Childbirth costs are extreme, even if you have insurance. If you’re not careful, the baby won’t be the only one sleeping in a cardboard box at the end of the day. Financially surviving the birth of your child with your lifestyle intact can be exceptionally difficult, not even taking into account recovery periods or the potential of an absentee parent. Here’s a few tips to help find a way out of the trials such a drastic change can have on your finances.
Taking Stock of Bills
Getting a realistic understanding of your bills is paramount. The costs of having a baby seem easy to estimate on paper, but the estimate is rarely to never an accurate amount. Each birth has its own complement of bills and “extenuating circumstances.” These tend to dramatically affect the charges due.
Make a list that includes each unpaid bill or insurance copay that you receive. Add the due dates and categorize by the bill’s origin. Use separate categories for specific hospitals, doctors who do their own billing and miscellaneous nursery and well-being items for the new child. Don’t worry about the bottom line at this point. Just focus on including everything possible.
Making a Plan
Armed with your list, you can start making a plan to tackle the extra bills due. Since you’ve categorized by debtor, you can make one call per category to negotiate better terms that fit your pay periods and lifestyle. Double-check to make sure each bill is legitimate. Medical billing errors are commonplace, and you could save thousands by catching erroneous charges.
Consider cash-out refinancing if you’re lucky enough to have a home that isn’t “underwater,” with more due than its value. Avoid other types of loans as they’re more likely to add to your debt over time than save you money on short-term fees due to interest and the risks associated with becoming new parents. Once you’ve got terms in place, go ahead and get that total and figure out exactly how much you’ll be paying each month or pay period on your plan.
Ultimately, meeting the agreements you’ve made will mean sticking with a budget. As your new child ages, their needs will grow. If your plan is solid, you’ll start eliminating debt as your child grows into new clothes and needs new toys or has new expenses like childcare, preschool and education costs. Adjust your budget whenever you clear away one debt, and strive to avoid adding any new debts over time. It will likely take years, if not a decade, to eliminate all debts associated with adding a new loved one to your family.
While you won’t go to jail for failure to pay medical bills, failing to negotiate terms can leave you saddled with wage garnishments and other forced measures that take the choice away from you. Don’t neglect these steps, as it’s far easier to create payment plans with hospitals and medical care providers than the bill collectors who will your debt after a time. Taking proactive steps to get ahead of the debt and address it is the number one way to make sure your family survives now financially to prosper in the years to come.