How much we spend on debt and health

Currently, for my husband and I combined, we spend $1,200 each month on health costs and debt. For health costs, this includes prescriptions, doctor’s visits, and a minimum of tests. For debts, this includes credit card, student loan, non-loan overdue university bills, bank fees (many of which we wouldn’t get hit with or would be lower if we had more money), and back taxes (from when we didn’t manage to pay enough estimated self-employment tax during that period when Husband worked full weeks and unpaid overtime but was only a “consultant” – just so that his employer wouldn’t have to provide him with benefits). And the monthly costs may increase soon since we’ll no longer be able to defer payment on my school loans, probably to about $1,400.  We are 24 and 29.  I’ve read that people in my generation have higher levels of debt in their 20’s than most previous generations.

With regards to credit card debt, I think I definitely fell victim to some predatory lending, and now I’ve got a debt with a really high interest rate and high over limit and missed payment fees too. I think I should have known better than that, but it’s too late now to ruminate. Now that things have calmed down, I’m going to see if I can get the rate down or transfer the balance to a card with a lower rate.

And now, I arm you with knowledge from Co-op America’s Real Money about predatory lending:

Predatory lending: Predatory lending is a fast-growing practice in which financial institutions use high fees, exorbitant costs, and other unscrupulous lending practices to take advantage of targeted groups—often the elderly, students, and low-income people. In the case of credit cards, banks may market cards to these groups that “contain hidden transfer charges, exorbitant late fees, and exploding interest rates,” according to the Center for Responsible Lending (CRL).

It’s not just target groups that suffer from such practices. A Woodstock Institute report states that “the intricate web of penalties and fees implemented by the credit card industry may be one of the key factors for the high level of indebtedness among Americans. In January 2005, the average US household had seven credit cards and carried a balance of $14,000, the highest level of debt ever.”

I feel a little better knowing I have less than average credit card debt…


13 thoughts on “How much we spend on debt and health

  1. I highly recommend calling the credit card company and trying to negotiate better terms. You can always threaten to close the account and/or transfer the balance to another company. I’ve found that makes them a lot more agreeable. I did the balance transfer a few times and still ended up needing to renegotiate with the new company after the grace period was over.

  2. Can you reconsolidate your student debt, now that you have left school?

    With regard to your husband’s situation as ‘consultant’, the IRS is very clear that it is not for the employer to decide who is employee or contractor. The distinction is based only on a strict checklist about the employment conditions. If his employer was in violation, he can still report them, and possibly get compensation as well, but this is a sticky situation for both of them.

  3. There’s no way we’d report them, because his former boss, a co-owner of the company he worked for, may be providing us some funding for the current company. Considering their own business practices, this is a bit risky to give him any kind of say, but we are able to get a good deal from him (give up less of the company than to a more professional angel investor), and so we are just being clear now about how we intend to treat our own employees.

    I will look into reconsolidating, but I did reconsolidate some of it in my final year of undergrad, or some such time. And I will definitely call the credit card company to negotiate a better deal, or transfer balances. I know I can do better than the current situation!

  4. I’m not sure of the current status of this, but it would be a possible improvement:
    It’s funny how what is basically usury is legal right now.

    I think it’s definitely worth trying to negotiate aggressively with your debtors, because I sense there’s starting to be some changes in lender attitudes… mainly that they are starting to understand that in the current economic climate, one can’t get blood out of a rock.

  5. good for you for actually being able to acknowledge and discuss you debt. i, on the other hand, feel sick to my stomach and anxious when i thin about how much money i owe in student loans (a HUGE shitload) and credit card debt (a small shit load.. at a very high interest rate). bah! look what you made me do! excuse me while i go vomit in my way too expensive apartment which i cannot afford

  6. haha, Crystal…no vomiting over it! You may note I didn’t give actual numbers for my credit card debt…I still feel very embarrassed to think of the actual numbers. But after reading about how the rest of my generation is doing with debt and health costs and the general economic situation, I feel that not only am I not alone, but maybe we shouldn’t all be so ashamed of it. Meaning, well, if we stand up maybe we can get some policy changes or regulation on the credit card industry or at least better programs to help people in debt…

  7. There are financial groups that can help you with this. Or at least help you negotiate a better loan to cover your credit card debit.

    I am grateful for my British education which cost me nothing. Not a penny. So I did not have to start my professional life in debt.

  8. Yes, I know of these types of agencies, but I had a horrible experience with a supposed debt assistance agency, one which i was referred to by a government based source, so now I’m very skeptical. I won’t use one again unless I have good proof that they won’t screw me over. Unfortunately, a few years ago, I lost $700 and missed 2 months of payments on all of my cards because of the incompetency of the organization I had been using (in combination with the misfortune of a hurricane severely damaging their offices and keeping me from managing to get that money back once I’d decided to leave their program).

  9. Back to the old adage” if you don’t have it, don’t spend it”. Predatory lending only works when one doesn’t understand the concept of spending only money that belongs to oneself.
    I took five years to get my BA because my parents refused to sign finaid papers: I borrowed to finance my PhD in late adulthood, but I worked many hours in addition to going to school, just to incur less debt.
    My daughter had to borrow more than I would have liked, but has already paid one major loan completely down. One son graduated in 03 and has just 5k left in debt. One son will graduate with >150k, but his earning potential is >100k/year, so the tradeoff is reasonable.
    The creed we live by; credit is for dire emergency ONLY and credit cards get paid off in toto each month. If we can’t pay off, we don’t put on.
    You can negotiate rates BEFORE you incur debt as well, and you can get professional help relatively inexpensively. I paid zero for my financial planner (whose advice was invaluable and helped me get into PhD land; we pay her only for products we purchase from her).
    Once can negotiate cheaper living arrangement, forgo luxuries, consolidate when interest rates drop and use public transportation rather than maintaining a vehicle.
    The troubles people get in are largely due to the choices they make.

  10. Dr Anfa,

    I find it presumptuous of you to assume that those who get into debt don’t understand the concept of spending only money that belongs to oneself. You make it sound like those of us that are in debt use our credit cards to buy things we don’t need. In reality, many of us have found ourselves in a situation where we didn’t have the money to eat and pay required bills like internet, electricity, and transportation, without which we could not do the work needed to provide further income for ourselves.

    I do acknowledge that we took risks which led to those situations, and had we been leading a risk-free life, we wouldn’t be in this debt. But I am confident that we will pay it off without a problem, as my husband and I both have over 100k earning power (like your son), and if we need to do jobs we aren’t crazy over just to get back on our feet, then we will.

    I am aware that “The troubles people get in are largely due to the choices they make.” Unfortunately, the choices people make are also largely affected by the information and guidance people have available to them. It’s great that you are comfortable with the amount of debt your kids have, but not all children have a financially responsible parent who takes the time to teach them how to make it through tough times without taking on debt. I was always taught “if you don’t have it, don’t spend it” in my youth, and when I got my first credit card I paid it off in full every month. The debt I incurred more recently that I think was predatory lending, well, I wasn’t exactly buying entertainment and fun things – my husband is a freelancer and we used it to help us through when payments he was owed were extremely late. We thought we had the money coming, because Husband had done the work and billed for it, but it turns out that by the time it was finally sent, we’d incurred hundreds in bank charges that made it hard for us to get back above water, and thus we weren’t able to pay it off then. We’ve been making above minimum payments whenever we can. This is a risk of being a freelancer while your spouse is a lowly grad student, and we could have chosen not to take that risk, but we are both a lot happier not selling ourselves to corporations who are just looking to fuck us over, even if it does mean suffering with debt. We will get out of it.

    Also, we do use public transportation (subways & buses), we did move to the less safe and falling apart apartment we are in now a few years ago, and not only do we forgo most luxuries, we’ve been forgoing a lot of staples too (balanced meals? nah.). So don’t assume, ok?

    We don’t know much about consolidating when interest rates drop, but I guess I’ll look into that.

    This isn’t an “oh poor me” post, it’s a matter of fact post, talking about the way things are. I’m not asking you to feel sorry for me, but please don’t go making assumptions that I’m some idiot who signed up for a credit card and then went on a shopping spree.

  11. Flicka Mawa,

    Not only do I applaud you for talking openly and earnestly about your debt, but I am also very impressed by your retort to Dr Anfa’s comment. My partner and I are 26 and 24, and struggling to keep the bills paid, stay a float, and desperately trying to save money for future plans (wedding, house, etc). Neither one of us spent excessive amounts on lavish sundries, nor did we go to ivy league schools, but yet we are strapped with such a load of debt that, even making a combined income of almost 90,000, we can barely keep it all together. We are both so fortunate to have good jobs, and we too live in a less than shiny neighborhood and have given up gas pumps for train stations. It sickens me to think how out of reach the simplest things have become for our generation. It’s as if corporate American has gone out of it’s way to ensure that hard work gets you no where. I work for an organization called Americans for Fairness in Lending. You might find our consumer resources helpful – there are also ways to get active on our site. You aren’t alone – it’s time for us to make it change!

  12. Jessica,
    Thanks for visiting and for your comments! I will definitely check out your organization! Hearing about others who share these stresses is always so bittersweet – it’s good not to be alone and drowning as the sole person who can’t keep it all together, but I hate to imagine lots of other people going through the same stuff, because it’s no fun at all.
    -Flicka Mawa

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