NerdWallet's Smart Money Podcast - Smart Ways to Get Out of Debt, and Pet Insurance Planning

Episode Date: July 20, 2023

Learn ways to handle your debt, including some options you might not know about. And find out how pet insurance works, how much it costs and ways to budget for pet care. 01:14 Today’s first Money Question: Personal finance Nerd Tommy Tindall joins Sean Pyles and Liz Weston to discuss alternative ways to pay off debt when you can’t get a personal loan. The Nerds discuss credit counseling, debt management plans and when it may make sense to declare bankruptcy. They analyze the pros and cons of each and discuss the potential effects on credit scores. If you've ever wondered when it may make sense to use a debt management plan or when bankruptcy might be a better option, this episode has got you covered.  17:04 Today’s second Money Question: Is pet insurance worth it? Co-host Sara Rathner joins Sean and Liz to answer that question by breaking down how pet insurance works, what to consider when selecting a plan and when you may want to consider it for your furry (or feathery, or scaly) friends. They also discuss the costs of different levels of coverage, the impact of your pet's age on insurance costs and how to budget for anticipated medical expenses.  In their conversation, the Nerds discuss: debt-to-income ratio; debt snowball and debt avalanche payoff methods; credit scores; credit counseling; declaring Chapter 7 or Chapter 13 bankruptcy; debt settlement; pet insurance premiums; preexisting conditions; dental cleanings; and pet emergency funds. Please take our listener survey at https://nerdwallet.com/podsurvey to help us improve the show! Survey participants will be automatically entered into our Smart Money Podcast Sweepstakes for a chance to win a $100 Amazon gift card when you complete and submit the survey form. The Sweepstakes period is from June 19, 2023, to August 7, 2023. Limit One (1) Entry per person. No purchase necessary to enter or win. Odds of winning will be determined by the number of eligible entries received. Read the Official Rules for more details. If you enjoyed today’s episode, then please vote for us in the 18th Annual People's Choice Podcast Awards! Register at https://podcastawards.com and find “NerdWallet’s Smart Money Podcast” in the Business category. Voting in other categories is optional. We appreciate it! To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail].

Hey, Liz, how much would you say your cats factor into your budget? Oh, way too much sometimes, especially if one eats something that she shouldn't have. Ooh, yeah. Ooh, yeah. Well, listener, you are in luck if you're a pet owner. Today, we'll not only discuss alternative ways to pay off debt, but we'll also talk about the pros and cons of pet insurance and how to figure out if it's worth it for your furry friends or

scaly friends. Or feathery friends or whatever it is that frogs have. And let's not forget exoskeletons in the case of a pet scorpion or a tarantula. Let's not Money Podcast. I'm Sean Piles. And I'm Liz Weston. Today we're revisiting a couple of our most popular money questions from the past few years. We'll start with a listener question about ways to pay off debt if you can't get a loan before we dive into the wild world of pet insurance. And listener, if you have any stories to share about your pet insurance experience, we would love to hear from you. Leave us a voicemail or text the Nerd Hotline

at 901-730-6373. That's 901-730-NERD. Or email a voice memo to podcast at nerdwallet.com. All right, on with the show. This episode's money question comes from a listener's voicemail. Here it is. Hi, Sean. My name's Virginia, and I have a lot of credit cards yet. My score is 753 despite my debt. I keep up with all my bills and I've tried to apply for a personal loan and I've been denied because of my high percentage rate, even though I pay my bills every month on time. And I was wondering, do I have to get somebody to back up my loan? Why did they deny me? I was wondering if you

can help me out. Thank you. To help us answer Virginia's question on this episode of the podcast, we are joined by NerdWallet debt writer, Tommy Tindall. Welcome on to the podcast, Tommy. Hey, thanks for having me. Glad to be here. Sure thing. Let's start off by talking about Virginia's situation. There is a lot that we don't know, like exactly how much debt they have, what their income is, but we can postulate a little bit about why they may have been declined for this personal loan. Liz, do you have any thoughts? Well, Virginia says it's because their percentage is too high, and that likely refers to their debt-to-income ratio. Your debt-to-income ratio is simply how your debt compares to your income. So for the purposes of debt payoff, we look at how

your monthly debt payments, your housing payments, student loans, credit card debt, etc., compare with your gross monthly income. Lenders typically like to see a debt-to-income ratio of 40% or lower. The lower, the better. They're also wondering if they need someone to back them up to get a loan, and I'm assuming that means getting someone to co-sign for a loan with them. And that could help if they could find someone who's willing and able and with a credit profile that's in good enough shape. But I also am beginning to wonder whether a personal loan is the best route for paying off this debt. One thing that we know anecdotally is that many people who apply for personal loans just do not get approved. Yeah, exactly. So Virginia might want to think about a different approach to paying off their credit card debt.

Tommy, let's discuss alternative ways to pay off debt beyond a personal loan. I think people's first tendency when they're in debt is that I can do this myself and I want to try the DIY method. And that's a good thought, but they're generally best if your debt to income ratio is around 40% or less. And there are a couple of DIY options if you do fall into that category. We've got Debt Snowball and Debt Avalanche. And Sean, I know that you are a couple of DIY options if you do fall into that category. We've got debt snowball and debt avalanche. And Sean, I know that you are a proponent of, a win, a serotonin boost that is encouraging you to continue to pay off your other debts. And Tommy, you're more debt avalanche. You want to give us the rundown of that? Yeah, I am. And I totally get the merits of debt snowball. And I just have a hard time sitting tight on the money that costs more to borrow. So then avalanche is basically the opposite. You focus squarely on paying the higher interest loans first and then you work your way down. Those dopamine hits will take a little longer. Those wins will take a little longer, but they can be more valuable. she had a lot of debt in the form of student loans, which is pretty smart. So there were some

pretty big bills, multiple loans to contend with. The biggest of those also, of course, had the highest interest rate. We decided we would target the biggest loans with the highest interest rates first and pay extra on the principal when we could. And eventually we knocked them out ahead of schedule. We saved some money and minimized the sting of those high interest rates. So Team Avalanche here when it's possible. Yeah. It was also, I guess, technically a third option, which is trudging through your credit

card debt with the terms as is. And this is often costly and not very time efficient. So that leads me to another option, which are balanced transfer cards. You roll over the balance of your current credit card debt to a new one that has a zero APR promotional period. The thing is, you really want to make sure that you can pay off your credit card balance before that zero APR period ends, because after that, your interest rate could go back up pretty high, maybe around where it was before. And you need a really good credit score to get those 0% offers, right? Yes, in general. And you might also need to have a low DTI,

which could be an issue for Virginia based on what we've been talking about so far. So let's go into another option for resolving debt. And this is credit counseling. And credit counseling is a good place to turn when some of the options we just discussed aren't available or aren't an option to you. And I think a lot of people might be surprised to learn that they can get free money advice from a nonprofit credit counseling agency. And these are generally trustworthy, accredited organizations, not-for-profit that are really there to help people work through challenges and financial crises. I've spent a lot of time poring over these organizations' websites because of my job, but if I didn't write about debt, I don't think I'd know these options existed either. So I imagine there are others in the same boat. So it's worth a look and it's easy to get in

touch with a credit counselor and get help over the phone. In many cases, these organizations have local offices in various states, so you get in-person help as well. And much of the support and the resources they offer are free or low cost. I think people hear that and they wonder, why haven't I heard about this? If it's so good, what's the deal? Why is it free? What's going on here? And I think the fact is that they just don't have the marketing budgets that a lot of other debt resolution options, especially debt settlement companies have. So they can't really get the word out, which is part of what we tried to do with our jobs. But it's true, you can call up these agencies,

they can give you free budgeting advice, they can walk you through everything from what you're paying for rent to toothpaste and help you get a better grip on your finances. And if it's a good idea, they can set you up with something that's called a debt management plan that can help you pay off your credit card debt much faster and cheaper than the standard way of doing it. I think this might be an option worth exploring for our listener, Virginia. Can you tell us a little bit more about how a debt management plan works? In its essence, it's a way to consolidate credit card debt from multiple cards into a single monthly payment and often at a reduced interest rate with waived fees. And that's kind of the kicker there. When you go through a credit counseling agency,

the rates can be cut significantly, talking by half or more, picture 22% down to 10%. In exchange for that lower rate, you'll agree to a monthly payment that fits your budget. And the cool thing is the credit counseling agency will facilitate the process. You pay the agency, they distribute it to your credit card company. And these plans are basically subsidized by the credit card companies, right? Yeah. The rate cuts are standardized across the counseling agencies by the creditors through agreements that they have together. Okay. How long does a debt management plan usually take? It depends on the amount of debt you have, but it usually takes between three and five years to complete. So there's definitely a commitment there, but the reduced interest can save you

thousands or knock years off what you would pay if you were going at it yourself. Sounds like a pretty good deal. I'm wondering what these plans cost and any downsides. Yeah, well, as the saying goes, there's no such thing as a free lunch, but it's close. There's typically a small cost to start the plan. From the reviews we've done, we've seen an average of around $30, then a monthly charge, which averages around $25. Virginia will have to live without credit cards for a while if she's on this plan, right? And how does it affect her credit scores? Yeah, that's right. She'll have to live without credit cards. But yeah, and as for credit score, I think this is a good way to

not impact your credit score so drastically since you are paying the debt that you owe. Sometimes agencies may ask you to close your accounts. And if that happens, you might take a hit to your credit score. But that doesn't happen every time. Okay, that's good to know. Tommy, can you let us know when that 50% debt to income area. to a monthly payment for an extended period of time. So it's important to have room in your budget to make that payment because missing one can derail the plan and end access to the lower rates that the agencies have through the agreements with creditors. I think credit counseling agencies are awesome. And I think debt management plans can really work. But all too often, by the time people realize they're in trouble, it's way too late and they really should be looking at bankruptcy instead. So I always say if you're going to look at credit counseling and talk to a credit counseling agency, also make an appointment with an experienced bankruptcy attorney so that you can get the whole picture of your options.

Bankruptcy may be best if your monthly debt payments consume more than half of your monthly gross income. It could also be a good option if you're being sued for debt and or see no way to resolve what you owe within three to five years. And Liz, a lot of folks are still pretty freaked out by the idea of bankruptcy. They can see it as a moral failing. Let us know. Tell us your thoughts on why it's better than just trudging through this debt for the rest of your life. Well, the reality is a lot of times you're facing unpayable debt. You could keep trudging for years and years, still not pay off this debt and wind up in bankruptcy court anyway. And I've talked to people who heartbreakingly have spent all their

home equity. They've spent all their retirement funds, and those two things would be protected in bankruptcy court. So they just kept trying when there was really no hope. And sometimes you need that outside person, that attorney, to take a look at your situation and go, you know what, you really need to look at this. I know that most of us have the desire to pay off what we owe, and we don't want to file for bankruptcy. But if you are really far gone, it can help you get that fresh start that you're guaranteed under law and help you start rebuilding your credit. Because as long as you continue struggling, your credit is going to suffer. Right. Well, with Chapter 7 bankruptcy, you can resolve your debt in a matter of months,

sometimes around three to four months. And that's instead of the years it would take you to typically pay off a lot of credit card debt. Most people do file for chapter seven. That's the one that essentially erases most of your debt. Chapter 13 is much harder to get through. And it typically is if you're trying to protect some kind of asset like equity in a home, for example. Liz, I agree with you. Before writing about this topic and learning more about it, it just sort of sounds like a negative thing. And it's not ideal, but it's an option that exists and it can be something worth considering to get out of debt. Right. And what we're laying out are a number of different tools that are available to be deployed given your personal

situation. Sometimes bankruptcy is the best tool to resolve what you owe. Yeah. But on the other hand, there are some tools that you should try to avoid because they might do more harm than good. One of them I want to talk about is debt settlement. And these companies have huge advertising budgets, so you've probably heard about them on the radio. But with them, you divert your monthly payments to a third party company that then basically sets up a game of chicken with your creditors hoping that they will make a deal to cut how much you owe. This can leave you vulnerable to debt collection efforts and

lawsuits. And all the while, while you're waiting months and months for your creditor to potentially cave, which they might not even do, your credit score is getting trashed as you rack up missed payments. Yeah, I could see some very limited use cases for debt settlement. But again, I think most people should talk to a bankruptcy attorney before they sign up for something like that. Yeah. One of my friends actually went through a debt settlement company to resolve her credit card debt. And I had to really bite my tongue before saying, why did you do this? But I ended up kind of coming to peace with it because it was what worked for her in a way. It wasn't the best solution, but at the end of the day, it was a

solution. It helped her get past her credit card debt. It took her a lot longer than other options. It cost her a lot more. It did a lot more damage to her credit score than other options would have done, but she took care of it. So I guess that's what matters sometimes. Well, and 401K loves are kind of the same. People turn to them a lot to pay off credit card debt, and we at NerdWallet don't think that's a great idea. Yeah, well, you're borrowing against your retirement savings. And it's true, the rates are generally lower than what a credit card will have you paying. But you're derailing your retirement savings.

And then if you get fired or quit the job that you borrowed the 401k loan from, you'll have to pony up that loan amount pretty quickly. And you've had experience with this, did you? Somebody recommended one of these to you? Yeah. Oh Oh my goodness. I had a financial advisor recommend a 401k loan to me just to ease my cash flow after I had some major expenses. And it was actually a red flag for me, which helped me know that I did not want this person to be my financial advisor because I didn't want to derail my retirement just so I could have a little bit more cash in the short term. Yeah.

Didn't make sense. Tommy, how about you? I have a little experience with this one too. The consequences weren't huge, but I did take a small loan out of my 401k to help with the down payment on our house about five years ago. And I'm still paying it back. And it was small. Upside on that one was the interest is low and I'm paying it back to my own account. But downside is that I missed out on that one was the interest is low and I'm paying it back to my own account. But the downside is

that I missed out on that compound interest. And I will note though, that I was fully vested in that company. So I was able to leave that company and keep my 401k, but I have not been able to roll it into my 401k here at NerdWallet because I have to get that loan paid back. Oh, interesting. Last thing you want to pay it back. Yeah. I got to pay it back in a lump sum. I'm going to do that, or I can continue making the payments. And as I mentioned, I like to keep borrowing the cheaper money. Yeah, yeah, understandably.

Well, most people do manage to pay off their 401k loans, but if you lose your job, that's when it really gets difficult, because not every company is as accommodating as your former company and letting you pay off that loan. Yeah. Well, Tommy, thank you so much for chatting with us. It was great to have you on the podcast. Yeah, thanks so much. I really enjoyed it. Before we get into the next listener question, we want to remind you how you can learn more

about things like debt snowballs and debt avalanches. Just visit nerdwallet.com. We have lots of in-depth articles about financial concepts like those, and we'll include a link to read more about the debt snowball and debt avalanche methods in this episode's show notes. And for right now, let's get to our next question. This episode's money question comes from a listener's text message. Here it is. Hi, NerdWallet friends. Would love to hear your take on whether pet insurance is worth it. Thanks. Oh, okay. To help us answer this listener's question, on this episode of the podcast, we're talking with our co-host, Sarah Rathler. Welcome back, Sarah. Thank you for having me for this extremely important topic, because I love animals,

so I love it. Yes. When we got this question, I figured that you could probably answer this with a single word, which I'm going to assume is yes. You are correct. Before we get into whether it's worth it and why, let's talk about how pet insurance works. Can you give us a rundown, Sarah? Yeah. So basically you pay a monthly fee. Sometimes you can pay an entire year upfront and even get a small discount for that. Or you can get a small discount if you have multiple pets using the same insurance company. So multi-pet discount, they call it. And then what you do is you'll take your pet to the vet as needed. You will front the cost of the vet's bill, and then you'll submit a claim to the insurance company and they'll reimburse whatever amount is appropriate

to your plan. That can depend on what sort of features you've picked in the plan, what sort of deductibles you're susceptible to. So you'll have to meet the deductible first before they'll begin to cover any costs. And then you can also select what percentage of costs the insurer will cover, usually 70 to 90 percent after you've met that deductible. Okay. And I'm assuming the more you pay monthly, the more they will reimburse you for a percentage. Exactly. So if you are anticipating higher costs for the year, it might be worth paying that slightly higher premium. But if you have a relatively healthy pet, you're not really expecting too many expenses, then you might want to save some money on the premiums and have a lower level of coverage.

One important thing we should talk about is pre-existing conditions because typically pet insurance does not cover pre-existing conditions. And there are even conditions that are sort of endemic to certain breeds. For example, if you have a German Shepherd, I think hip dysplasia is often not covered. So that's something else you need to go through and make sure that you understand what the policy does and doesn't cover. Right. And if there's anything on the vet records, if you've recently adopted an animal, for example, you'll receive their medical records from the shelter. And anything on there might be considered a pre-existing condition that wouldn't be covered. So that's just something

to keep in mind. Does pet insurance typically cover things like dental cleanings? It kind of depends on the plan you pick. Some plans cover, for example, preventative care like your annual exam and vaccines. Some don't. And it really just depends on the level of coverage you want to pay for. All right. Asking selfishly because my dog and my cat both have awful teeth. So this is something I'm looking into for myself and we can get into that later on. But let's talk about how to know if pet insurance is worth it for you. So there are a number of different routes you can take when it comes to covering the

costs of pet care. And one thing you should just know from the get go, there are going to be costs. It's so tempting to get that cute kitten or that cute puppy. You don't really think about the ongoing expenses beyond food, but animals can get really sick. They can eat things they shouldn't eat. They can get injured. They can get attacked by other animals. And that will cost a lot because just like with people, doctors need to do diagnostic testing to determine what's going on with your animal because your animal can't say it hurts here. So they have to do the surgery and the ultrasounds and the blood work and all of that. You can rack up a bill of thousands of dollars just trying to figure out why your dog is on a hunger strike. And it might be nothing serious or might be something

very serious. So point being, you need to have a plan for how you're going to pay for these things. You can go the route of self-insuring, meaning you will pay for all medical expenses out of pocket with no insurance. This could be a good route if you have a relatively healthy pet, you don't want to spend money on insurance, You would rather take the money you would pay for premiums and just put it into a savings account. Just have it at the ready. But the important thing is you need to have these savings set aside. Think of it like an emergency fund for your pets. You probably want about $5,000 set aside because that's what you'll spend on surgery if your pet has to have it.

And I got this idea from a financial planner I used to work with who had a dog savings account, which is not an actual financial product. It was just a savings account. She earmarked for dog expenses, and I thought that that was a really great idea. So if you want to self-insure, have that emergency fund at the ready. The other route is having insurance. What I like about it is I don't hesitate to bring my pets to the vet if I think they are acting a little strange, because I know that an illness visit is pets to the vet if I think they are acting a little strange because I know that an illness visit is going to be covered 90% by my plan. I'm not going to be out a ton of money in the end if out of an abundance of caution, I take my pets to the vet because oftentimes if your pet starts acting a little different than they normally do, maybe

they're not as enthusiastic about their food. They are a little bit lethargic. Even waiting an extra 24 to 48 hours to take them to the vet, let's stick it out. Let's wait and see. That can exacerbate a situation. And if you had gotten them to the vet more quickly because you weren't really worried about the cost, it can make a very big difference in treatment and in the outcome. I'll be honest. I don't have pet insurance for my dog and my cat. I have something similar. It's a subscription plan with a veterinary office that's a national chain. And I like it for that same reason.

I've had instances where I've been traveling with my dog and something has happened. There was one time where she was shaking her head a lot and she was batting at her ears. She has these big old bat ears, we call them. And we thought something was wrong. Maybe something got in there. And we were able to take her to a vet in the town that we were visiting and get it checked out. And it turns out, yeah, a wood chip fell into her ear because that happens with dogs. And she was fine. But we also wanted to make sure that it wasn't something more serious. So I was happy to have that coverage in a sense, even though it wasn't quite actual insurance. Well, in some historical context to throw in, 20 years ago, there were a lot of things that

pets couldn't do that they can do now. And you may very well face a situation where you can save your dog's life, you can save your cat's life, but it will cost you, as Sarah said, $5,000. And when my husband and I started owning pets together, we were both farm kids. We thought, you know, at a certain point, you just let them go. We turned out to be not nearly as tough as we thought we were going to be. And we had one cat that was constipated. So we had to have him cleaned out professionally several times. And, you know, you're not going to let a cat die from constipated. So we had to have it cleaned out professionally several times. And you know, you're not going to let a cat die from constipation. We just weren't going to let that happen.

So anyway, it's a long way of saying, if you have a pet, you very well could face this situation. So you want to make sure that you either have the insurance or the savings account that Sarah talked about. Right. I mean, even if the situation is not dire, you might just have a pet that needs to be on some prescription medication for a short while, like an antibiotic or even chronically. My dog is on Prozac and he is better living through chemistry. Let me tell you. Oh, man. This dude is living his best life. You joke in my family when you die, you want to come back as a Rathner pet.

Because you're coddled and drugged. Oh, he's drugged. And he's like sitting on the front porch with my husband right now, just watching the dogs walk by. I mean, best life. Non-reactively. Yeah. Non-reactively. He's still plenty reactive, but much less so than before.

But that's something he's going to be on forever because he is a much happier dude on that medication. It costs us 20 cents a day. Well worth it. But, you know, especially as animals get older, they might have to take medication basically for the rest of their lives that will help them live a longer and happier life as they get older and slow down, as we all do. One thing I've been thinking about is that it actually could be worth it for folks to get pet insurance earlier than they may expect because they won't have the pre-existing conditions in their pets that could potentially develop later that would then not be covered by insurance. Yeah. I mean, I'll give you an example of like the pre-existing condition. We pay out of pocket for the Prozac. So thankfully it is as cheap as it is because my dog has serious vet anxiety because of some medical treatments he went through when he was at the rescue. He

had heartworm, which is a very traumatic thing to treat. Don't let your pets get heartworm. It's the first of the month he got his preventative today. Give your pet a preventative seriously. And I think the experience was so difficult for him, he hates going to the vet. So the vet sort of branded him as anxious in his records and now because he's an anxious dog uh anxiety is not covered under our insurance policy wah-wah so point being you might not have as much control as you might think if the vet picks up on something and it is in their medical records it might not be something that's covered later on. So yeah. I know that pet insurance can be really beneficial for end of life care.

Yeah, this is the hard part to talk about. So if this is not something you want to hear, please pause this podcast for the next few minutes. I have had two pets pass away and I have three currently. So this is something I lived somewhat recently because the last pet of mine to pass away was right before the pandemic started. She must've seen it coming and she was like, Oh hell no. And she's like, Oh, I also think she missed her other friend who passed away before her.

And she was like, I'm going to join them in the ground guys. Like peace out. Which was very sad for us, but you know, I'm going to do. So I've had one pet die before we went down the insurance path and one pet die with pet insurance and i gotta tell you um end of life

care is expensive and you are vulnerable and sad so you'll sign anything you'll pay any price you will say yes to any test because you're wondering what the hell happened to your pet that used to be healthy and is now like not eating and peeing around the house or whatever i will say yes to any test because you're wondering what the hell happened to your pet that used to be healthy and is now like not eating and peeing around the house or whatever i will say that after my second cat passed away getting a 2100 check because our insurance covered most of the cost of the diagnostic testing she had and then the cost of putting her down and cremation it softened the blow a little bit i mean i still missed her like crazy but it helped lessen the financial impact of what was already truly just one of the worst times. So I would say to anybody that's thinking about this, unfortunately, end of life care is going to run you in a couple

thousand dollars. It's very rare that your cat just sort of lives until they're 20 and then dies in their sleep. So, I mean, I wish that were true for every pet. I wish they were immortal, honestly, but they're not. So that's just something to think about. It hurts to think about it. You don't want to think about it. You'll be glad to have that insurance when the worst happens. You're not going to be thinking clearly. I will tell you that.

That's just the nicest way I can put that. I can paint a deeper picture of you just lying in the fetal position because your pet is dying and you know it. Well, yeah. I look at my little dog sleeping and I'm like, I would do anything for you. And she's in perfect health right now, knock on wood. And I can't imagine the kind of irrational things I would do and the amount of money I would throw at her health if something happened. Yeah. I think it's an ultimate act of love to care for these creatures throughout their lives when they're young and healthy and when they're older and slow down and ultimately when things end because they give you, I'm going to cry at this part,

they give you unconditional love for their whole lives. And when it's like you're returning the favor. I think that my cat's love is conditional on occasion. And we always say that. My cats might be a little nicer than yours because

I think they love me. I don't know. I mean, I know they're very food motivated. No, Argus, my cat, is very sweet. But if we give him the wrong food, he will make us pay for it with nips. So we've been talking about the cost of all these care, but we haven't talked about the cost of insurance yet. So can you say a little bit about what people should expect to pay? Again, it depends on the level of coverage. It also can depend on your pet's age because it gets more expensive as they get older because the assumption is they will need more medical care as they get old and gray and adorable.

Oh my God. Is there anything cuter than a dog with one of those white faces? I've heard it called sugar face, which I find so adorable. Oh, well, that's like there's this old golden retriever in my neighborhood who sits in his his owner's like storm door and he has got the white face and i refer to him as the olden retriever oh that's what we got nope yeah um anyway so um i pay i i estimated this, about $500 a year for my dog and then $300 a year for each of my cats. And this covers non-wellness costs, so illness and injury. And I think our deductible is like $250 and then it covers 90% of expenses after that. And also we happen to go to a vet, and this is the only vet I've seen do this,

but he actually lists pricing for all the different procedures on his website. So when we're scheduling an appointment and we know that our pet might need an antibiotic shot or a teeth cleaning or something that, you know, we know what the bill is going to be, which is awesome because most of the time you go and you have no idea what you're going to walk out paying. So I like the ability of that. We started paying about the same for our dog and our cat. Now that they're 12, the dog's insurance, I think, is up to $1,600, and the cat's, I know, is probably close to $800. That's with a $500 deductible, and it's hard to send that payment in, but I think it's worth it.

For my dog and my cat, I pay about $100 a month total. So around $1,200 a year. And this, again, is not for insurance, but it's for this vet subscription service. And I have a somewhat higher tier among what they offer because I need teeth cleanings regularly for my pets. Pepper used to chew on rocks as a puppy. So her animal is all messed up and Argus only eats on one side of his mouth. And so the teeth on that side are like all messed up. It's just weird. So they have dental problems. And I really appreciate being able to get a free dental cleaning every 12 to 18 months, quote unquote,

free because I paid for it in advance. But that said, it doesn't cover things like if there is a big medical issue that pops up, I'm not going to get reimbursed. I may get some discount. So I think for now it works out, but I'm beginning to reevaluate my needs longer term. And I think eventually, probably in the next year or so, I'm going to make the jump over to actual pet insurance. Yeah, I wouldn't wait too long because as Sarah said, there could be something that pops up that makes it impossible for you to get coverage. Right. Argus is seven and he only has one eye. So those may be two things against him. But, you know, price is only one thing to think about when shopping around for pet insurance. What other things should folks consider when they're looking at one company or another? There are lots of companies out there. So really, pricing and coverage is what I look for. But I

also look for user experience because a lot of insurance companies now are app-based or you will interact with their website. I want an insurance company that makes it really easy to file claims, whether I can just snap a photo of the receipt and then upload it to the app. Super easy because you have to do a lot of the administrative stuff yourself. If it's really complicated, I am less likely to get around to submitting those claims. And that's just money out of my pocket, essentially. So basically, yeah, it's kind of like a bank that has lots of functions on its app. So you can deposit checks and pay your credit card bill on the go. I want the same kind of frictionless experience with my pet insurance company.

Yeah, that's fair. So are there options if you don't have insurance? There are essentially financing options. So one that a lot of vets tend to use is called care credit. And that can also be used for financing human medical expenses, by the way. But it's kind of like a store credit card where you get deferred interest for a set period of time while you pay back your loan. The thing with deferred interest you just want to keep in mind is when the no interest promotion ends, if you haven't paid off the balance entirely, you're going to owe interest not just on the remaining balance, but on the entire amount you originally borrowed. So that can be really expensive. Yeah, retroactive interest.

Yes. So if you go this route, just kind of look at your budget first and make sure you can time your payments so that you get down to zero before that promotion ends. If it's an anticipated expense, like you know you're going to bring your pet in for some sort of medical treatment and you know around how much it's going to cost, you might consider maybe a credit card that has a 0% interest deal for new purchases. The thing is, it could just be hard to time when those, you know, how often do you really plan out a massive vet bill, right? Normally, those massive vet bills come unexpectedly. So if you happen to be sitting on a new card that has 0% interest for a while, that could be helpful. You might want to put the cost on that card and then pay it off as a time. And then obviously buy now, pay later is big. There are ways coming out where you can use these buy now, pay later services at any vendor,

including at Vets. So that could be helpful for budgeting purposes. If it's easier for you and the way that your paychecks come in to pay a large bill off in several installments, then that could be a good way to get around it. Yeah. I think I'm about to open up yet another savings account among my half a dozen that's dedicated just to pet expenses. There you go. I support that. Well, Sarah, thank you so much for sharing your insights with us today. Anytime. May you all have wonderful pet experiences

and may they live long and healthy and cheap lives. Yes. Sean, if our listeners remember one thing from today's episode, what should it be? My top tip as the owner of a small menagerie is that pet owners should always expect and prepare for pet expenses. Maybe your dog will swallow a marble or your cat will get into a fight with another feline in the neighborhood. Stuff is going to happen and you want to be prepared for it, either through a dedicated savings account, that's what I use, or pet insurance. 730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Remember to follow Smart Money on your favorite podcast app to automatically get new episodes. If you're listening on Apple Podcasts or Spotify, then tap the five-star button to rate the show. We really appreciate it. This episode was produced by Cody Goff and myself with help from Sean.

Kaylee Monaghan mixed this episode with additional was produced by Cody Goff and myself with help from Sean. Kaylee Monaghan mixed this episode with additional audio editing by Cody. And a big thank you to the folks on the NerdWallet coffee desk for all their help. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.