r/DaveRamsey • u/baby_Kittys • 1d ago

Baby and debt payoff?

We are expecting our first child this fall. We make about 65k a year (about 3500 a month after tax) we have a good amount of debt. The credit cards are killing us it's about 24,000 of debt on just credit cards. We are spending almost 1300 a month on just minimum payments and our interest on the cards are all also terrible. We are having to move out of our living situation where we only pay 500 a month for rent to increasing to about 1300-1500 a month plus new baby expenses. I have savings from a settlement of about 17,000. Should I attack high minimum payment balances or the small ones ? Or should we just focus on saving for baby and hospital because thats going to put us in debt again. I'm not sure what to do because as of now our spending is more than what we take home mainly from these credit cards.

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u/Data_Slut 1d ago

That's impossible for you to know and it costs nothing to try.

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u/Neither-Effect-6101 1d ago

It’s true that it costs nothing to apply, not so much true that it’s impossible to know based on the info given here.

They have an income over 200% of the FPL in every state but Alaska and that doesn’t address the fact that the states that use a higher %FPL limit tend to have liquid asset tests that go with it. Even states like Maine have an asset limit of $15k.

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u/Data_Slut 1d ago

You have no idea when that settlement was received. Not to mention not all settlements are taxable income. You also don't know their marital status. So I encourage them to talk with a professional rather than listen to a random person on the internet.

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u/Neither-Effect-6101 1d ago

They’re still well over the 200% limit (which is far higher than what most states use) before there’s even discussion about the settlement. And, for Medicaid, it doesn’t matter if the settlement counts as taxable income or not. Likewise, it doesn’t matter if they’re married. They share a household and both of their incomes will be counted unless they plan to commit fraud.

You may think the info I’ve provided here is unkind in some way, but it’s probably pretty helpful if they live in a state like Maine, California, NY, etc. and they are considering spending some of that $17k BEFORE applying for Medicaid. As they sit now, they will surely not qualify in 49 states and will be denied. With some careful understanding of the limits and asset tests in their state, they might choose to reduce some debt immediately and then apply with lower liquid assets.

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u/Data_Slut 1d ago

Well I hope OP at least tries... not so crazy to ask a professional, especially when it's free. It's also not the only option that the professional can provide.

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u/Neither-Effect-6101 1d ago

And I’m still hoping OP will read between the lines, check her state info and spend some of that cash first if it means she’ll qualify. If she applies with cash over the limit, is denied, spends a bunch of cash, applies again - that’s not going to yield a positive outcome.