definitely pay off all my debt outside of my mortgage by the goal date of June, 2023. And if I work hard and stay focused, I truly believe I can pay off all debt by that date.
My consulting business continues to bring in steady income which I am just letting build right now. I will decide when to dip into that this summer as I re-evaluate things then.
*This number is an estimate. I’ve had a TERRIBLE time working with this lender. Their statements rarely arrive, they don’t “receive” payments and then charge me $40 late fees, etc. Just had a call with them and they are expediting a new bill for me and crediting my account for fees. Thankfully, I pay through my bank so it’s very easy to “prove” that payments were sent in a timely fashion. Not sure where the money is going, but they are straightening it out. Should have accurate numbers next month.
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 3 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
A couple hot takes.
1. I’d prioritize the peskiest debt collector personally. Where balances/interest rates are similar, get rid of the stressful one.
2. As a separate activity, analyze your health insurance claims/payments against your actual out of pocket billed and paid. I’m in a situation where I hit my out of pocket max each year and I reconcile to make damn sure I didn’t exceed it. In Network/Out of Network also isn’t as clear cut as you’d expect. An out of network provider you don’t have the option to choose (like anethesia) is often legally required to be applied as in network when your hospital is in network.
I have chased down thousands of dollars in over payments by doing this analysis. I start by download a csv file of my annual claims from my health insurance company.
3. You’re using the snowball approach here, right? Minimums to everything and all excess to a single debt? Focus on getting rid of bills, not spreading out a little here and a little there.
4. You might also consider taking one month to build up a buffer to live on last month’s paycheck and then start your aggressive work in February. 4th quarter seems to have been chaotic.
How much is in your HSA? Between insurance, EF/ savings, and HSA, I don’t understand why you have so many medical bills.
And…. I mean this with respect….. opening multiple new check accounts sounds like it will add a layer of confusion to your already confusing budgeting process.
I’m confused – didn’t you have insurance from your corporate job during that period? Their should be an out of pocket maximum that is less than the $20k you’re showing there.
If you haven’t had testing #1 and #2 done yet, those estimated numbers may be much lower. It will go through your insurance and even if you have a high deductible, the insurance company will have an “allowable amount”. This usually adjusts that cost down quite a bit.
I agree with Walnut–since the hearing aid billing people are such a pain to work with, why don’t you focus on paying that off first? This would also make sense as a snowball approach since it has the smallest balance.
If you are making upwards of $140k yearly, I would just pay off the hearing aids and not deal with the stress and time of the annoying company who holds the debt.
Some insurance companies are covering covid hospital stays 100%. Have you checked?
I agree with the comments above; if you were insured you should have a lower oit of pocket max. What about the car debt?
How is your student debt higher than what it was in August 2021? I thought you had it on auto pay?
Verify that you actually owe those medical expenses, particularly the Covid hospital stay – many insurers covered those at 100% for quite some time. Also, you can negotiate medical bills with the provider – you can ask them to cut it in half, waive the out of pocket amount, accept the insurance payment as payment in full. It doesn’t always work, but it is always worth a try. I have had thousands waived over the years just by asking.