When medical debt happens

[0:00] When a large amount of debt becomes part of your life, whether student loans, medical bills, or credit card debt, it has consequences for your well-being. [0:09] I'm AP financial wellness reporter Cora Lewis. Welcome to our Money Happens series. [0:14] In each episode, you'll hear from everyday people sharing their financial experiences, and from financial experts who offer advice which could help you or someone you know, even in a small way, starting as soon as today. [0:25] For this episode, we're focusing on medical debt. [0:28] I had considered things like filing for bankruptcy and those types of things, and I mean, to me, that felt like the easy way out, kind of, and more damaging to my credit. [0:39] You just heard from Jennifer Voll, a 37-year-old single mom who works for the state of Minnesota's Department of Human Services as a healthcare training specialist. [0:48] Right now, one in five Americans have at least one medical debt collection account on their credit reports, according to a 2022 report from the Consumer Financial Protection Bureau's latest data. [0:57] The problem disproportionately affects people of color. [1:00] 28% of Black people and 22% of Latino people in the U.S. carry medical debt, versus 17% of white people. [1:07] On top of dealing with whatever medical crisis precipitated the bills, Americans then must contend with the psychological challenge of climbing out of debt. [1:15] On January 13th of 2020, my son was diagnosed a month before his 12th birthday. [1:21] He was diagnosed with leukemia. [1:23] He is good now and healthy, and you would have never known he was ill. [1:28] But luckily, in 2020, I was debt-free, and I was able to utilize my credit to survive. [1:35] Because one thing with cancer is bills don't stop just because somebody gets sick. [1:42] Naturally, both the experiences of cancer and the resulting debt have had consequences for Jennifer's mental health. [1:48] In March of 2021, I was diagnosed with thyroid cancer. [1:52] With my illness, I had a lot of extra medical bills. [1:58] I was maxing out deductibles, lots of surgeries. [2:03] If you've been in Jennifer's position or you know someone who has, you understand. [2:07] For today's episode, we also spoke with Ashley Agnew, a certified financial health therapist who says medical debt in particular can affect one's psychological health. [2:15] So when you're under a great deal of financial stress, it does present physically, right, in forms of insomnia, migraines, relational troubles. [2:27] So when you're pairing that with something that's already medically impacted, then, you know, that just compiles the feelings that you can have around that type of debt. [2:36] A lot of times you kind of push your mental health to the side to just try and get through things. [2:41] And you're not really dealing with that mental health piece of it. [2:46] The weight of that just feels heavy when you're trying to provide for a family. [2:50] It's added stress. [2:51] It's added frustration. [2:53] I mean, I took on multiple kind of side jobs to just I'm going to dedicate this job to just that credit card bill, just to try and like even get further ahead and those types of things. [3:06] And it's stressful and it's tiring and feeling like there is no end doesn't help. [3:14] I asked Jennifer what some of the most challenging moments were for her in her experience and some of the financial choices she made at the time. [3:21] To my son, we got to a point where we didn't know if he was going to make it. [3:28] And so one thing that we did was we literally spoiled him rotten. [3:33] Anything he wanted, he got because I didn't know if I was going to be able to give it to him again. [3:38] And at the time, it was rightfully so. [3:42] And looking back, I don't know that I would have changed that. [3:45] But part of me now regrets doing that. [3:49] He is here and there is more to be given to him. [3:53] But again, at the time, we didn't know that. [3:55] When I shared Jennifer's story with Ashley, she was more than understanding of these choices. [4:00] Helpless is a feeling that is much more strong than people give it credit for, especially when you're a nurturer, right, or a caregiver. [4:08] So sometimes the only way to get those feel-good chemicals back in the brain is a little bit of retail therapy, right, a little bit of a dopamine hit. [4:16] My first piece of advice would be for her to give herself a little bit of grace and understand that now she has some luxuries that she didn't before. [4:25] When you're going through things that are so big and so much bigger than you, like cancer diagnoses, right, you're in survival mode for a reason. [4:36] And sometimes your stress responses do, in fact, keep you safe. [4:40] Ashley then spoke about the importance of having the courage to face the resulting finances after the fact. [4:45] It's important to take a deep dive in. [4:48] I mean, what parts of that are accumulating interest? [4:52] How far out is the debt in the 30-, 60-, 90-day cycle so that it's impacting credit scores? [4:58] And how can you get on some kind of payment plans so that you can automate some of these items so you're not revisiting it so deeply, so consistently? [5:08] Jennifer did end up reaching out to a debt management company for help, and both she and her son sought counseling. [5:13] She recommends both. [5:15] Okay, there's an end to this. [5:17] Like, I know it's going to be a while, and I know I'm going to have to work hard to get to that end, but I can at least see an end, which was relieving and kind of helped, really helped my mental health. [5:29] In April of 2024, Jennifer still had $21,000 of medical debt. [5:34] She now has a plan to pay it off in monthly installments of about $535, comparable to her former credit card bill payments. [5:41] That was in part because she worked with a debt management company. [5:44] I asked Ashley if she had any more recommendations for Jennifer or anyone that might be in a similar position. [5:49] I also shared with her Jennifer's goal of eventually buying a house. [5:53] We live in an age of comparison and instant gratification. [5:57] Unfortunately, those, for a lot of us, are markers of achievement where they shouldn't be. [6:02] So what we will often say is, well, where do you get? [6:06] What feelings do you get when you envision being in a home that you own, right? [6:11] And that might be, you know, freedom or empowerment. [6:15] Okay, well, what are some other activities that you do or some other experiences that you have where you've felt that way? [6:24] While we're working towards this long-term goal, how can we feel that way along the way? [6:29] Ashley reminds us to reconsider what we want out of our relationship with money. [6:33] So it's interesting that when you really take a deep dive into your money story and into your relationship with money, what's really fulfilling, right? [6:44] Sometimes it's not the thing, it's the experience or the feeling. [6:47] For Jennifer, confronting two medical diagnoses meant she had no choice but to take on debt. [6:52] And the stress of that financial reality only added to the anxieties around her and her son's health. [6:57] Ashley's recommendations remind us there are ways to manage these challenges. [7:01] To conclude today's episode, I'll summarize her advice. [7:04] First, know where you stand. [7:06] Face the debt head-on. [7:08] Automate payments where you can and make sure you have a plan. [7:11] Second, give yourself grace. [7:13] It makes sense during a medical crisis to be in survival mode. [7:16] And lastly, know what you want out of your relationship with money, whether that's something like buying a house or something like more experiences with the people you love. [7:25] I'm Cora Lewis and this was Money Happens. [7:27] This episode was produced by Marcela Sanchez. [7:32] For more, visit apnews.com. [7:34] The information provided in the series isn't intended as financial advice and listeners shouldn't rely on it to make personal economic, budgeting, or investment decisions. [7:42] You may benefit from obtaining independent professional guidance before taking action on such matters. [7:47] We'll be right back. [7:48] Thanks for joining us. [8:05] Thank you.