331. Debt Solutions: Credit, Loans, and Medical Bills

Kati (00:00):
Whether you have credit cards, loans or medical bills,
debt can feel overwhelming.
The good news is, there areseveral proven strategies to pay
off different types of debt.
Stay tuned for ideas on how totackle your high-interest credit
card balances, ways to pay offa car loan or heal up those
pesky medical bills.
Thank you for listening to theDebt-Free Dad podcast, where we

(00:27):
help everyday, normal peoplelike you take control of your
finances and live a happier,less stressful life.
I'm Katie, your host fortoday's episode, and I've been
on my journey to debt freedomfor just over six and a half
years and I've paid off over$211,534 in student loans, car

(00:48):
loans, medical bills and creditcard debt all on a single income
.
Just like there are multiplekinds of debt, there are
different ways to approachpaying off each of these types
of debt.
Today, let's talk about some ofthe best methods to pay off
credit cards, loans and medicaldebts.
When it comes to credit cards,the most common repayment

(01:10):
strategies are the snowball andavalanche method when it comes
to credit cards.
Here are some effective tips topay off credit card debt.
The first thing you're going towant to do before you do
anything else is create yourbudget and track your spending,
know where your money is goingso you can allocate more towards

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debt repayment.
This means cutting outunnecessary expenses and
redirecting those funds to yourcredit card payments.
Second, you also need to stopusing your credit cards until
you can pay them off.
If you're not adding more debtwhile you're trying to pay them
down, that means you're notdigging as deep of a hole to get

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out of.
Try to always use cash or adebit card instead, and if you
come across windfalls, maybesome unexpected money whether
it's a tax refund, a bonus,inheritance, something like that
Try and apply as much as youcan towards your debt up front
so you're knocking those out asfast as possible.

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This is great for people whoare trying to just speed up your
debt repayment withoutimpacting your monthly budget.
You can always pick up a sidehustle to increase your income.
There's so much freelance gigwork, working overtime or
getting a side job that can helpyou accelerate your debt payoff

(02:35):
and then making sure that younever miss due dates and
avoiding those late fees oroverdraft charges.
Set up your payments so theycome out automatically from your
bank account.
You just got to make sure thefunds are in there, all right.
So, as far as credit cards go,there are two popular methods
for paying off credit card debt.

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Here at the Debt-Free Debt, wefocus on the debt snowball
method.
We want you to write down yoursmallest balance to largest
balance of your different debtsand then you want to focus on
paying off that smallest balancefirst, while you're making
minimum payments on the rest ofyour debts.
Once that smallest debt is paidoff, roll that payment into the

(03:20):
next smallest debt and thatprogress will speed up for the
next one and follow that all theway through.
This method is best formotivating people who need those
quick wins, especially if thatmomentum is what you need to
keep going.
If you are looking at the debtavalanche method, this would be
where you prioritize paying offyour credit cards with the

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highest interest rate first,while making minimum payments on
the rest.
Once those highest interestdebts are gone, move on to the
next.
This is for people that areconcerned with saving the most
money on interest over time.
However, we always say if itwas a math problem, you probably
wouldn't have gotten into thisin the first place.

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Anytime you've got debt, if youwant to hit it a little harder
is making extra paymentswherever possible Instead of one
$600 payment every monthinstead of waiting for the due
date.
If you pay every week $150towards that debt, anything with
interest is going to just beknocked down a little bit as you

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continue.
That makes the interestaccumulation taper off and then
it also shortens your payofftimeline is.
Negotiate with your creditors.
Call your bank, call yourcredit card company and ask for
a lower interest rate or if theyhave some kind of relief plan
whether it's temporary or ahardship program that helps you

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longer term.
It never hurts to ask.
The worst they can say is no.
But if you don't ask, theanswer is always no.
A good payment history willincrease your chances.
Sometimes they'll offer reducedrates or waive some of the fees
, but that's going to depend onthe bank.
Again, if you're strugglingfinancially, like overall, it's

(05:10):
a hardship situation those arethe best methods for that.
Some people just need a simpleway to accelerate their debt
payment.
So rounding up your payments.
Let's say the monthly paymentfor that bill is due $320.
Why not round it up and make it$350?
This does still help.

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Any little bit that you can addto your payments is going to
help over time.
And for some people's place ofemployment, they offer an
employer loan repaymentassistance.
This is great for student loansespecially, but they might
offer a benefit that it neverhurts to check in with your HR
department and see if they offerassistance to their employees.

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Now, when it comes to medicaldebt, this one can be a little
trickier because it also comesprobably with some emotions as
well.
So the first thing you want todo is try and always review the
bill, the itemized bill, ask forthe itemized invoice on it so
you can check for errors, verifyall the charges, because

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sometimes medical billingmistakes happen and it's pretty
common.
This is also another placewhere you can negotiate with
your provider and ask for somekind of discount, especially if
you're paying all in full or incash up front.
If they don't have to deal withinsurance companies, sometimes
they are willing to just makethat easier and it takes some of

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the work off of their end.
Too Many hospitals offerhardship programs or financial
assistance, so that is somethingthat you can also request from
the hospital or the provider.
And then setting up a paymentplan, no matter what your
balance is on it.
Most providers provideinterest-free or super low

(07:00):
interest payment plans and youjust need to negotiate a monthly
amount that fits your budget.
Do not put them on credit cards,even if it's a zero percent and
you're pretty sure you can payit off in that period, depending
on what the health issue was.
If you're out of work orsomething else happens, there's
complications and you might notbe able to pay that off.

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That's just where it getsreally risky when you start to
put medical bills on a creditcard.
There are also plenty ofnonprofit organizations
available that offer financialaid for medical bills, such as
the Health Well Foundation andPatient Advocate Foundation.
There's also lots of stateprograms, depending on where you

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live, that may offer reliefbased on your income.
If you have an employer or aninsurance plan that offers a
health savings account, an HSA,or a flexible spending account,
an FSA, use those tax-free fundsto cover any eligible medical
expenses, so it's not dippinginto your personal savings.

(08:03):
And again, if it's a hugemedical bill, you want to be
able to ask if they will settlefor an amount that's less than
the overall debt you would haveto call the provider, or if it
has gone to collections alreadyand be able to offer a lump sum
settlement at a reduced rate.
Again, it never hurts to ask ifyou're in those kinds of

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situations.
I hope these are some tips thatmight spark an idea for you if
you have these different kindsof debts that you're looking to
pay off.
And until next time, thanks forlistening to the Debt-Free Dad.

Brad (08:38):
Now listen if you're ready to break free from living
paycheck to paycheck which, ifyou're listening, I hope you are
.
You want to reduce financialstress.
You want to build savings.
You want to finally pay offdebt for good, but you're not
sure where to get started.
Don't worry, we've got youcovered.
Here at Debt-Free Dad.
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(09:01):
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You're also going to gain thetools and the confidence to
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Thanks for joining us ontoday's show and we will see you

(09:24):
guys on the next episode.