MM WWYD

realisticdreams · May 2016

Hi Ladies, I haven't been on here in a while but I need some financial advice on what you would do with $10,000 (no strings attached).

We have $14,660 in credit card debt. Down from $30,000+ a few years ago. We had to go to 1 income because our daughter's are both medically fragile and traveled from VA to MI 7x for neurosurgery treatment in a years time. I'm trying to figure out how we could best spend the 10k on our credit cards. (ETA % rates) Our credit scores are actually both very good, these cards are half and half and we always pay on time.

Im not sure if we should pay off ALL but Card #7? DH wants to pay off Card 7+ others. We also have to pay for cobra soon which is $2400/month $2000/month if the let us drop dental/vision, this would be for 3 months most likely.

Card 1/care credit 1	$25.00	0%	$150.00
Card 2/care credit 2	$25.00	0%	$610.00
Card 3/cap one 1	$59.00	25.15%	$1,840.00
Card 4/Barclay	$45.65	20.24%	$2,040.00
Card 5/Amazon	$80.00	26.24%	$2,700.00
Card 6/Cap one 2	$61.00	19.15%	$2,120.00
Card 7/Gander Mtn	$187.00	24.99%	$5,200.00

	$482.65		$14,660.00

crunchymommy15 · May 2016

given your daughter's medical conditions, do you have your Max OOP for your insurance plan in savings?

This is really hard, and I'm not certain what I would do in this situation. Do the monthly payments fit into your working budget?

I'd maybe be inclined to pay-off the gander mountain and then keep the rest to cover fututre medical expenses out of pocket (opposed to on a card like carecredit). then take the $187 and use it to start a snowball, target capital one, once that's paid off keep the snowball going and put the $248 towards amazon, etc. once you have them all paid off I'd recommend putting the ~$500 a month you won't be spending on credit cards into some kind of savings account for health care expenses. once you have a good amount saved, if you're not already on a HDHP you might look into getting onto a HDHP, you'll meet your deductible early and you'll have access to a HSA, which is a triple tax advantage savings vehicle.

(for regs on the board this is GDaisy09)

LillibetteV · May 2016

Since the Care Cards don't charge interest I would definitely leave them for last. You could pay off Gander Mountain, Cap One 2, and Amazon (assuming you can add $20 to that $10k).

The remaining balances (a) don't all accumulate interest and (b) have a total payment of $154.65 which is less than the Gander Mountain minimum that you'd be left with if you paid off everything else and kept that one instead.

Xstatic3333 · May 2016

So sorry for all you are going through with your daughters. I can't imagine how tough that is.

I have a few questions on the financial side. You mention Cobra; did you or your H just switch jobs or lose a job? That's a qualifying event to get on an ACA plan. I know the quality of plans available really varies by state, and you clearly need pretty solid insurance, but I bet you'd have a good chance of getting a better deal than the Cobra. I'd look into it before you start writing those big checks.

Before spending it all on the CCs, I'd probably look at my savings and make sure I had enough for any upcoming medical expenses, upcoming life expenses, etc. plus an emergency fund. How big the e-fund needs to be is a topic of debate around here. Ours is just a few thousand dollars since we don't have kids yet, but you may want a full 3-6 months in your situation. $10,000 would be a great way to build that up quickly.

If you do decide to spend it on the cards, I probably would do what you suggest and pay off all but the Gander Mountain card, and then put the rest towards it. If Cobra for 3 months turns out to be your only option, and you can't cash flow that expense, I'd put aside what you need for that and then pay off as many of the smaller debts as I could.

crunchymommy15 · May 2016

I believe care credit is only interest free for 6 months after each charge is made. this is a great way for someone with a HDHP and expensive medical cost to spread out cost if they tend to meet their deductible/Max OOP early in the year. (For example people who might have a Prescription that costs $10K a month, and a $2600 Max OOP, they can charge the $2600 to care credit in january and then have until june to pay the $2600 interest free), but I think after the inital 6 month grace period the interest rate on carecredit is actually quite high.

Xstatic3333 · May 2016

crunchymommy15 said:

I believe care credit is only interest free for 6 months after each charge is made. this is a great way for someone with a HDHP and expensive medical cost to spread out cost if they tend to meet their deductible/Max OOP early in the year. (For example people who might have a Prescription that costs $10K a month, and a $2600 Max OOP, they can charge the $2600 to care credit in january and then have until june to pay the $2600 interest free), but I think after the inital 6 month grace period the interest rate on carecredit is actually quite high.

It depends on the type of charge. CC gives you 6 months for vet charges and a year for dental. I'm not sure how long it gives you for human medical costs. You're correct, after the promotional period the interest rate balloons up to something around 30%. The good news about CC is that they spell it out really clearly on the website, as opposed to trying to trick you into blowing through the promotional period like many store cards do. In any case, OP's Care Credit charges are so low that I'm not sure keeping them around makes sense at this point. If it were me I'd probably just pay them off.

cbee817 · May 2016

Xstatic3333 said:

So sorry for all you are going through with your daughters. I can't imagine how tough that is.

I have a few questions on the financial side. You mention Cobra; did you or your H just switch jobs or lose a job? That's a qualifying event to get on an ACA plan. I know the quality of plans available really varies by state, and you clearly need pretty solid insurance, but I bet you'd have a good chance of getting a better deal than the Cobra. I'd look into it before you start writing those big checks.

I agree with this piece- your girls may even qualify for some type of medicaid coverage given their health situations and your role as their caregiver.

I would look into this before paying off any credit cards and then I would pay off the Gander Mountain and snowball the others starting with the Amazon card (#5).

hoffse · May 2016

I'm going to answer this assuming you can afford the COBRA. If not, then I think that comes before any of this. But if you have $10K available to you after accounting for your upcoming medical bills, this is how I would spend it:

I would pay off cards 3, 5, and 7, and then put the $260 left on card 4.

Then I would probably open a Chase Slate (or similar) and transfer the balances on the other cards to the Slate card. This would amount to $4,680 being transferred. The Slate card has a $0 transfer fee and 0% APR for 15 months.

You are currently spending about $480/month on minimum payments for these cards. Redirect the entirety of that $480 toward the Slate card. You would be credit card debt free in 10 months, and you would not pay any additional interest.

Balance transfers aren't something you should do too often, but I think it's an OK approach when you are getting to the end of your credit card debt, and you just need to buy yourself a little extra time to pay it down.

realisticdreams · May 2016

LillibetteV said:

Since the Care Cards don't charge interest I would definitely leave them for last. You could pay off Gander Mountain, Cap One 2, and Amazon (assuming you can add $20 to that $10k).

The remaining balances (a) don't all accumulate interest and (b) have a total payment of $154.65 which is less than the Gander Mountain minimum that you'd be left with if you paid off everything else and kept that one instead.

I love this idea. And we will actually have the $$ to pay off both care credit cards too with DH safety bonus. So we would be left with just 2 cards. We had already projected to pay off all the cards by the end of the year. The charges on the care credit are from the last month or so-lost my rx sunglasses in water-legally blind so had to go to lenscrafters and the other was a vet bill-girls left oreos on the couch and he hate the whole bag.

AprilZ81 · May 2016

I would, at a minimum, pay of the Gander Mtn card since it is the highest balance and a high interest rate.

I echo PPs suggestions of looking into a new ACA plan if your husband has lost a job or lost insurance coverage. And Medicaid might be a good option for the girls (and possibly the whole family) depending on your overall financial situation.

If you don't have any sort of emergency fund I would just pay off the one card to give yourselves some breathing room and keep the other half of the money available for medical expenses.

Are you able to put back any money right now or is it all taken up by living and debt payments?

realisticdreams · May 2016

Xstatic3333 said:

So sorry for all you are going through with your daughters. I can't imagine how tough that is.

I have a few questions on the financial side. You mention Cobra; did you or your H just switch jobs or lose a job? That's a qualifying event to get on an ACA plan. I know the quality of plans available really varies by state, and you clearly need pretty solid insurance, but I bet you'd have a good chance of getting a better deal than the Cobra. I'd look into it before you start writing those big checks.

He *might* be switching jobs and we could potentially be moving out of state. The ACA plans in the state we are looking at are awful and HMO only. We will have met our max out of pocket for this year with our insurance after some more scans this week. We just can't do HMO going into a new state and needing 20+ doctors each. We may hold off on the move until next year, its' up in the air.
Before spending it all on the CCs, I'd probably look at my savings and make sure I had enough for any upcoming medical expenses, upcoming life expenses, etc. plus an emergency fund. How big the e-fund needs to be is a topic of debate around here. Ours is just a few thousand dollars since we don't have kids yet, but you may want a full 3-6 months in your situation. $10,000 would be a great way to build that up quickly.

If you do decide to spend it on the cards, I probably would do what you suggest and pay off all but the Gander Mountain card, and then put the rest towards it. If Cobra for 3 months turns out to be your only option, and you can't cash flow that expense, I'd put aside what you need for that and then pay off as many of the smaller debts as I could.

Xstatic3333 · May 2016

That makes sense, @realisticdreams. It's good you looked into it to cover your bases at least.

Erikan73 · May 2016

If you use all the money to pay off the CC, then I would pay off cap 1, Barclay, amazon and cap 2. and then put whatever you have left to the last cc. Reason being is more of a mental game. For me to get rid of 4 bills and only having to worry about 1 interest charging cc would feel like a ton of weight being removed from my shoulders.

csuave · May 2016

Whatever cards you can't pay off and need to leave open it could be worth calling them and seeing if they will lower the interest rates for you.

vlagrl35 · May 2016

haven't read all the replies yet but DAMN that's a lot for COBRA - like more than a house payment. I would highly recommend looking into ACA - I think as long as you make $60k or less you get a tax subsidy. We have been on it for 2 years and although we did have a bit of a nightmare being dropped off of it without knowledge - its the best coverage we've ever had.

brij2006 · May 2016

1. I'd look into a different health insurance option. Call an independent insurance agent in your area and have them help you. With the new ACA laws, you should be able to purchase a separate insurance policy even outside of the marketplace.

2. If there are a bunch of things up in the air right now. Like a move and the girls' health testing. I would sit on the cash for an extra buffer until those things get sorted out and decided on.

3. Once things are calmed down, I would work these from smallest to largest, then snowball those payments onto the last card (plus work on the budget to pull extra from it), and get them gone.

als1982 · May 2016

Where are you moving, and why have you been traveling to MI for your daughters' care? Childrens National in DC is a fabulous hospital.

As for the debt, I'd put $1000 aside for true emergencies (I wouldn't consider prescription sunglasses a real emergency) and put the rest towards the cards, paying off the highest interest rates first.

Good luck!

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