As you know, because I tell you all the time, I get a ton of mail! Today, I reached into my virtual mailbag and pulled out two reader questions, neither of them having an easy answer. But I hope this will make you think of your own situation in light of these questions and my responses.
Another option is to pay the extra money back to the lender. Any help is greatly appreciated. Thanks.—Lisa
I hope this is the end of your borrowing and that you will soon find a well-paying job in your field of study. When you do, paying off that debt must be your top priority.
My advice is to repay the money to the lender at the earliest opportunity, making sure that it reduces your principal balance—not applied to accruing interest.
As for your credit card debt, this is a problem too. However, my advice is based on the severity of the consequences in the event something happens in the future and you are unable to repay your debts. Not paying credit card debt is less severe than not paying student debt.
That being said, let me assure you that if you are diligent to stop adding to your debts and willing to live very frugally once you begin earning an income, I am confident you'll be debt-free in record time. Good luck!
For example, does it become secondary to your primary health insurance, paying out only after all of your other resources are exhausted?
Or does it pay a per-day rate regardless of whether you are admitted to the hospital or have other coverages?
Is it expense-based (covering a percentage of qualified charges) or lump sum-based (pays a specific amount and that’s it)?
While cancer is a horrible disease that we hear about a lot, the chances of you getting it are quite low. According to the National Association of Insurance Commissioners, cancer treatment accounts for 10 percent of all U.S. health expenses.
- Do you have adequate health insurance that covers all health issues?
- Do you have disability insurance? Statistically speaking, at your ages, you and your husband have a much greater chance of being disabled than getting cancer.
- Do you have an emergency fund with enough money in it to pay your bills for six months in the event of unemployment?
If you answered “yes” to all of the above—and can easily afford disease-specific insurance—cancer insurance may be a luxury item you wish to own. Before you make your final decision, you should do some math. I did. This is what I discovered:
Let’s say your monthly premium is $50 for this insurance, and you decide to save that amount instead of buying insurance and have it automatically deposited every month into a mutual fund account that averages 10 percent growth (not unusual these days) until you are ages 72 and 75. You will have $114,958 in the bank—nearly $97,000 of that amount coming from growth.
Remember, insurance is a gamble. The company is betting that you won’t file a claim and they'll get to keep your premiums.
The NAIC offers a free “Shopper’s Guide to Cancer Insurance” on their website that discusses this in greater depth. I hope that helps. It was great to hear from both of you.
