So in part one of this two-article set, we discussed the two major sources of debt in our lives – Mortgage debt and car debt.
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As I was doing research for these articles, I found three things that really surprised me.
1.) The Great Disparity
There is a great disparity between those who are in debt and those who are not. According to this article by Money, the average debt of someone who is 45-54 if they carry ANY debt is……….are you ready for this? It’s staggering! The average debt per household for people 45-54 who carry any debt is around $600,000! BUT the average debt per household when ALL 45-54-year-olds are taken into account is only $130,000!! In general, those that are in debt are WAY in debt. Those that aren’t really skew the stats of how bad it really is – though I’m SO proud of them for having no debt!
2.) People In Debt
People who are in debt, owe on average, just as much for a second house as they do their first house. For households in the 35-65 age range, they owe ALMOST as much on a second home as they do their first home! REALLY? I mean just ………..wow.
3.) Car Loan Debt
For the average person, car loan debt isn’t the second most owed type of debt. That really surprised me. The average type of debt that people owe after their mortgages is…………….
Educational Debt
It blows my mind! If you want to attend a private college the average bill for ONE year for JUST tuition (and misc fees they throw in with the tuition) is almost $35,000!! That doesn’t include room and board or transportation expenses!
Do you want to go to a public college? The average yearly cost for tuition (again not room and board) is almost $10,000. It’s definitely cheaper, but $10,000/year for just tuition is still NOT cheap.
Another Option
There are other ways to do college much less expensively. Have you ever heard of Accelerated Pathways? It has several advantages.
First off, it allows you to study from anywhere in the world. You don’t HAVE to go away to college (which saves on room and board) unless you want to.
You pay much less per credit hour by utilizing a program called Accelerated Pathways through Pierson. According to their website, the current average cost per credit hour using Accelerated Pathways is 64% of the average cost of an in-state public college.
A homeschooler can dual enroll in high school and college after you complete your freshman year of high school. We had a friend who graduated from college at 18 because of using Accelerated Pathways (then called College Plus). He dual-enrolled in high school and college at the same time.
Medical Debt
Did you know that the United States spends more on health care per person than any other country, yet of the twelve most wealthy countries, we rank dead last for life expectancy (pun intended)?
Even if you can afford health insurance or you have health insurance provided for you through your employer, you may struggle to pay your medical bills. Currently, one in five people in the US who currently has health insurance has trouble paying off medical bills.
Bankruptcy and Medical Debt
Also, amazingly I found out that more people declare bankruptcy because of medical debt than any other type of debt! According to “The Balance:”
“In 2015, the Kaiser Family Foundation found that medical bills made 1 million adults declare bankruptcy. Its survey found that 26 percent of Americans age 18-64 struggled to pay medical bills. According to the U.S. Census, that’s 52 million adults. The survey found that 2 percent, or 1 million, said they declared bankruptcy that year.
In 2017, Debt.org found that people aged 55 and older account for 20 percent of total filings. That number has doubled since 1994. Even with assistance from Medicare, the average 65-year-old couple faces $275,000 in medical bills during retirement.”
I found this article on how a high school teacher and coach from Austin, Texas (who had insurance) was landed with a hospital bill of over $100,000 and that was AFTER insurance! He was having a heart attack, and his neighbor drove him to the hospital. His neighbor drove him to a hospital. The hospital wasn’t in his network. His insurance paid about 1/3 of the hospital bill but left him with over $100,000 in debt.
Other Options for Better Service and Coverage
But what if you don’t have health insurance provided to you, and you can’t afford it? Believe it or not, there are other options that fulfill the conditions of the Affordable Healthcare Act. If you are a Christian, you can look into Samaritan Ministries. This is a health care sharing ministry.
As a member, 11 months of the year, you’ll get a statement sent to you telling you to send money to another person who had turned medical bills into the organization. How much money you spend depends on how many people are in your family. A single person would currently send $220. A married couple would send $440. A family of three or more would send $495. This gets sent directly to a person who has a medical need 11 months of the year. One month a year, this amount is sent into Samaritan Ministries to cover operational expenses.
If you have medical bills that are considered “sharable” under the guidelines, you’ll send them to Samaritans using their website. These bills will be gathered together in the month you send them in. The month after you send them in, your bills (called a “need”) will be matched up with people from the ministry who will send you money. The second month after you have submitted your bills, you will be sent money from other people in the ministry.
It’s fairly simple, but it is profound. Of all of the health care sharing ministries out there, Samaritan Ministries is the most friendly toward alternative medicine. They share regular allopathic medicine as well. Check them out. Tell them that Karen Morris sent you.
Credit Card Debt
The “good news” when it comes to credit card debt is that just over ⅓ of American households carry a balance on their credit cards. The bad news is that those who carry a balance on their cards carry an average of $16,048 in credit card debt.
Let me start by saying, both my husband and I have one credit card. We do pay them off each month, and I have found an amazingly wonderful and easy way to make sure they get paid off each month.
YNAB
We use a financial Program called YNAB – or You Need a Budget. And this is how it works. We signed up for a 31 free day trial, and when I gave them my e-mail address, we got an extra 30 days. I went in and changed categories around, moved things to make them what I thought they should be. I then hooked up our two credit cards and our bank account to YNAB.
How it Works
When I log into YNAB, it will download any transactions to each of our accounts hooked up to it. You’ll categorize each transaction that you download. So if I went to Costco and spent $450 (yes, that’s realistic for us for our ONE Costco trip per month), I would put that under the category of “Groceries.” If one of my credit card charges came in from Exxon, then I would categorize that as “Gas.” YNAB removes the money from our “Gas” account and credits it to our credit card!
Whatever I or my husband spend on our credit cards in any given month, is automatically transferred from the category to which it belonged to the appropriate credit card account! So when I go to pay off that credit card next month, the money is already ALL THERE! This was a game-changer for me and has allowed us (and helped us) to keep our credit cards paid off each month.
If you start your YNAB experience out already having credit card debt, you can apply extra money to these accounts each month, but it will still make you categorize what you spent THAT month, so what you spend on it currently is always taken out and set aside. How amazing is that?!?
What About You?
Do you have any tips and tricks to keep yourselves out of debt or to minimize your debt? Share your ideas in the comments below so that we can all be better prepared.
Together, let’s love, learn, practice, and overcome!
Last updated 11/19/2020
