NEW Debt Management
Medical bills piling up? Between sky-high treatment costs, confusing insurance gaps, and endless paperwork, it’s easy to feel overwhelmed by medical debt. But here’s the good news: it doesn’t have to take over your life. With the right approach, you can manage it, regain control, and breathe a little easier.
First, let’s talk about what medical debt is and why it’s so important to tackle it head-on.
What is medical debt?
Simply put, medical debt happens when your healthcare expenses go beyond what insurance covers—or when you don’t have insurance at all. It could be from a hospital stay, surgery, prescription meds, or even a routine checkup that ended up costing more than you bargained for.
How common is medical debt?
It might feel like you’re carrying this burden alone, but many others are in the same boat. Medical debt is something millions of Americans are dealing with, often from those little, unexpected costs that pile up silently. It can sneak up when you least expect it, and the unpredictability only makes it harder to get back on track.
Why does medical debt matter so much?
Unfortunately, medical debt isn’t just something you can forget about once the bill gets stuffed in your drawer. It’s a form of unsecured debt, which means it can lead to collections, hurt your credit score, and cause long-term financial instability.
That’s why we’re here to help you address it before it spirals. Let’s look at some practical tips to manage your medical debt effectively.
1. Start with your budget
Think of your budget as the blueprint for your financial life: it’s the foundation that keeps everything from falling apart. Without it, things can get a little wobbly, and you might not know where to start with tackling medical debt.
Assess your finances: List out your monthly income and all the things you need to pay for, like housing, utilities, food, and any other essentials. This gives you a clear picture of where your money’s going and where you might be able to cut back.
Set some realistic goals: Consider your goals. Maybe you want to pay off a medical bill by next month, or save $200 for your emergency fund. Whatever they are, make sure they’re achievable. Small goals = big wins, and every win counts.
Get help from budgeting tools: If you’re not a fan of the pen and paper method, don’t worry—tracking your budget is easier with tech! You can always use the budgeting feature at Best Egg Financial Health or check out apps like Mint and YNAB (You Need A Budget) to categorize your spending and see where you can save.
2. Cut back where you can
Sometimes, to tackle medical debt, you’ll have to make a few temporary sacrifices. Cutting back doesn’t mean depriving yourself of everything, it just means being a bit strategic with your money.
Review non-essential spending: Look at your discretionary spending—things like dining out, entertainment, and those subscription services you forgot you had. To save, think about what you can do without for now.
Prioritize the essentials: Focus on the basics first. Housing, food, utilities, and transportation should always come before anything else. Once those are covered, you can shift your attention to other areas of your budget.
Find creative ways to save: There are plenty of ways to save without sacrificing your lifestyle. Meal prepping, canceling unused subscriptions, or even finding fun, free things to do on the weekend. Every dollar counts when you’re trying to knock down medical debt.
3. Boost your income
Cutting back is helpful, but you can only go so far. If you want to make a bigger dent, it might be time to earn a little extra cash.
Explore side gigs: Do you have a hobby or special skill you could monetize? Maybe you’re into freelance writing, tutoring, or photography. Or you could try side jobs like ridesharing or food delivery. Use every extra dollar to chip away at your debt.
Sell unused stuff: Look around for anything collecting dust—old gadgets, clothes, furniture, and any other items you no longer use. Sell them on online marketplaces or have a garage sale, and now you’ve turned that clutter into cash.
Ask for overtime: If you’re currently employed, see if you can pick up some extra hours. It could make a huge difference in paying off your medical debt faster.
4. Choose your debt repayment strategy
Now that you’ve trimmed your expenses and boosted your income, it’s time to put your debt repayment strategy into action. Here are a couple methods that can help you get the job done.
The debt snowball method: This one’s all about building momentum. Start by paying off the smallest debt first, then move to the next smallest. It may feel like a slow start, but the quick wins can be super motivating—just like crossing things off your to-do list.
The debt avalanche method: If you’re after long-term savings, the avalanche method may be more your style. This strategy focuses on paying off your highest-interest debt first. It saves you more money on interest in the long run, but it might take longer to see the rewards.
Which one works best? There’s no one-size fits all answer. If you need quick wins to stay motivated, go with the snowball. If you want to save the most money over time, the avalanche method is for you. Stick with one and you’ll make progress either way.
5. Don’t be afraid to negotiate
If your medical bills are still keeping you up at night, it’s time to pick up the phone and call your provider.
Check your bills for errors: Before you start negotiating, make sure everything on your bill looks right. Catching any mistakes could save you a lot of money. If anything looks off, don’t hesitate to ask for clarification.
Talk to the billing department: Call the billing department and explain your situation. Hospitals and providers often have discounts, or payment plans they can offer, especially if you’re proactive and polite about it. Don’t be afraid to ask for help.
6. Consider other options
If your medical debt is still looking like a mountain, there are a few other options to consider.
Credit cards: Credit cards can be a lifeline in emergencies, but the catch is their high-interest rates. If you use one, look for a 0% APR deal and have a defined repayment plan before the interest kicks in.
Personal loans: A personal loan can consolidate your medical debt, often with lower interest rates than credit cards. With that said, be careful not to take out more than you can handle. It’s important to be realistic about what you can afford.
Government and nonprofit programs: If you qualify, government programs like Medicaid or Medicare can cover some medical costs. There are also nonprofits that offer assistance with medical bills. Take time to research what’s available to you.
Crowdfunding: It’s not for everyone, but crowdfunding can be a great way to get help. Platforms like GoFundMe let you share your story and get support from friends, family, or even kind strangers.
Credit counseling services: Medical debt can be tricky, but you don’t have to face it alone. Credit counseling services can help you create a debt repayment plan and negotiate with creditors, often at no cost to you.
Bankruptcy: Bankruptcy should absolutely be your last resort, but sometimes it’s the best choice to make for a fresh start. If you’re considering this, talk to a bankruptcy attorney to understand your options.
Conclusion
Medical debt can feel like a huge weight on your shoulders, but remember, it’s about taking it one step at a time. Now that you’ve got the tools and know-how to regain control, just keep moving forward.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.