Category Archives: Money

Should You Finance High Medical and Dental Bills?

Should You Finance High Medical and Dental Bills?

Everyone has occasional sky-high medical or dental bills, many of which they did not anticipate. Some may be due to a newly-diagnosed health condition or an accident. Whatever the reason, when presented with a service estimate of hundreds or thousands of dollars, the question arises as to whether the service should be performed with the expectation that the patient will finance high bills over a period of months or years.

Since Americans are expected to carry some type of health care coverage or be penalized without it, most people have a certain amount of coverage. But many insurance plans do not cover all costs, and some cover very little of the actual expenses. If you are diagnosed with a serious illness or recommended to have a dental implant to replace missing teeth, or any health service that will cost thousands of dollars, should you take out a loan or charge the fee on a credit card? Here are a few points to consider.

Get a Second Opinion

For any serious medical or dental diagnosis that requires treatment, it is often a good idea to get a second professional opinion. Sometimes the recommended treatment can be delayed or reduced, depending on the patient’s condition or symptoms, to avoid the necessity of paying the entire fee up front or at the time of service. For example, if you need to have two wisdom teeth pulled and will have to pay $1,000 out of pocket, a second opinion might point out if the teeth aren’t bothering you at the moment, you can wait a few months and save some money toward the cost before having the teeth removed, which will reduce financing costs. Always ask the medical or dental expert if lower-cost options are available that will not compromise your quality of health care.

Negotiate For A Discount

As with other types of financial transactions, medical and dental services can often be negotiated. We’re all familiar with generic brands of drugs that are cheaper than brand names. Similar savings may be available with surgery facilities and rehab programs so that you receive the same level of care by driving a few miles more each way than paying a higher price for a closer facility, for example. Many medical providers will reduce their fee to accept only what insurers provide, so patients don’t have to pay anything out of pocket. Ask your doctor or dentist about optional services to see if anything less expensive is available and just as good.

Ask About Paying It Off Over Time

Before financing a huge medical bill, ask if the provider will accept monthly payments. For example, if you are carrying a $250 balance from several office visits after a bout of pneumonia, instead of taking out a loan for $250 and paying interest until the balance is paid in full, ask if the billing office will accept monthly $25 payments instead. Chances are they will, and you won’t have to pay interest.

Research Low-Interest Credit Options

If you are in a position where you have no other option but to take out a loan for a large medical or dental fee, for example, for a child’s orthodontic braces or adult Lasik surgery that may cost several thousand dollars, shop around for low-interest or no-interest finance plans. Some medical providers will direct you to medical finance agencies that specifically make loans to cover health care expenses. However, check with your local bank or consider low-interest credit card offers to get the best rate on a long-term loan.

Medical bills don’t have to break the bank, but they should be managed prudently to cut costs. Take time to explore all available options when making your payment plan with a doctor or dentist billing office.

Common Misconceptions About Credit Cards

Common Misconceptions About Credit CardsCredit cards can be a great tool to have around, but a lot of people don’t understand them as well as they think they do. Not being fully informed about them can lead to some costly mistakes. The following are some common misconceptions about credit cards.

Closing a Credit Card Helps Your Credit

When people intend to pay off their credit cards they often close out the old cards so they aren’t tempted to rack them up again. However, doing can be counterproductive to your credit score. You do want to pay your credit cards on time to keep good credit, but keeping them open will actually help build your credit. Instead of shutting them down just use them in very small amounts and then pay them off each month. If you don’t trust yourself to carry them around, then don’t. Use them as the default cards for your automatic bill pays and then cut up the physical card.

Having Many Credit Cards is Bad for Your Credit

This is not necessarily true. Your credit score does take a slight dip when you apply for a new card, but it’s possible to have ten cards and still have a great FICO score. For the average person, however, two is a great number to go with. Credit card owners are highly rewarded for having cards for long periods of time. In fact, 15 percent of your entire credit score is determined by the length of its history.

An Annual Fee Card Should Be Avoided

Credit cards that require an annual fee also offer perks, which is probably why you would choose to sign up for one in the first place. Maybe the card provides airline miles or points that you can use at the grocery store. It’s not necessarily a bad move to get a card with an annual fee, just as long as you’re actually using the perks. The perks should outweigh the annual fee, plain and simple.

Having a Balance is a Good Thing

Carrying a balance from month to month on a credit card does not help to increase your credit score. It only leads to a buildup of interest and requires more money from you in the future. Your credit score is not going to suffer if you pay off your balance each month, it will only suffer if you stop using the card completely or close it out in entirety. It’s up to you whether you carry a balance or not, but do know that it won’t necessarily help you.

It’s Okay to Go Over Your Limit

Many credit cards will, in fact, allow you to charge over your limit. But they will also charge you a fee when you do. Being penalized with a $30 or $40 fee for spending a few bucks over probably isn’t worth the move. Instead, work on paying down your cards and not relying on credit so that you’re not faced with that situation at all.

Interest Starts Accruing Immediately

Do you know when the interest on your purchases actually starts accruing? Many people don’t. The credit card company only adds interest to your purchases the following day after your monthly payment is due. That means that if you pay off your entire monthly statement on time each month, you won’t owe any interest at all.

When to Start Saving for a Child’s College Education

When to Start Saving for a Child's College EducationChildren are expensive, we have a 1 year old daughter, and diapers, toys, clothes, and daycare add up very quickly. But one of the larger expenses associated with kids is their college education, which means that considering how that will work is imperative. Consider the following points about saving for a child’s college education.

For the 2015-2016 school year, the average in-state on-campus public school costs came in at $19,548 for a four-year public school. That number climbs to $34,031 when a student is attending school out of state. Private schools cost an average of $43,921, while a two-year public commuter school was “just” $11,438.

Realistically, the earlier that you can start saving for your child’s college the better. The longer you allow money sit in a 529 or other investment account, the more interest you can make from it. If you start saving money when your child is just a baby, $5,000 can turn into $19,980 over a period of 18 years. assuming an 8% interest rate. If you started with $5,000 and contributed $100 each month, that account would balloon up to $68,500 by the time your kid is ready for college. But the truth is that the monthly payments are more important than the initial amount, so even if you don’t have $5,000 to stash away now, all hope is not lost. If you had $0 saved now but contribute $100/month for the next 18 years, that would result in a whopping $48,500!

Start Saving as Soon as Possible

The simple answer to the question about when to start saving is to start saving as soon as possible. But in reality, that’s not always possible and there are other priorities in many people’s lives that push saving off until that promotion or raise comes. If you’ve got a child who is 10 years old, you’d need to sock away $350/month for 8 years to hit the $48,500 mark. This just underscores why saving early and often is so important!

Of course, not everyone needs to pay for their children’s college education. I think it’s very important for students to have some “skin in the game” when making college decisions, and it can often lead to your kids taking school more seriously. Hopefully they make smart decisions and go to cheaper schools, but taking out some student loans to cover the cost of education doesn’t need to be avoided at all costs.

But Always Put Yourself First

Most parents would prefer that their kid isn’t entering the job force with debt hanging over their head. As many as 70% of students do end up taking that route. For example I had about $25,000 in student loan debt when graduating. Have your child investigate scholarship opportunities, too!

Keep in mind that your own savings are important to protect as well. You should not be giving up your own retirement account to help pad the college fund. While student loans are always available, the same does not hold true for a retirement fund. Another option is that if you’re in a more secure financial situation when your child has graduated, you can help pay off the student loans.