by Ashley
First, thanks for all the great comments and advice on my Medical Debt Collector Dilemma post!
If you haven’t read the comments, then I’ll give you the update: I was able to negotiate our medical bill down into 3 equal sized payments to be paid across the next 3 months (February through April), and then the medical debt will be GONE and nearly $2,000 will be forgiven. Some commenters noted how this will ding our credit, but seeing as we’re unlikely to be needing any new lines of credit anytime soon, I’m not too worried about the ramifications. I feel like we’re pretty well “set” with our current debts (great mortgage rate, good credit card balance transfer options for paying off student loan debt) – we won’t be adding any additional debts, hopefully EVER!
I’m kind of excited about being rid of this medical debt. We prioritized it below everything else so far simply because it was at a 0% interest rate. But with the offer to forgive $2,000 of the debt, it had to be bumped up to the top of our priority list (which will change the “debt payment” proportions that I had just posted in our 2017 budget. Oh well, budgets need to be flexible!).
I know there are strong feelings on both sides of the fence regarding whether it is morally “okay” to negotiate down debts as opposed to paying the bill in full. We would have paid the bill in full. That was always our intention. But we also weren’t in any hurry about it with so much student loan debt racking up in excess of 6% APR. The offer to settle for less than was owed was solely initiated from the medical debt collection agency, itself. So I feel like it was a fair transaction. The medical company will receive their payment (much sooner than they would have otherwise, at that), and we will soon be able to cross off one more debt from our list of debts!!!
One other thing I wanted to mention was regarding credit card balance transfer options. When I realized I would be unable to refinance my student loans away from Navient with one of the big/respected student loan consolidation companies, some of you recommended continuing to do credit card balance transfers. So I applied for a new credit card and promptly transferred another student loan away from Navient. Again – a super controversial thing in the world of debt repayment. I wouldn’t recommend this option for everyone, but I’ve been doing it a couple years now and have had great success with it. I literally only use the credit card for balance transfers (it’s not even in my wallet – it would otherwise be cut up and destroyed because it serves no purpose otherwise). So now I’ve got TWO credit cards designated specifically for doing balance transfers. The balance transfer fees have been low (between 2-3%) and I receive 0% APR as long as balances are paid in full by the due date (which I closely track and monitor and have never had a problem with). So….it works for us. Unconventional? Yes. Would I recommend it for everyone? No. But it’s working for us.
And so with some explanation of our debts (and, specifically, the new credit card balance transfer debt you’ll see), I present to you January’s Debt Spreadsheet:
| Place | Current Balance | APR | Last Payment Made | Last Payment Date | Original debt, March 2014 |
|---|
| Navient - Federal 2 (unsubsidized) | $11098 | 5.80 | 42 | January | 82433 (all school loans, combined) |
| Navient - Federal 3 (subsidized) | $8624 | 5.80 | 25 | January | |
| Navient - 2 (subsidized) | $8531 | 6.55 | 25 | January | |
| Navient - 7 (subsidized) | $7226 | 6.55 | 21 | January | |
| Navient - 8 (subsidized) | $6398 | 6.55 | 19 | January | |
| Navient - 9 (subsidized) | $8531 | 6.55 | 25 | January | |
| Navient - 10 (unsubsidized) | $9772 | 6.55 | 2018 | January | |
| Balance Transfer Student Loan #2 | $2200 | 0% (through April 2017) | $800 | January | $7650 |
| Balance Transfer Student Loan #3 | $4594 | 0% (through October 2018) | | | |
| Medical Bills | $5586 | 0% (must be paid by April) | $25 | January | $9000 |
| Balance Transfer student loan #1 | $0 | 0% | - | Paid off in March 2016 | $5937 |
| PenFed Car Loan | $0 | 2.49% | - | Paid off in January 2016 | $24040 |
| License Fees | $0 | 2.5% | - | Paid off in April 2015 | $5808 |
| BoA CC | $0 | 7.24% | - | Paid off in June 2014 | $2220 |
| Mattress Firm | $0 | 0% | - | Paid off in May 2014 | $1381 |
| Wells Fargo CC | $0 | 13.65% | - | Paid off in May 2014 | $7697 |
| Capital One CC | $0 | 17.9% | - | Paid off in March 2014 | $413 |
| Totals | $72,560 (Dec balance = 75,171) | | $3000 | | Starting Debt = $145,472 |
When I first started blogging back in April 2014, I had $145,472 total debt.
As of January 31, 2017, with a margin of under $200, we have finally hit our half-way mark! We now have $72,560 in debt.
Oh my gosh, guys! I can’t tell you what a huge milestone this is for us! I’ve been blogging for nearly 3 years and we have JUST NOW hit our half-way mark in terms of debt reduction. We likely have another 2.5 years to go (maybe less), so we’re over half-way in terms of the time spent in debt reduction mode. I just cannot even believe it. All the changes in the past three years, all the sacrifices, all the splurges, all the savings and the spending and the analyzing numbers over and over and over again. It just feels fantastic.
I know some have commented that the second half of debt reduction would just fly by. That as soon as we hit the half-way “tipping point” things would start snowballing and debt would just melt away.
I’ve got so far still to go, but I am hopeful and excited about the future!
And I want the debt gone sooner than our projections have it. I want it gone yesterday. I’ve been doing a lot of thinking of ways to reduce savings categories (temporarily) in order to throw more toward the debt. And there’s still some work stuff up in the air that will impact this whole process. I’m optimistic. It’s hard not to be. I may not be able to quite see the light at the end of the tunnel yet, but at least we’ve crested the top of the mountain and are about to make our descent. I can’t wait for the journey downward!
