Spending tax return on old medical bills

Miscellaneous and Personal Stuff I Must Share
1

Long story short: I kind of got screwed, and found out about a few hundred dollars in medical bills about six months after I went to the doctor last year. Right now money is tight, and mine and my girlfriend’s tax returns are going to be a HUGE windfall, but she wants me to spend a significant portion of it (about ~20%) on those medical bills.

The way I see it:

#1 - I feel like I got screwed (long story) and shouldn’t owe the money in the first place, and I’m naturally stubborn so I don’t want to pay it until I have to.
#2 - I don’t think they’re really hurting my credit. AFAIK, they go away as soon as you pay them and don’t leave any lasting effect.
#3 - I’m going back to work full time at the end of May and we will be in a MUCH more comfortable position to pay them then. I say the money will do us a lot more good right now by padding our bank accounts and paying forward other bills (utilities, insurance, etc.) She, on the other hand, cannot stand having any kind of debt and is using 100% of her return to pay old student loans even though we’re barely scraping by what I consider our more “urgent” bills at the moment.

What do you guys think?

[sub]BTW, this is not an excersize in “I’m right, she’s wrong”, I won’t even show her this thread or using anything posted here against her, and I don’t even necessarily think I’m 100% right. We’re already basically done talking about it, I just want to continue the discussion with other people so her and I don’t have to fight :D[/sub]

2

I think you posted to the wrong forum.

3

I see where you’re coming from, but I agree with your girlfriend. Plus, you said youd only spend about 20% of your return on the bills so why can’t you do that and use the rest to pay forward the other bills a bit or stick the rest into savings?

I’m in a similar position - pay off slightly overdue medical bills or put money in savings and continue to pay small amounts toward the bills?

Having grown up poor and watching my mom deal with creditors all the time, then making some really dumb financial decisions of my own resulting in being hounded by creditors for years, I’m tired of owing people money. So even though I know that earning interest on the total amount of my refund would probably be the most financially sound thing to do, I’ve decided to go ahead and use most of the refund to pay off all my outstanding bills.

It’ll take longer for me to build up my savings acct, but my daily life will be much less stressful. Less stress for me results in a much more pleasant life for my loved ones.

4

Cisco, the Cafe Society forum is for discussions of art and entertainment. I realize that your finances are likely entertaining to someone, but I am moving this to someplace where you’ll get more reasonable discussion.

5

I will be spending part of my tax return to pay medical bills, too. I’m just grateful that I can pay them!

6

If I were in your situation, I’d pay off the medical bills.

You MIGHT have more money in May. You don’t know what’s going to happen between now and then, your job might not even exist (God forbid). I think if you have the money to pay off a bill, it’s best to do it when you have the money and not put it off. I’m just a big believer in not counting on money you don’t already have in your hand, that’s all.

I don’t know you, so this may not apply to you, but the 20% you were going to “save” instead could very well just end up getting frittered away. How sure are you that the money you don’t put towards the medical bills will end up being put to good use? You might go on a Borders run, then take your woman out to eat a couple of times, then find an electronic toy you just have to have, etc., and boom. Money’s gone. I’m not saying you’d do this, you may be a responsible sort with tons of self-control. It’s just something to think about.

And yes, medical bills hurt your credit report.

Here’s an alternative, if the thought of plunking down all that money at once on those bills is daunting:

Take the 20%, stick it in the bank. Let’s say you owe, oh, $700, right? It’s almost February. Pay $100 in February, March, April and May. Then if going back to work full time pans out, you can just pay off the other $300 in June and be done with it. This way, the money will still be in the bank for you in case of an emergency (surprise car repair, etc.) and you won’t be up a creek if you need some of that 20% in, oh, March. Yes, your bank account will take a hit in June, but you will be out of debt and you’ll have a steady income coming in, so you’ll be able to quickly build back up your savings.

7

I put this in the Cafe? How the hell…:confused:…Anyway, sorry.

This sounds like good advice.

Can you elaborate? When I was working in mortgage loans we would just stipulate that the outstanding balance be paid before the loan closed. It didn’t otherwise effect the approval. I was also told that it either didn’t effect your FICO score or had very little effect on it. Then again, even people that have been in related businesses their whole lives don’t seem to really understand exactly how credit works.

8

All’s I know is that there are some old medical bills on my credit report. My credit rating sucks. I assumed the medical bills were at least part of the reason why.

I personally don’t think they should be held against someone. If you’re uninsured and think you’re, say, having a heart attack, what are you supposed to do? Stay home and die?

9

I don’t really have any advice or anything, although I think Abbie Carmichael’s plan is sound. The only real reason I’m here is to mention one of my pet peeves.

What you’re trying to decide on is what to do with your tax refund, not your tax return. I know that’s really nitpicky, but I see it here all the time and it drives my crazy.

Okay, back to the thread now.

10

Well, I overpaid on purpose, so I could say that it’s a return on my (no interest gained) investment. QED :cool:.