Eila dropped a line this week to get advice on how to tackle her debt. She and her husband are trying to turn things around, but they’re overwhelmed by medical bills. They’re hoping GRS readers can offer direction. Eila writes:

How do I prioritize my medical bills? I have about $8000 in medical debt that’s broken up into $300 here, $200 there, $1000 over there, etc. The bills are to different medical centers, doctors and hospitals — and they all want their money today. Some are already on my credit report. One isn’t even willing to work with me on payments. I haven’t even called back because I don’t know where to start.

I’m really trying to make the debt snowball work and stop living paycheck-to-paycheck while building savings ($20/paycheck), but I have questions:

  1. How do I make these payments on 15 medical bills? Can I only send $10/month to each? What if they won’t accept anything less than $50? (Or in one case $120?)
  2. If I were to make $10/month payment, can they still put a negative on my credit report? If it’s already on my credit report, will making payments help?

How do I prioritize? Help!

I wanted a little more information about her financial situation, so I asked Eila to share her budget with us. She and her husband live in Colorado. They earn between $4200 and $4400 per month after taxes. Their expenses total $4252 per month — and that doesn’t include the medical bills. Here’s a rundown of their current spending:

  • Mortgage: $1170
  • Food: $600 (for a family of four)
  • Car: $485
  • Credit cards: $455 (minimum + $50 debt snowball)
  • Utilities: $386
  • Medication: $360
  • Gas: $280
  • Loan: $275
  • Insurance: $146
  • Miscellaneous: $75 (school, entertainment, etc.)
  • Savings: $20

On top of this, the family has fifteen individual medical debts totaling just under $8000. They’re able to throw $50-$150 per month at these debts.

So how do you prioritize medical bills in a situation like this? I don’t know. I have no experience with this sort of thing. When I was tackling my debt, I had a handful of very large obligations. Eila has many small debts. I’m not sure my approach is right for her.

My inclination would be to pay the smallest bills first, to eliminate as many as possible as quickly as possible. Sure, that means the largest bills are being neglected, but I’d rather have just one or two grumpy creditors than a whole bunch. But I’m not sure this is the right approach.

Have you struggled with medical bills in the past? How did you prioritize them? What would you do in this situation? How is handling more than a dozen small bills different than tackling a single large debt? Where should Eila and her family start now that they’re ready to put their financial house in order?

Update: One commenter reminded me that Gerrold Mundis has an excellent book that addresses this subject. Eila may want to pick up a copy of How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.

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