I believe I have mentioned before that I have a certain knack for pretending things don’t exist if they annoy me. Debt annoys me and overwhelms me. When I started the process this year, and really focused on the issue, I sat down and made a debt snowball listing, following the guidelines of Dave Ramsey. For those who may not know, it means you list your debts in order smallest to largest. Then you build an emergency fund of $1,000. You decide what your minimum payments are, or the creditors tell you what you must pay, and you consider that your minimum payment. You begin paying off debt by paying all of your extra money to the smallest bill first and make minimum payments on everything else. Once you have paid off the first bill, you take the money you were paying on that bill and ADD it to the amount you’re paying on the second bill. You continue this process until you’re debt free.
Before you read any further and think I am a total moron who has no business writing anything about finances, let me explain something. When we started accruing medical debt, I called each and every business we owed money. I spent hours on the phone trying to make some kind of payment arrangements. At the time, my husband was still waiting on some immigration paperwork to come through and was NOT ALLOWED to legally work. These companies were absolutely unforgiving and unwilling to try to work out ANY kind of affordable payment option. Not ONE business said “just pay us something and it’s ok”. I was constantly met with threats of collection agencies and law suits. When it first started we had about 6 medical bills and they ALL wanted about $40.00 a month. When I explained how many bills we had, and how it just was not possible at the time for us to pay that much, they told me they would accept nothing less. I offered to send $10.00 a month, $20.00 a month (which was still just about impossible at the time) and was told if I mailed a check, they would send it back.
I have stated here that my husband lost his job in January. I make enough money on my own to support our household. Barely. As if all of that wasn’t stressful enough, that was also the time I decided enough was enough and I was going to face 3 years of debt. I was also encouraged to handle it because we had already been sued. Yes, I said those ugly words. I put something off until it was too late and instead of making payments we can easily afford, we’re dropping $100.00 a month to a stupid lawsuit. We’ve kept up with them, barely, but life would be a lot easier if I had dealt with the situation earlier.
Regardless, it happened. Lesson learned. So, in the middle of a job loss, a law suit, and too many other financial issues to count, no pun intended, I pulled my head out of the sand and faced the mountain of bills. It took my husband and me about 3 hours to go through the pile, match them up and get them in order to truly figure out what we were facing. Our total personal debt was right around $10,000. About $7,500 of that was medical bills. The rest is a combination of 2 small credit cards and a personal loan from my brother that helped with immigration.
$10,000 may not seem like a lot. However, when you’re a one income household and it’s about 1/3 of your income, it’s a lot of debt. I looked at our other bills, the credit cards, and figured what minimum payments we already were required to make. Then I figured out what was left over. At that time, we could pay $90.00 a month towards debt. Pitiful right? I took the number of bills we had, divided it by $90.00 a month and subtracted out the minimum payments we were already required to make. Basically, we had $5.00 a month to pay each of our debtors. However, I knew this was money my salary would be able to pay, so if something happened, if my husband lost his job again, I could still make the payments on my own.
It was mortifying to me. How was I going to call 19-20 debtors and tell them we want to do the right thing? How was I going to get them to understand that $5.00 was really all we had to give? I called my Dad and asked him what he would do and I think he gave me the best advice:
Don’t bother calling them. Don’t argue with them and get yourself stressed out. Just send them the check. They’ll cash it.
He was right. At the end of last month I mailed out 20 checks to start paying down our debt. We actually paid off our first bill. I’ll pay off another one this month. Another one the month after that. So after all the stressing, arguing and frustration those companies finally did decide $5.00 was enough. Only one of them has sent a letter in regards to the payments. It was along the lines of “Thanks for the payment, but we need to come to an agreement on what you’ll pay.” They are going to get a nice little letter back that says, “Thanks for your letter, and here is the next payment, but we’re paying you what we can, and you’re in position #whatever on the list. Because we are diligently paying our debt down as fast as possible, our payments will increase when we can get to you.” I’m not going to call them, I’m not going to listen to some person try to bully me into spending more money than I can in order to pay them. Why?
We control our budget. No one else. I will NEVER allow someone to dictate payments to me again. I will not become so stressed out that I shut down because some jerk on the phone has a job to pressure me. I will not be bullied into making bad financial decisions for our family and I will stand strongly against anyone who tries to push me around. We could have filed bankruptcy, but we’re trying to do the right thing. No one is going to take that away from us. EVER.
Now that my husband is working again, we hope to have all of this debt gone by the end of the year. I can’t wait to see if we meet that goal!
Have you ever had to fight with debt collectors? How did you handle it? I really want to hear about your experiences!