By Kelsi Loos
GAITHERSBURG – Dennis and Stephanie Bradshaw of Gaithersburg took on a hefty hospital bill when they brought home their second son in July 2010. And while credit cards served as a quick fix, they couldn’t pay down their growing credit card debt without help from family.
The bill for Grant’s birth, which was without complications, came to about $10,000. Dennis Bradshaw had insurance through his account managing job at a high-volume printing company, but it only covered $6,000 of the bills. Rising health care costs had forced a reduction in coverage, he said.
The family entered into a monthly payment plan with the hospital but soon found that the extra bill was too much to manage. So they started using their credit cards to meet their expenses.
“To make up for the $200 dollars a month, you have to put gas or whatever on the credit card,” he said. He was also charging for the family’s food and other necessities.
“Obviously, I was charging for diapers, which was a huge expense,” he said laughing.
Things were different when the Bradshaws’ first son, T.J., was born in August 2008. That was before his employer had to make cutbacks because of the recession.
Dennis Bradshaw had savings and was making about $22 an hour. Stephanie Bradshaw had a good salary as the director of a child care center By early 2009, the medical bills were paid, he said, but the savings were gone.
That summer, Dennis Bradshaw took an 8 percent pay cut. The company also began paying him a salary instead of an hourly rate, so he lost overtime opportunities. He estimates that he lost five to 10 hours of overtime a week, which he said hurt his finances worse than the pay cut.
The reduced income was not enough to cover the growing family’s costs and medical debts. Both children were old enough for day care that year and Dennis Bradshaw estimates that they were spending about $2,900 monthly on basic costs including rent, food, gas, day care, auto insurance and life insurance.
Those costs were on top of health insurance payments taken out of his salary and a monthly payment on a Rav4 he bought before the recession hit his company.
The family kept using credit cards to cover their bills and, in April 2011, Bradshaw was paying a total of more than $1,000 a month on five different credit cards at interests rates of 6 percent to 17.1 percent.
The family cut back on expenses and shopped smarter, but it wasn’t enough. “We switched from Pampers to the Target brand. We just try to cut costs that way,” Bradshaw said. “It’s just watching what we spend and thinking about what we’re going to eat, and instead of going to McDonalds for lunch, we bring our own food.”
To make ends meet, Stephanie Bradshaw asked her grandmother for financial support and she was able to contribute a large gift. Dennis Bradshaw’s mother also helped out with a series of gifts. His tax return went to paying off credit card debt.
At the end of the month, Bradshaw should finally be able to pay off his Bank of America card. When things were at their worst in 2010, he owed $6,000 on it. It carries an interest rate of 12 percent.
He still owes on the other four cards, but with the help he received and by limiting his expenses to the minimum, the family is slowly coming out from under the burden of debt.
“We haven’t used our credit cards hardly at all this year. If I need to use it I will definitely have it as a backup, I just hope I don’t get to that point,” Bradshaw said.