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Dave Says Knock Out that Hospital Bill
Townhall.com ^ | January 1, 2013 | Dave Ramsey

Posted on 01/01/2013 8:04:29 AM PST by Kaslin

Dear Dave,

My wife and I are 70, and we have $950,000 in annuities in the market, plus $68,000 in our emergency fund. The only debt we have is our mortgage. I’m considering converting our stocks to a money market account to lower the risk. What do you think?

Howard

Dear Howard,

There are two sides to this. One is the asset allocation method, where as you grow older you move away from equities like mutual funds toward safer, more conservative investments like money markets, bonds and certificates of deposit. This is standard financial planning theory.

I disagree with that theory, and here’s why. Statistics show that if you make it to 72 years of age and are in good health, you have a high probability of living into your nineties. If you’re making around one percent on your money market and inflation is four to five percent, then your money isn’t going to be worth a lot. You need to outpace inflation, at least with your investments, in order to break even.

You might move some cash over to money markets and CDs for your own peace of mind, but I’d also recommend growth and income mutual funds along with some balanced funds. You want the entire group to be hitting the four to five percent range over the next several years, so you can at least keep up with the rising costs of gas and bread.

In my mind, you’re avoiding one type of risk by moving everything to money markets, but you’re taking on a different kind of risk—the chance you’ll get tackled from behind by inflation. My advice is to balance things out so you can sleep better at night, but at a pace where you and your money stay ahead of the curve!

—Dave

Dear Dave,

My wife just had our first child. As a result, we now have $2,500 in medical bills not covered by insurance. We’ve got $7,000 in our emergency fund, and I make about $25,000 a year. Should we dip into our savings for this or set up a payment plan with the hospital?

Matthew

Dear Matthew,

Congratulations on your new baby! I know this is going to make the new year extra-special for you.

If I were in your situation, I’d write a check today and knock out that hospital bill. This definitely falls under the heading of “emergency” in my mind, so pay the bill and jump back into rebuilding your emergency fund.

You’ve done a good job of saving on $25,000 a year, but let’s look around and see what you can do about making more money, too. Additional classroom education or extra training in your field could increase your income pretty quickly. Your emergency fund probably needs to be a little bit bigger as well, and it’ll be a lot easier to make this happen if you’re bringing in more cash.

I’m sure you’re a hard-working guy, but the truth is it’s going to be pretty tough for even a small family to make it on what you’re bringing home now. Life happens, and the unexpected can become a common occurrence when there’s a little one loose in the house!

—Dave


TOPICS: Miscellaneous
KEYWORDS: daveramsey; money; mutualfunds; ramsey

1 posted on 01/01/2013 8:04:33 AM PST by Kaslin
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To: Kaslin

I disagree with “knock out the medical bill”. We have med bills and pay between $10-$20 per month interest free on them. It has no effect on our credit and they give us zero grief.


2 posted on 01/01/2013 8:12:23 AM PST by albie
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To: Kaslin

As I understand it, as long as you make payments towards the hospital bill they can’t chase you down for it. I’d go that route rather than pay off the whole thing at once, since you might need that money for something catastrophic (loss of a job or something similar) where missed mortgage/rent payments would be a lot more significant than a small unpaid hospital bill.


3 posted on 01/01/2013 8:15:09 AM PST by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: albie

Twice I have called to pay off a hospital bill and both times they offered to ‘settle’ without me even asking. The result was a reduction of anywhere from 30%-50%. I think there is a padding in the bill that they can take out if you pay in full. If you call a billing office to pay off medical expenses, ask about any discount for paying it off in full.


4 posted on 01/01/2013 8:27:29 AM PST by Cowgirl of Justice
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To: albie

Dave may own medical stocks and wants his $$$ now! ;-)


5 posted on 01/01/2013 8:27:51 AM PST by Average Al
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To: Cowgirl of Justice

We’ve done the same thing. We weren’t looking for a ‘discount’, but we were offered it! Yes, there must be padding in bills to offset those who have no intention of ever paying them. The medical institutions and companies must be happy to get money from folks who are willing to pay.


6 posted on 01/01/2013 8:45:21 AM PST by SuziQ
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To: SuziQ
Yes, there must be padding in bills to offset those who have no intention of ever paying them.
Was in ER a year ago - no big deal - my first time ever in a hospital.
Got a statement/bill a few weeks later and noticed NY State added a 9% surcharge to the bill.
Called my state senator (who I know personally) and he explained that the surcharge was to pay for deadbeats, illegals, etc.
I called him so many names he hung up on me.
7 posted on 01/01/2013 9:24:14 AM PST by oh8eleven (RVN '67-'68)
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To: Kaslin
you’re avoiding one type of risk by moving everything to money markets, but you’re taking on a different kind of risk—the chance you’ll get tackled from behind by inflation.
Wrong call for a 70 year old. The difference between money market interest and inflation may be anywhere from 1% to 5%.
Yeah, you may lose some buying power, but your principle is safe.
In contrast, if you're in mutual funds that tank 20% to 40%, that money is gone and the only way to replace it is to get a job ... at 70+ years old.
8 posted on 01/01/2013 9:32:18 AM PST by oh8eleven (RVN '67-'68)
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To: albie

“I disagree with “knock out the medical bill”. We have med bills and pay between $10-$20 per month interest free on them. It has no effect on our credit and they give us zero grief.”

Bingo. Much better advice. Also, he did not know enough about the “annuities in the market” to offer advice. Were there living benefits, and if so what are they and backed by whom?


9 posted on 01/01/2013 9:33:41 AM PST by jdsteel (Give me freedom, not more government.)
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To: Kaslin

Years ago we paid medical bills in small incremental payments, but now you can negotiate a bill, sometimes to half of what your owe.

I wouldn’t do it over the phone, I’d take cash in hand and walk into the payment office and say if we can settle this bill right now for “x” amount of dollars, I have the cash with me. If the billing office is in a different city (which some are) then you’ll have to do it over the phone.

An insurance company pays the hospital a huge reduction in their actual bill. Sometimes the bill is reduced by 80 percent. The hospital is willing to deal, especially if you’re holding cash in hand and it’s settled at that time (saves them labor costs and the uncertainty of whether they will be paid or not.) Just make sure you get it in writing that the amount you’re paying satisfies your debt.


10 posted on 01/01/2013 11:05:16 AM PST by memyselfandi59
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To: Cowgirl of Justice
The result was a reduction of anywhere from 30%-50%.

That's pretty good. A local hospital offers a big 10% off.

I think there is a padding in the bill that they can take out if you pay in full.

There is so much padding in bills from hospitals that they sometimes take off as much as 90% for certain payers on some charges.

11 posted on 01/01/2013 11:44:49 AM PST by wideminded
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To: Kaslin

Dave Ramsey lives in some kind of fantasy world when it comes to investing money , he’s great at killing debt but he STILL seems to thing that growth mutual funds average 8-12% growth and that the markets aren’t screwed, when they are so divorced from reality as to be laughable ... He also enjoys disparaging people that see gold as a wealth store... he encourages people to sell theirs off and uses the false argument that it “isn’t money” “can’t spend it at the Hess station, but they sure take those crummy paper dollars” ...


12 posted on 01/01/2013 12:30:23 PM PST by Neidermeyer
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To: Kaslin; CSM

Live like no one else so that later you can LIVE like no one else PING!


13 posted on 01/01/2013 9:35:58 PM PST by Altariel ("Curse your sudden but inevitable betrayal!")
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To: Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...

Dave Ramsey Ping. Thank you Altariel for the ping.

Let me give everyone an example of how nice it is to start LIVING like no one else. This is the first month for me without a mortgage payment and amazingly my current TV is starting to really decline and is most likely on the verge of failure. So, I started looking at new TV’s.

Wow, I couldn’t believe the prices for a basic flat screen TV. I could get a good size for about $300-500. Then I realized that those base models had no functionality and were way behind the current “smart” tv models. I looked around and found a Plasma that will be a huge upgrade for me, but it was a lot more expensive.

I hemmed and hawed about laying down so much money on one purchase for a couple of days, then I thought to myself, “hey, isn’t this why you lived like no one else, so now you can LIVE like no one else.”

So, I bought a new Plasma smart TV with all the bells and wistles AND a new home entertainment center to match it! The great thing is that I feel no guilt or “buyer’s remorse” at all, instead I am very excited for them to arrive so that I can enjoy my large purchase!

In all honesty, I am actually surprised at how easy it was to actually spend some money and am surprised that I have not had any regrets!

So all of you that are working hard to get through the Baby Steps, keep going. It will be worth it.


14 posted on 01/02/2013 12:54:53 PM PST by CSM (Keeper of the Dave Ramsey Ping list. FReepmail me if you want your beeber stuned.)
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To: Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...

Dave Ramsey Ping. Thank you Altariel for the ping.

Let me give everyone an example of how nice it is to start LIVING like no one else. This is the first month for me without a mortgage payment and amazingly my current TV is starting to really decline and is most likely on the verge of failure. So, I started looking at new TV’s.

Wow, I couldn’t believe the prices for a basic flat screen TV. I could get a good size for about $300-500. Then I realized that those base models had no functionality and were way behind the current “smart” tv models. I looked around and found a Plasma that will be a huge upgrade for me, but it was a lot more expensive.

I hemmed and hawed about laying down so much money on one purchase for a couple of days, then I thought to myself, “hey, isn’t this why you lived like no one else, so now you can LIVE like no one else.”

So, I bought a new Plasma smart TV with all the bells and wistles AND a new home entertainment center to match it! The great thing is that I feel no guilt or “buyer’s remorse” at all, instead I am very excited for them to arrive so that I can enjoy my large purchase!

In all honesty, I am actually surprised at how easy it was to actually spend some money and am surprised that I have not had any regrets!

So all of you that are working hard to get through the Baby Steps, keep going. It will be worth it.


15 posted on 01/02/2013 12:55:39 PM PST by CSM (Keeper of the Dave Ramsey Ping list. FReepmail me if you want your beeber stuned.)
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To: Kaslin

Step one is to call the hospital and say you want to arrange a payment plan, because most of the time they’ll knock half off the bill right then. And they won’t charge interest either, so might as well work a plan, time value of money is on your side when there’s no interest.


16 posted on 01/02/2013 12:59:09 PM PST by discostu (I recommend a fifth of Jack and a bottle of Prozac)
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To: CSM

Yes! Yes! Yes! Congratulations!


17 posted on 01/02/2013 4:29:24 PM PST by Silentgypsy (If you love your freedom, thank a vet.)
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To: Kaslin

The problem with dragging it out with payments is then you MUST make those payments every month. Get it over with, pay it off now if you can, then you’re not stuck with the past making ongoing demands on your future.


18 posted on 01/02/2013 5:35:04 PM PST by ctdonath2 (End of debate. Your move.)
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To: CSM

Indeed!

Good to have a reminder of what I may (Lord willing) look forward to one day.


19 posted on 01/02/2013 11:10:26 PM PST by Altariel ("Curse your sudden but inevitable betrayal!")
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To: CSM
Yes, the benefits of Dave Ramsey's ministry is AWESOME!

We too are completely debt free (paying off all debts after 5 years of work!).

As another example of what it is like on Step 7. You save for what you need and then you bargain with leverage. We needed a new roof, siding and garage doors. All looked terrible and were just about completely worn out.

'Normal' would have taken a Home Equity loan and been dumb with Debt. But we started a 'RoofSidingGarage' savings account with automatic deposits and started dumping as much as we could; just as if paying off debt (except for the beans and rice). The three held up for a year and a half and we saved up $17,000 for the project and just got it done.

This is definitely "Weird"!

Here are some photos if you would like to see: https://www.dropbox.com/sh/1744ljejwloa73o/Hx3BUHR1au

20 posted on 01/03/2013 2:39:16 AM PST by sr4402
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To: CSM
Yes, the benefits of Dave Ramsey's ministry is AWESOME!

We too are completely debt free (paying off all debts after 5 years of work!).

As another example of what it is like on Step 7. You save for what you need and then you bargain with leverage. We needed a new roof, siding and garage doors. All looked terrible and were just about completely worn out.

'Normal' would have taken a Home Equity loan and been dumb with Debt. But we started a 'RoofSidingGarage' savings account with automatic deposits and started dumping as much as we could; just as if paying off debt (except for the beans and rice). The three held up for a year and a half and we saved up $17,000 for the project and just got it done.

This is definitely "Weird"!

Here are some photos if you would like to see: https://www.dropbox.com/sh/1744ljejwloa73o/Hx3BUHR1au

21 posted on 01/03/2013 2:39:16 AM PST by sr4402
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To: sr4402

Great job! I bet you were able to negotiate a great deal too!


22 posted on 01/03/2013 8:31:27 AM PST by CSM (Keeper of the Dave Ramsey Ping list. FReepmail me if you want your beeber stuned.)
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To: ctdonath2

I’m with you about paying it off, only I’d call to negotiate it down, then get rid of it. With his small salary, I’d want as few monthly payments as possible. And if something major goes wrong that *has* to be paid, I’d rather not have the hospital bill hanging over my head.

Another option would be to negotiate it down, then pay it off over 3 months, not 12 or 24.


23 posted on 01/03/2013 12:32:43 PM PST by radiohead (Taxmaggeddon - are you ready?)
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