Your Questions About How To Pay Off Debt Fast

Betty asks…

Pay off high interest or lowest balance first?

I’ve heard a lot of conflicting information regarding paying off credit card debt. Is is easiest to get credit card debt paid off faster by paying off your highest interest credit cards first, or your lowest balances first?

Curious to know if anyone has tried either of these methods and how it worked for you?

richmama answers:

I would agree with the first answerer when he says that mathematically, it makes sense to pay of the highest interest first. However, math doesn’t always work. Getting out of debt is more about psychology and behavior rather than math. Paying off smaller accounts first creates mental momentum. Getting a quick success makes you hungry for more. Plus it frees up monthly money which you can roll over onto bigger accounts.

Mark asks…

What is the best way to pay off our debt?

My husband and I just filed our taxes. We are going use part of the refund to pay for car repairs and catch up on rent.

We haven’t decided how to spend the rest. We don’t know if we should…
a) catch up on all of our monthly bills
b) pay off all three high interest credit cards
or c) pay off half of our medical bills that are in collection agencies (We will only get enough to cover half)

Which option is the best? We want to pay off our debt in the fastest, most efficient way.

richmama answers:

Catch up on your rent first. It wouldn’t matter much about the other debts if you are homeless.If there is a chance your car will be undriveable pay to have it repaired or buy a used car. If you mean utilities etc. By catching up on monthly bills that should be your second priority. Again you need lights and water right now. If you still have the money pay off all your credit cards or at least down to 35% of the credit limit..that looks best on your credit card. Do not to continue to use them or you’ll be right back where you started. Having credit cards maxed out, the bill is up to the credit limit, will go against your credit.

Mandy asks…

How do you pay off an old debt once they have done bankrupt?

I am needing to pay off an old ambulance bill for like a 100 dollars, but they went bankrupt two years ago and no longer exists. I can not find any information about their debt collecting agency from the hospital I was brought to or anything. How can I get this off my credit fast?

I am trying to get into the airforce, thats why I need it off fast, by the way.
I ment to type gone bankrupt, not done.

richmama answers:

You need to dispute the debt with all 3 credit bureaus. You can go online to equifax, transunion & experian to do this. It does take awhile though 30-45 days. The credit bureau will try to contact the creditor to verify debt owed. If they can’t they are required by law to delete the account from your credit. Good luck!

Chris asks…

How to pay off credit cards enrolled in a debt management program?

I have been in a debt management program with a local credit counseling service for about 8 months. My parents have offered to co-sign a loan so I can pay off the cards. The loan with the bank is a lower interest rate than the cards and will pay them off faster with a lower payment each month. Should I pay the cards directly or go through the credit counseling service? Which is better for my credit score?

richmama answers:

The Credit Counseling company will probably get you a better price in the long run because they will negotiate a lower rate than you can. But, you are being charged a very large amount of compounded interest on every dollar that you owe them for every Month that the amount is owed. Let Mom and Dad help IF the interest rate and terms are better than you are currently paying the credit card companies. And, if you can afford to pay all of your bills iccluding that payment. Remember that the credit counselor is making money on you, they will not always counsel you to your advantage.

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How to Lower Your Medical Bills

Tips to Negotiate Lower Medical Bills


Do you want lower medical bills?  With health care costs spiraling out of control, it’s natural to want to lower your medical spending.  According to Consumer Reports, only 31% of Americans try to negotiate the price of medical bills, but those who do usually succeed in saving big money. These are some methods that will help you lower medical bills:


Understanding Your Medical Bills – Discounts and Charges

  1. Become familiar with routine discounts. Doctors and hospitals typically give discounts of as much as 60% to Medicare, Medicaid, and insurance companies. As an individual, you may have less leverage than the big payers, but you can usually save significant money by negotiating and asking for a discount.
  2. Look for the CPT code. Current Procedural Terminology (CPT) codes are the standard codes maintained by the American Medical Association. They’re what billing departments use to determine the charges for any procedure. Once you know the CPT codes, you can comparison shop. How cool is that?  Of course, we know not all medical care is the same, but it’s good to find out what an average or reasonable rate is.
  3. Get Comfortable with Negotiating your Medical Bills – Many health care providers are getting used to patients taking a more active role in controlling their spending. Millions of people have lost their insurance coverage along with their jobs. Even those who are insured are often paying more in out of pocket charges than ever before. So join the crowd and start wheeling and dealing.

Selecting Lower-Cost  Treatments

  1. Talk with your doctor. While billing departments are important, it’s your doctor who orders the services so let them know your financial limits. Avoid taking it personally if you encounter any resistance. Physicians may feel uncomfortable discussing money and may assume that your insurance covers more than it really does. It’s ok to push back and ask if the test is really necessary.
  2. Always Opt for generic drugs. Generic drugs are any easy way to save money. Most contain the same ingredients as the brand name formulas but they cost much less. This one step can dramatically lower your medical bills.

Negotiating Medical Bills and  Payments

Make up-front payments. Offering to pay by cash or check in advance is usually the best way to get a sizeable discount. Even doctors find cash is king. In exchange for bypassing insurance reimbursements or collections agencies, many providers will cut your bill by 20% or more.

Base your proposed payment on Medicare charges. Medicare payments are a great starting point for calculating your own expenses. Once you know your CPT code, look up the Medicare payments in your geographical area at the American Medical Association website or call around to the billing departments of local medical centers. Paying 25% more than Medicare is reasonable for most procedures.

Always Review your bills. This goes for all bill types but – Industry experts estimate that up to 85% of medical bills contain one or more errors. Ask for itemized bills and review them carefully. It may be helpful to arrange conference calls with the hospital and your insurance company to conduct a full analysis.

Ask about interest free payment plans. Obviously, paying by credit cards costs a patient more in the long run if interest accumulates. The provider also has to pay the transaction fees so they may be willing to give you a zero interest payment plan if you’re paying cash.

Hire a medical advocate. Medical advocates charge a fee for their services but the savings can be worthwhile, especially for large hospital bills. After all, they know the way around medical bills. Typically, you’ll pay a flat fee or 25% to 35% of the amount by which they reduce your total bills. You can find advocates in your area through free online directories at organizations like the National Association of Healthcare Advocacy Consultants.

Learn how to get discounts on your medical bills so you’ll be in a better position to afford the care that you and your family need. By shopping around and offering up-front payments, you could save thousands of dollars. Saving on your medical bills can really add up – and put a lot more money in your pocket.

Your Questions About How To Pay Off Debt

Paul asks…

How long does it take to pay off debt from college and med school?

I’m just curious as when I told my parents i wanted to become a neurosurgeon, they said they when i finally am one, i’d be paying my butt of with debt. On average, how much is college and med school debt, and how long does it usually take to completely pay it off?

richmama answers:

Well it varies, but you can expect to pay anywhere from 100-350k. But you have to remember (depending on your area of specialism) that Doctor’s have high salaries. You can expect a 6 figure start off salary (when you finally qualify as a fully fledged neurosurgeon, which takes a fair long while). You’d have your loan paid off fairly quickly. But they don’t expect you to pay ALL of it as soon as you get a job, so don’t worry. With experience comes more money, and some neurosurgeon’s make millions of dollars a year.

Lisa asks…

How do I pay off debt if I don’t even know what it is?

I have debt that shows up on my credit report, from medical bills and various things, but I have no idea where to pay it, where its from, or how to get that information.
I want to pay off my debts, how do I find out what they are and who to pay?
My credit report is 550 or something, I just want to make my credit better!

richmama answers:

Information about your debts should be on your credit report. Go to and order it for free.

If the phone number and/or address is not listed, send a dispute letter to the credit bureau and demand an investigation. When the report comes back, if it still doesn’t have the info, ask the credit bureau to give you the “means of investigation”. This will show who the bureau contacted to verify the debt.

Susan asks…

I am getting ready to refinance and I heard that I can take some money out to pay off debt How does this work?

In other words, If my loan is 250,000 and I want to refinance and lets say my house appraises for 300,000. Does that mean I have 50,000 I can use to pay off debt? Am I understanding this correctly?

richmama answers:

Basically what all the others said were accurate and true. You can get a 100% loan with the proper credit score and credit rating.

Before you mortgage your most important investment to the max, find out if it is necessary. I must say that if you are paying off credit cards this is probably the correct thing to do as the interest you pay on your mortgage is normally tax deductable.
Check with your cpa or tax preparer.

Add all the debts you want to pay off according to the balance of each debt. This will give you an idea of how much money you really need. Once you have added the debts up and found out the true amount of debt you want to pay off. Add the same debts only this time add up the monthly payments you are making on each debt.

Take the monthly balance you have added up and the balance on your mortgage this will give you some what of an idea about what loan amount you will be seeking. If, in addition to paying off the debts you want some cash in your hand add this amount to the debts and mortgage amount. You mgiht not need the entire amount of the $50,000. Just because the equity is there does not necessarily mean that you have to use it up. If paying off all your debt is beneficial by all means do so. If not leave the equity in your property, it is like money in the bank.

Take the monthly mortgage you pay each month as well as the monthly payments you are making on the debts you want to pay off this will give you some idea as to what you are paying presently each month.

Now you should contact a mortgage broker about securing a loan with the amount you have determined that you need. See if this person can run a credit report as well as give you an idea about the value of your property. Tell him what you want to pay off and if you want cash in your hand.

Once he has ran a cedit check he can tell you the type of loan program you are qualified for to include if you are able to get a 100% loan on your property.

Now there is another thing to consider. You know the loan amount you had in mind, now you have to find out the cost this loan will cost you. Again check with the mortagage broker, he will issue you a document called a HUD-1 or Good Faith Estimate as to the cost, debts you will be paying off to include the mortgage and the amount of money you will be getting in your hand if you requested any.

Now find the monthly payments for your new mortgage,find the piece of paper that you added your monthly payments up to include your monthy mortgage. Are you saving enough that this loan make sense? If you are saving in excess of $300 or more it might behoove you to accept the loan.

Once you have decided to take the loan your mortgaage broker will then require you to prove your income, with pay stubs and w-2, other documents will be needed so be prepared. It might seem as if it is a long drawn out procedure, but it will come to an end. The one important thing to remember is that even though you are paying off your debt, please continue to pay your debts as well as the mortgage. If you have a questions about paying consult your escrow closing officer or your mortgage broker.

It does you no good to pay off these high interest credit cards and other debts if you are gonna run them back up and not take this opportunity to save a portion of the money that you are paying off. Let’s say for the sake of a good argument that you are saving a total of $400.00 each month. I think you should take at least half of that savings and put it into some type of savings account, retirement account or some intrustment that will be beneficial to you later in life.

If you don’t take the measures to do this immediately and have it deducted from your check each month, in about 3 years you will be doing the refinance dance again. That is up to you and you have to make this decision, I can only give you my opinion, but I have seen it time and again,my same clients continue to do the same thing over each time, paying off debt followed by running it up again, thus the refinance dance.

I hope this has been of some use to you, good luck.


Jenny asks…

Is there a way to tell how much a credit score will go up when you pay off debt in collection?

Me and my husband are trying to get a mortgage but his credit is really bad. I have a 755 but alone do not make enough to qualify. He makes more money but has a 588 (I know, its bad). We are planning to pay off his debt in collections in hopes that will bring it up enough. Is there a way to tell if it will get high enough?

richmama answers:

Your credit score won’t jump dramatically. It will take time for it to go back up. The debt in collections will stay on your report for many years, it will be listed as paid; however, still looks bad and affects your score.

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