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Elective Medical Procedures While in Debt

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This is my second year with a Health Savings Account. Last year we only had routine doctor’s appointments, and I had banked a decent amount of money into the HSA. Our family out-of-pocket-max is $7,000 so that’s the amount I invest.

This year, and another $7,000 being invested, I knew I wanted to take the plunge on a couple of elective medical procedures I’d been thinking about for quite some time.

Why now? HSA vs FSA

For the first several years at my job (where I started work in 2015), I had a Flex Spending Account. The reason I’d opted for an FSA initially is that it allowed for more coverage with our insurance (lower deductible). That was important to me at the time, given that some of our medical expenses were variable and unexpected (helloooooo, kidney stones!)

The big down-side to an FSA is that the funds are use-it-or-lose it. As a result, I would contribute less money annually since it didn’t roll over from year to year. The “pro” for both FSAs and HSAs is that the money is deducted from my paycheck pre-tax, which is a nice tax advantage.

I switched to an HSA after tracking medical expenses for several years (so now they’re more predictable!). Also, being in a relationship with my now-husband helped because I had more stability in terms of income and living expenses, etc.

The down-side of an HSA is that you must use a high deductible plan and you pay for most medical care 100% out-of-pocket until your deductible is met. That’s why I have chosen to invest our out-of-pocket max ($7,000/annually) so we have a nice buffer just-in-case of catastrophic event. That said, we’re now into year 2 and haven’t hit our deductible, even with my routine specialist visits (due to chronic kidney stones I see a urologist and nephrologist every 6 months). We have a nice little stockpile of money growing in our HSA.

Long-term, the plan is to invest that money and watch it grow. It will be there for any medical expenses and, ideally, will grow to a substantial amount to help us in retirement with medical expenses. But on the short-term, I’ve had a couple elective medical procedures I’ve been really itching to get taken care of. Since we had the money sitting in our HSA either way – why wait?! I dubbed 2022 the “Year of Elective Procedures.”

Elective Medical Procedures

Big caveat – you can NOT use HSA funds for elective cosmetic surgery. My elective procedures do not fall into that category.

LASIK

The first procedure I had completed early this summer – I got LASIK eye surgery! I was very nervous about this procedure, but had been wanting to get it done for years. As I watched our HSA funds growing, I knew I wanted some of the money to go toward my vision. I do not have vision insurance and was paying out-of-pocket for annual eye exams, contact lenses, and glasses. I was spending approximately $1200-1500/year for eye expenses. My LASIK surgery cost $3700 and I was able to pay for it entirely out of my HSA. It cost me nothing from my regular paycheck/checking/savings and I figure it will pay for itself in 3 years’ time! Money well spent and it’s been priceless to be able to wake up and instantly SEE!

Salpingectomy

The second procedure is actually occurring later today. I’m having a bilateral tubal with salpingectomy. In layman’s terms, I’m having my fallopian tubes removed. This procedure is one-part elective and one-part medical necessity. The conversation started with my doctor because I want to have a hormone-free permanent birth control. I do not want any devices implanted in me and I cannot risk a pregnancy. Due to my health background, a pregnancy could be fatal (I had HELLP syndrome with my twins and am at increased risk of recurring HELLP syndrome if I were to get pregnant again). I don’t want to take any chances.

In speaking to my doctor, it was recommended that I have my tubes removed due to a family history of ovarian cancer, which originated in the fallopian tubes. By removing my tubes, I get the permanent hormone-free birth control I desired, and also lower my risks of ovarian cancer down the road.

This was a tough and personal decision for me and I don’t really want to talk politics or debate different birth control options. If you vehemently disagree with my choice, that’s your right. But this was the best choice for me and my family. That said, I didn’t make the decision lightly. I’m afraid of going under general anesthesia. I actually had this appointment scheduled for November 2021 and cancelled when I got cold feet. It’s happening this time though. If you are a praying type, I appreciate any prayers (or good vibes, well wishes, etc.). I’ll be going under the knife at approximately 3pm Arizona time today! I’ve been assured it’s a quick and easy surgery (as easy as major abdominal surgery can be), but I’m a big scaredy cat so I still have anxiety about the procedure.

Costs

Jury is still out about how much the salpingectomy is going to set me back. Google tells me that they cost approximately $11,000 and my insurance has me paying 10% copay, approx. $1,100. But the U.S. health care system is pretty messy, in my opinion. It’s been really tough to get exact costs. My doctor’s office says this procedure is 100% covered (just like my birth control pills are 100% covered by insurance). But I would be shocked and amazed if I didn’t receive some type of bill afterward. I received a bill from the surgery center for $350 and have already paid it. Basically – I don’t really know what to expect in terms of cost, but I have no doubt that I’ve got enough in our HSA to cover it, whatever it may be.

Controversial?

Is it controversial to be paying for elective medical procedures while still in the depths of debt-payoff? IDK. To me, I’d still be investing the same amount in my HSA regardless of whether I had these medical procedures or not. I feel like I might as well be taking care of my medical needs – after all, that’s what the money is for!

As I said, I do have a long-term plan to let this money grow, invest it within the HSA, and have it help as a buffer throughout retirement. But for now….why not use it if I’ve got it? Especially since it doesn’t impact any of my take-home pay.

 

What are your thoughts? Would you be open to completing elective medical procedures while still deep in debt?

A New Mortgage Payoff Strategy

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Mortgage Payoff Stategy

When someone is trying to pay off their mortgage early, they usually choose a shorter loan term or make additional principal payments to speed things up. I started making monthly mortgage overpayments as soon as I bought my house a year and a half ago. So far I’ve knocked about $20,000 off my mortgage balance using this method, but I’m thinking about changing up my payoff strategy due to the looming threat of a recession. 

A few weeks ago I read an article from Forbes about a different way to pay off your mortgage early to reduce your risk. Instead of paying the bank extra money, you deposit the cash you would’ve spent on mortgage overpayments into a high-interest savings account. This prevents your money from being locked in “equity jail” where you can’t easily liquidate it. Then when you accumulate enough cash to pay off your mortgage, you simply write a check for the full balance. However, there are some pros and cons to this method. 

Pros and Cons of Stashing Mortgage Overpayments in Savings

The biggest benefit of stashing your mortgage overpayments in a savings account is that you maintain control over your money. When you make mortgage overpayments to your lender, your cash gets tied up in your mortgage. To access your money in the event of an emergency, you’d have to do a cash-out refinance or get a HELOC, which isn’t always possible. For example, if you lose your job, you probably won’t be able to find a lender willing to refinance your property. 

But if you put the money earmarked for mortgage overpayments in a savings account instead, you’ll be able to pull from it when necessary. If you get laid off or fall ill and deplete your emergency fund, your mortgage savings will provide an extra safety net. That way you can still pay your bills no matter what happens. This added liquidity reduces the chances that you’ll foreclose on your house if you fall on hard times. 

Higher Risk of Wasting Your Money

However, because your money will be easier to access, it will also be easier to waste. If you have $50,000 sitting in your bank account, it may make you feel extra flush. I know I feel richer when I have a high savings balance, which makes me think I can afford extra splurges. Many people make mortgage overpayments because it’s a form of forced savings. Since you can’t tap your equity easily, you can’t fritter that money away on unnecessary purchases. 

To prevent this from happening, you should keep your mortgage savings in a separate bank account and pretend the money isn’t there. Otherwise you may end up blowing some of the cash and jeopardizing your early mortgage payoff goals. 

Higher Interest Costs 

Another downside of stashing your mortgage overpayments in a savings account is that you may pay more interest over the life of your loan. I ran the numbers and compared the interest costs you’d incur if you made monthly overpayments versus one lump sum. 

The scenario I used was a $200,000 mortgage with a 4% interest rate and a 30-year term that’s paid off in five years. Assuming my math is correct, you’d pay about $17,300 more in interest if you saved your overpayments instead of applying them to your mortgage balance monthly. In the grand scheme of things, this isn’t a ton of money, but it’s still worth keeping in mind. 

Saving My Mortgage Overpayments For Now 

Paying off your mortgage is viewed as a low-risk financial strategy compared to investing in the stock market. But since I’m pretty conservative when it comes to money management, I’m always looking for ways to reduce my risk even more. That’s why I’m drawn to this strategy of saving my mortgage overpayments in a bank account to provide an extra layer of financial security and liquidity. 

I’m planning to implement this strategy at least until this upcoming recession is over. You never know how long it will take to find a job if you get laid off at the height of a recession. So having additional money on hand in case of emergency is never a bad thing when a downturn is on the horizon. Once the economy bounces back, I may reevaluate this strategy. After all, I don’t want to pay more interest if I don’t have to, or risk wasting my mortgage savings because they’re easily accessible. 

What do you think of this mortgage overpayment method? Would you use this type of strategy to pay off your debt? Share your thoughts in the comments below!

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