28% of Americans With Medical Debt Have Been Forced to Make This Hard Choice

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KEY POINTS

  • Many Americans have incurred medical debt since the start of the pandemic.
  • For some, owing that money means not being able to put more money into savings.

It's a decision that could have serious implications.

The COVID-19 pandemic has caused a world of financial upheaval for many people. Not only did millions lose their jobs in the course of the crisis, but many of those who were able to keep working still struggled with income loss or added expenses.

One expense consumers grappled with in the course of the pandemic was medical bills -- so much so that 53% were forced to take on new medical debt, according to a new survey from Discover Personal Loans. Worse yet, that debt has been preventing some people from meeting their financial objectives. And for 28% of those with medical debt, it's meant not being able to contribute money toward their emergency savings.

The danger of having an incomplete emergency fund

The purpose of an emergency fund is to get you through a financial crisis. That could mean having to replace a car on a whim, having to cover a massive home repair, or having to pay your bills during a months-long period of unemployment.

Generally speaking, it's a good idea to have three to six months' worth of essential living costs available in a savings account. That way, if job loss ensues, there's money to tap for bill-paying purposes, especially in situations where an employment claim is rejected or delayed.

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If you've been trying to build an emergency fund but got stuck with medical debt, and you're now no longer able to contribute to your savings, you may, unfortunately, end up in a tight spot when your next personal crisis arises. It pays to do whatever you can to somehow manage that debt while also funding your emergency savings.

Boosting your income to stay afloat

Maybe you were contributing $200 a month to emergency savings steadily before getting hit with a series of medical bills that are now monopolizing that $200 a month. If your paycheck is maxed out, you may feel compelled to ignore your emergency fund until your debt is paid off. But there may be a way to keep up with those debt payments while continuing to contribute to savings -- getting a second job.

Taking on a side hustle isn't always an easy thing, especially if you happen to have health issues or already work long hours. But if you're able to make one work, you might manage to chip away at your medical debt while also building yourself a solid savings cushion.

These days, there are many side hustles available that are flexible -- meaning, you can do them from home or set your own hours. Take a look at your schedule and see what's doable. Even if you're only able to put in two or three hours a week at a side gig, it may do the trick in helping you pay down your debt while meeting your emergency fund goal.

At the same time, you shouldn't hesitate to try negotiating some of the bills that landed you in medical debt in the first place. Talk to your providers and file appeals with your insurance company for rejected claims that have left you on the hook for big bills.

You may not manage to shed your debt completely. But if you can get even a small portion of it knocked off, that could put you in a better position to pay off the rest while working toward a complete emergency fund.

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