Medical Bills/ Credit Card Debt spiraling out of control

**JoeP** · 05-29-2012, 09:20 AM

Are your medical expenses fully accounted for in your credit card balances?

In any case, I'd drop the cable and cell phone and go prepaid for a while. You can get basic internet for somewhere around $40/mo or less with introductory offers. Prepaid cell phones are very cheap (I pay $80 a YEAR, although I am a light user). A little sacrifice here will allow you to free up around $130 a month that you can apply as extra principal toward the credit cards.

Can you find a cheaper gym? There are a bunch of lower cost gyms here that cost $30-$40/mo.

I'd avoid a loan to pay down a loan. Call your CC companies and just tell them that you want a better rate. You might be surprised to learn that they will usually give you a small break.

Finally, Dave Ramsey's advice on paying down the smallest debt first might give you a "win" to lift your spirits a bit. Kill off the store credit card, then attack the MC, then the visa. I'd also close out the Amex and Discover and one of the others. Do you really need 4?

**breathemusic** · 05-29-2012, 09:39 AM

I'd cancel the gym membership totally. There are plenty of ways to get exercise without going to a gym. look up home workouts on the internet and you can save over $100 a month right there.

I'm in agreement about not getting another personal loan to pay off the credit cards. But could you potentially find any offers for 0% cards for the first 18 months or whatever? Just transfer a balance to the card that you think you could reasonably pay off before the end of the period. Of course, it's still worth trying to get your interest rate lowered on the existing cards.

**disneysteve** · 05-29-2012, 09:48 AM

Cancel cable and gym. You don't need either.

How many people are you feeding for $350/month on groceries? Many people around here feed a family of 4 for that amount. If it is just you, I'd sharply cut that back, at least in half.

Those 3 changes (cable, gym, food) will free up a lot of cash that can go toward debt reduction.

**maat55** · 05-29-2012, 02:11 PM

I'm curious as to why you have life insurance. I am assuming you carry term and have a higher rate due to your medical history. If you are single, drop the life ins. This is assuming that you own all of your debt yourself and are not married.

You need to stop using your cards. Your first priorities will be paying your rent, utilities, reduced food bill, auto expenses etc. before credit card payments. Pay your minimums and attack the two smaller debts first.

I would eliminate the cell, cable and gym. Added is that your housing is far too much for your income. You should find a cheaper place to live.

These things done together will free you up substantial extra income. Being single without children, you could find extra work. You need to adjust your expenses to fit your income. Sacrificing on luxuries while you pay down debt will change your spending and saving habits. Good luck.

**eforce123** · 05-29-2012, 06:48 PM

Hi guys- thanks all for great responses I'll respond to why I have the following expenses that I have:

cellphone cable- is on contract. the prepaid is a great idea, but the forfeiture fee would not be worth it.
Life Insurance- this is a whole policy that builds cash value, that and I am grandfathered and can never get again at the rate that I"m getting it.
Gym- Contract yet again.
Rent: This is not a bad idea, but I REALLY don't want to move. I've moved very year since college and my apartment is a steal (in chicago on lake michigan) in comparison to other options in the area.

Some info I do need to add

$600 in Cash Value in the Life Policy
$5k in 401k
$3k in emergency savings

I guess there aren't any debt consolidation tactics I could consider? I'm cringing at the idea, but it maybe a great option to move, that and or get a second job. At 70k year $1100 isn't all that bad, but it's tough at $45k-$50 + $9k debt.

Thanks all for the feedback some tough, tough, decisions to make.

**eforce123** · 05-29-2012, 06:55 PM

duplicate

**MonkeyMama** · 05-29-2012, 07:29 PM

I just had to add while many of the comments are about cable and gym, the thing that stuck out of me is the rent. Can you take on a roommate? I know neither is ideal, but something has to give. {For reference, I am from one of the most expensive cities in the U.S. Which is probably why roommate comes front of mind to cut costs - but there are always options with a little thinking outside the box}.

Good Luck!

**sblatner** · 05-29-2012, 09:32 PM

I'd say think about a renter for a short term rental. Maybe get a job as a tutor or something in the evenings/weekends if you think you would be good at it. Parents pay a lot of money for something like this. Sells things on Ebay. Check out the website of the guy from Harvard who paid off $100k in 8 months. He was very creative. It won't take too much to get you out of debt if you focus on it.

**disneysteve** · 05-30-2012, 05:08 AM

Originally posted by eforce123 View Post

cellphone cable- is on contract. the prepaid is a great idea, but the forfeiture fee would not be worth it.

Gym- Contract yet again.

Are you sure that the early termination fee isn't worth it? I would run the numbers. How much is the fee and how much will you save every month by paying that fee? Let's say the fee is $250 but you'll save $100/month by not having that bill. In 2-1/2 months, you'll break even. I'm just making up numbers here but I'd advise checking the actual numbers in your case. Much of the time, breaking the contract still works out to your advantage.

As for the gym, are you actually using it? You had open heart surgery 6 months ago so I wonder what your exercise status is at this point. If you aren't able to use it, see if you can have your doctor write a letter to get you out of the contract.

**JoeP** · 05-30-2012, 08:59 AM

Why do you have life insurance? It is typically for people who have current and projected financial liabilities (e.g., kids' college) that they want covered at the time of death so that the estate is not liable for payment. Without a spouse or kids, I have to question this expense. When you do have kids and a spouse, then you'll be better off with TERM life insurance. Use other financial vehicles for your investments, not life insurance.

Regarding your contracts, run the numbers as suggested by ds. You are experiencing why contracts are rarely a good idea: you are stuck with them regardless of your financial or usage situation.

**disneysteve** · 05-30-2012, 09:18 AM

Originally posted by JoeP View Post

Why do you have life insurance? It is typically for people who have current and projected financial liabilities (e.g., kids' college) that they want covered at the time of death so that the estate is not liable for payment. Without a spouse or kids, I have to question this expense. When you do have kids and a spouse, then you'll be better off with TERM life insurance. Use other financial vehicles for your investments, not life insurance.

Typically, I'd agree with you, but this is now a 25 year old with a significant medical history who may be unable to get term insurance in the future. $50/month is not going to make or break his finances at this point. He has bigger problems to deal with. I say keep the whole life policy now that you have it and might possibly be uninsurable. It isn't the coverage any of us would have recommended but this is one of those cases where it is probably good that you got it.

**breathemusic** · 05-30-2012, 10:20 AM

I agree with DS. At this point it's probably worth it to just keep the policy. However, the cash value is so low that I'm wondering how long ago you got the policy. Even though your premium is the same every month, I question how long it will be before the actual cost of the policy is higher than your premium and you have to spend more just to keep it going.

I have a universal life policy as well... but it was bought when I was born and payments turned over to me when I was 18. I figure at least the cash value of the policy is high enough that even when I get older it will be able to stay afloat without me paying more than the premium, and when I don't want/need any more life insurance I'll just turn it into an annuity. Not my ideal choice for life insurance, but it's the hand I was delt!

Either way, for your situation it seems like you have other ways to save money that can be put towards debt.

Oh, and I know you mentioned that you cable and cell, etc are on contracts that you don't want to cancel, but even if you don't cancel the contract, you can probably at least adjust it so it's the cheapest plan they offer. At least then you wouldn't have the hassle of changing your phone number (unless you have the option of keeping the same number?).

**bethasaver** · 05-31-2012, 06:27 AM

What are you paying for medical bills and what's the total? Have you worked with the billing office to negotiate a reasonable monthly payment? I work in healthcare, and can tell you that if you consistently pay something even $50 per month, generally the institution is happy because it's not carried in their bad debt bucket and they don't have to pay bill collectors to hassle you. Good luck to you, keep your head up.

**snafu** · 05-31-2012, 08:55 AM

One more thing...I've noticed that many posters find significant errors in their medical bills like being charged twice for the same procedure and charges for procedures that were changed/cancelled. If you have not done it, I suggest you review the statements looking for errors which could be disputed and ultimately reduce the sums charged.

Since you want to stay in your current apartment, please consider a roommate short term. You lose some privacy but gain the benefit of non-taxable income.

Medical Bills/ Credit Card Debt spiraling out of control