Medical expenses vs.Savings

[angelove]

Hello ladies,

I have some medical expenses coming up shortly which will cost over $3000. If I pay it all upfront, I get a 15% discount. If I pay it off monthly over a period of 5 months, I get a 10% discount. Or I can pay monthly for a year but there's no discount.

Do you think it would be better to use our savings to pay this bill in order to get a 15% discount ($475 less on the original price), knowing that we would not have much left in our saving account (about 1/4 of our monthly living expenses)? Or is it better to just pay it monthly and not get a discount but not touch our saving account? FYI I would get $1400 back from my health insurance but it is over a one year period. Also if something would happen and it would cost more than we can afford, I have the option to use my credit card but of course it would come with a high interest rate!

Thanks for your input 

[MacroMama]

Keep your savings. If all of a sudden you have no income, no one will finance your groceries or rent.

Good luck!

[angelove]

Thanks for your input MacroMama!

[JudiAU]

That is a large savings. Assuming you fairly stable, have access to credit or other help during the period if something happens I would pay it now. And continue to build up your savings a priority over the same time.

[angelove]

My job is really stable but my husband's isn't. He is currently looking for work as he got laid off in March. He gets unemployment insurance but it will run out by mid-October. My salary can provide for our family expenses but there will not be a lot of wiggling room. However I do have access to credit or family help if any emergency occurs.

[seashells]

How much are you adding to savings each month?

If you could get savings back up to $1000 within a couple of months, I would pay upfront. I just can't beat a 15% return. Even if 2 months from now I had to put $3000 on a credit card and took 10 months to pay it off, I would still either be better off or it would be a wash at the worst.

That's from my perspective and assumptions: I have credit I can use, I don't have a credit card problem (in my 18 years as a credit card holder, have never carried a balance), I don't see any specific problems on the horizon. Also, admittedly, I have a sinking fund, so if the car needed a few hundred bucks in repair, I've got that covered separately from the emergency fund. If $3,000 is literally all your cash, no buffer in the checking account, no sinking fund at all, I guess I'd go with the 5 month repayment plan.

[angelove]

We would be left with about $1,200 in savings if we pay these medical bills all at once. I have been able to put away $1,000 since DH got laid off so about $200 a month. On top of that we also spent $550 to fix our cars so technically we could have save more if we didn't have those extra expenses. However my DH was/is still getting unemployment insurance but he only has about 6 weeks left.

Part of me just want to pay it off now to be done with it and to get the discount. But I am also afraid that something happens in the next few months and then we would be financially stressed!  I hate having to make financial decisions than realise down the road that I did not make the right choice. It makes me so anxious :(

Thanks for all your comments. Trully appreciate your replies :)

[lilyka]

I would pay it off and make refilling the bank account a priority.

[SunRise]

Yeah. I would pay it off too. Instead of putting the monthly payments on the medical bill (which I suppose you have in your budget if you were considering a monthly plan) ... put that back into savings.

[angelove]

Thank you all ladies for your replies and suggestions. I have decided to pay it all at once to save money. I also change our budget and we are going to set aside a specific amount of money every month to replenish our saving account :)