Saturday, December 5, 2015

Want an Easier Life? Commit to Becoming Debt Free Now!


Life is what you make of it. I want a life away from worry and stress. I want a life that I can control within reason. I can't do that when I am stressing out and worrying.

The single biggest thing that makes me worry and stress out? Debt.

Debt can rule your life. It can make you a slave to your money instead making your money work for you. It can cause your to lose sleep, become anxious, and generally be cranky towards those you love (and not love). Debt can be the factor that breaks up marriages, drives a wedge between family relationships, and can even cause medical issues due to stress and anxiety.

Who needs that?

I don't and you don't either. Do I know what I am talking about? Oh yes. I still struggle with it even today. I was doing well, but our medical bills exceeded what I had set aside in my emergency fund and savings. Ouch. I have insurance, but with deductibles and out of pocket expenses I got socked a bit. I still have a student loan that I was planning on getting rid of in the next year. And I have the dreaded car payment (that should be disappearing soon).

So I commit to becoming debt free. I want these bills gone. I know a lot of this will go away soon with my tax refund and extra income coming in, but in the meantime I am making payments on the medical bills, a student loan, and a car payment.

And I hate it. I am anxious about it. I am already an insomniac so losing sleep is already normal. Having debt doesn't help the insomnia though.

What do I do about this? What should you do about this?

1. I make monthly payments. No matter what. Even if my budget only allows a $25 payment, that is what I do. Making a monthly payment shows that you are making an effort to pay the bill. Making monthly payments will also keep you out of small claims.

2. I make a list of my debts from smallest to largest. Dave Ramsey suggests this in his debt snowball program and I totally agree with it. I tackle the smallest debt first. When that debt is paid off, I continue onto the next debt. If another bill shows up, I readjust my debt list to include that bill. I was still getting new bills from a doctor appointment and tests in August in November yet. I was constantly shaking up the list for three months in a row.

3. I make a plan of attack. I look at my budget and decide what I can do to pay now these extra debts. This month I paid off the $52 bill to one hospital. I have four other medical establishments to deal with yet (labs and radiology reads, MRI at a different hospital, dental, and our usual hospital). I paid $50 to each of the other places. The next bill is $130 and I will tackle that next month. I continue to make the same payments for student loan and car.

I know from working in accounts receivable that companies would rather see an attempt in payment even if the amount is low. If they do not see an attempt in payment, they wonder if you ever intend to pay and will proceed with tougher bill collecting. Most companies understand that people are on tight budgets and tough times happen. You should always talk to the companies and try to pay what you can.

4. I look over every bill before I even begin to think about paying it. I caught a mistake in October when I realized that the company that reads the MRI did not file to the right insurance. While I knew this was probably going to the deductible on the insurance, I also knew I would benefit from having it refiled right. I did benefit from it because the bill was cut in half with the savings from Blue Cross Blue Shield. You need to carefully read over every bill and question everything. Don't be afraid to call either and ask what a certain charge is. You should be able to understand your bills.

5. I commit to avoiding debt in the future. This year I had one daughter injure herself and another daughter who needed treatment for an old injury. These were unavoidable and not within my control. I try to save my money for these situations and avoid the situation I find myself in now. I am going to save money for a vehicle for when I need to purchase another one.

Committing to becoming debt free only works if you pay your debts you have now first. After you have those paid off, take that money and put it in savings for the next crisis or large purchase. Using credit cards or using charge accounts will not help you stay debt free either. Being debt free means not accruing debts and creating more. 

Thanks for reading,
Erica

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