Did you know that 1% of Americans have medical debt over $10,000.00? That’s 3 million people. 23 million have medical debt of at least $250.00, that’s about 7% of our population.
Don’t finance medical care if you can avoid it
Imagine being in such rough financial shape that you can’t afford a $250.00 medical bill. Worse imagine using a credit card to pay off your medical debt. If you don’t have $250.00 and decide to finance your medical debt at nearly 20% annual interest you have a serious problem that must be addressed.
Typically a minimum payment of around $15.00 would be required by the credit card company. It would take 20 months and cost $45.00 to pay off a $250.00 medical bill.
Honestly I can’t imagine a $250.00 medical bill – that seems really low to me. The veterinarian we take our cat to every year costs around $500.00, so for a human to have a bill of $250.00 seems unlikely. More importantly the cost of the debt over time is 18% of the original bill. Now let’s imagine a $10,000.00 medical bill financed on a credit card. The minimum payment would be around $400.00 each month. The average cost for rent in the United States is $1,700.00. The minimum payment on $10,000.00 medical debt is 23% of the cost of RENT!
Bankruptcy is a real possibility
Medical debt is one of the leading causes of bankruptcy in America. Don’t be that person if you can avoid it.
Clearly this is a huge problem for the 3 million people in the United States who are burdened by our system of medical care that is privatized. But what can you do if you are facing a medical issue that is not covered by your insurance, or if you don’t have insurance, which is the case for 27.5 million Americans?
Here are some solutions
First things first. If you don’t have insurance, try to find a job that offers coverage, or see if you can buy insurance through the Affordable Care Act health care marketplace. If you live in a state that doesn’t offer Medicaid expansion, that can mean healthcare is not affordable. I suggest moving to a different state in this instance.
If you live in a state without Medicaid expansion your state likely has all manner of other issues, like higher mortality rates, lower educational outcomes, lower quality of life, poor economic opportunity and more. You would do well to reconsider where you live. I realize that many people can’t afford to pull up stakes and move, but it’s worth considering. No one has ever been successful without sacrifice, and relocating may be a sacrifice you have to make to improve your life.
Live a frugal lifestyle so you can divert funds
If you are self employed, you can divert part of your income into a self employed persons retirement savings account. This will allow you to lower your actual income and which will allow for higher subsidies if you are buying health insurance via the Affordable Care Act health care marketplace.
Stay healthy or get healthy
If you don’t currently have health insurance, but are in good health, stay that way. How? Eat a plant based diet, get sufficient sleep, get the recommended amount of exercise. Don’t use drugs, don’t drive drunk or under the influence of drugs and don’t get into cars with drivers who are drunk people or people who are on drugs. Also don’t get into cars with people who wreck their car all the time. I know people who do this and it’s amazing they are still allowed to have a driver’s license. Don’t allow people to drive you around if you know they have poor driving habits like texting and driving. It’s not worth it. Clearly this is not to be construed as medical advice; I’m a blogger not a doctor.
If you do go to the doctor’s office for any reason, make sure you always ask if the procedures you are getting are covered by you insurance. Don’t just accept any prescription your doctor gives you without learning if there is a more affordable alternative.
If you have any chronic medical issue, do your best to control your challenge. For example, take your medication as prescribed, visit the doctor for regular follow up visits as recommended. Ask your doctor if you can limit visit to one or two times per year versus every three months if your condition is well managed. This is especially important if you are not insured.
Dental hygiene is important
Maintain good dental hygiene. This is critical because dental hygiene has been linked to other health concerns like heart disease diabetes and more.
Look for resources in your community that can help save you money on health care. Most communities offer some services, but you’ll have to conduct research to learn more about what is available to you in your area.
Be creative with how you are employed
Healthcare is an important consideration financially. In order to have the best possible financial outcome, take time to assess where you are with healthcare and what steps you need to take to get the best possible healthcare at the lowest possible cost. That might mean opting out of the healthcare plan your work offers and opting into the health care market place. It might mean seeking contract work and being a self employed person, using the income tax deferred option you have available to you as such. To do this you need to have a great understanding of how much money you need for your expenses. Once you know this figure out how much you can defer and how much your tax burden will be.
Living frugally by having a good understanding of your liabilities and meeting this minimum, while diverting funds to a tax deferred account is a great way to increase your wealth, since you will be investing your deferred income in an account that earns money. It adds up fast and you likely won’t even miss the money you set aside if you have done the math well.
Embrace the change that will improve your situation
If you are an employee and your company doesn’t offer a 401k or health insurance, its time to consider making a change. If you aren’t ready to change because you need to increase your skill set, there is no time like the present. If you can’t afford to quit your job and go to school, consider online courses. Sometimes you don’t need to take that many classes to up you skill set and get a bump in pay, or land a different job with benefits. It really depends on what you do for a living.
If you just want to change jobs doing the same type of work but for a competitor that offers benefits, start improving your skills now, document all the successes you’ve had on the job you have now, and start networking with people who work for the company you are targeting. If you don’t know how to network, find a YouTube video that shows you how or even better create a YouTube channel that demonstrates your amazing capabilities so you can share it with the company you want to work for.
Buy my book, “Never Worry About Money Again: Gain Financial Freedom By Becoming Better At Managing The Money You Have” to gain more insight in to frugal living.
