Coy Smith and his wife were getting up to 16 phone calls a day, all to discuss the same topic — how they planned to pay off the thousands of dollars in medical bills their family had racked up after facing a series of serious healthcare issues.
By 2023, the family was more than $30,000 in the hole, including credit card debt they had taken on to help pay their medical bills.
“It’s very stressful knowing that every time the phone rings, you have to pick it up and talk to someone who says you owe them thousands of dollars for something you couldn’t help,” Coy, 32, a Cypress, Texas, resident, told CBS News.
40% of Americans
The phone is also ringing off the hook for millions of other people facing overdue healthcare bills. Roughly 40% of Americans are saddled with debt for medical care not covered by insurance, treatment for complex medical conditions, and hospitalization costs for serious injuries or illnesses, according to health policy and research firm KFF.
Those debts are often financially debilitating, with high healthcare costs topping the list of financial worries for U.S. voters, a recent KFF poll shows. To stay on top of their medical bills, people may cut spending on essentials like food, exhaust emergency savings and tap their retirement funds.
“There’s no other way to state it than as a parent and American, you dread having to go to the doctor and having to go to the hospital,” Smith said. “You know it’s going to cost thousands of dollars just to walk in the door.”
Smith also said he was routinely advised to take out a personal loan to consolidate the family’s crushing debt. But that approach carried its own financial risks. At the time, they calculated, it would’ve taken them 30 years and cost $150,000 in interest to pay down all of their debt.
Instead, the goal was “to change our relationship with credit and how we paid for things,” he told CBS News.
How illness spawns debt
Smith and his wife, Caty, are both public school teachers, earning a combined income of roughly $100,000 per year plus benefits, including health insurance.
Their financial problems began in 2023, when their youngest son was hospitalized with lung problems shortly after birth. Their son’s one-week stay in the hospital left the couple owing $10,000 even after insurance had covered its share.
The stress also triggered a flare-up of the autoimmune and inflammatory diseases Caty has suffered from since 2018, he told CBS News. After she missed some days at work because of her health issues, Caty’s employer docked her pay, further straining the family’s finances.
With lower income, the couple turned to credit to cover urgent medical costs and pay their grocery, electricity and daycare bills, resulting in a ballooning balance.
“We paid our electric bills with credit. We did anything we could to keep the lights on and make sure we could provide for the family,” Smith said. “At one point, we even had to put daycare on our credit cards. We were unable to keep up with payments and interest rates, and found ourselves in this revolving cycle of debt.”
Making ends meet was difficult, and even small unexpected expenses could make budgeting all but impossible, Smith told CBS News. To make matters worse, the family was paying interest rates of up to 30% on some of their debt.
“Any time we would get a little bit of air, we would blow a tire on the car, or an appliance would go out, or something along those lines would happen,” he said.
Getting back on track
Knowing they needed help, the Smiths turned to Money Management International, a nationally accredited credit counseling firm. Working with a debt counselor, they took stock of all their obligations and set about negotiating lower interest rates with creditors. That allowed them to form a repayment plan.
“They would negotiate a lower interest rate and plan a time period where we would make X number of payments at X value, and within a set time period that debt would be paid off,” Smith said of working with a counselor.
The family wanted to be aggressive, but realistic, in paying off debt. That meant thinking long-term — their goal was to have it all paid off by the time the Smiths’ two children had left daycare and entered the local public school system.
“We wanted to have it paid off so we could enter the next phase of life without credit card debt hanging over our heads,” Smith told CBS News. “We put together a plan we could afford, which was $400 less than if we’d continued to pay minimum monthly payments on our own.”
Inevitably, escaping debt also required belt-tightening and greater prudence in how they spent money.
“We are very careful about where we spend money, avoiding any consumer debt, avoiding things like buy now, pay later loans,” he said. “We are smarter about looking at interest rates before entering into agreements.”
Four years later, the Smiths are on track to be fully out of debt by the end of 2027. The experience, while harrowing, has at least made Smith think long and hard about how to change the family’s financial behaviors to avoid future problems.
Smith added, “If we have our debt paid off by the time our oldest son is 7, and our youngest is 4, they have the rest of their childhoods to enjoy trips together. We can enjoy them, too, knowing we are not burying ourselves in insurmountable debt while doing it.”
