Before making dental financial decisions, start with a consultation to understand costs. Utilize $12,000 savings as a foundation, create a budget, and explore personal loans with ASB for lower interest rates. Be cautious with credit cards, considering potential credit score impact when closing accounts. Maintain an emergency fund for unexpected expenses while prioritizing dental health and financial goals. Consult with ASB for personalized financing advice.
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“So I’ve been embarrassingly putting off dental work due to my irrational fear for years now, & I’ve somehow managed to just talk myself into it. But due to me not going for a long time, I’m more than positive I’ll need a lot of work done, but I know the dentist can be quite expensive. I have savings I can use ($12k), but that would completely wipe me, so I am considering in getting either a personal loan or credit card through my bank (ASB), but I’ve also seen options for either a GEM card or Q card to top me up. (Side note: I recently got a loan from my bank as a personal loan to buy a car. I didn’t want to empty my savings again. It was a 3-year contract, but I managed to pay it back in 3 months – that wouldn’t affect me if I wanted to get another loan?)
But I’m not really sure as I’m not the most informed about finances, such as interest + interest in cash advances?, so I’m not really sure which option to go for… also if I were to get a credit card, could I just use it for the dental work & once I pay it off, I can close it? I haven’t actually gone yet, as I wanted to make sure I had my finances sorted for all the work just in case they wanted to fix it there and then (which I’m sure they don’t do), but I think it would help my anxiety about the whole thing – would it just be best to go & get a consultation? Find out how much it’s all going to cost?”
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Consultation: Before making any financial decisions, it’s crucial to schedule a dental consultation. During this visit, the dentist will evaluate your oral health and provide a treatment plan, including an estimate of the costs involved. This will give you a clear understanding of the extent of the work required, allowing you to make informed financial decisions.
Budget and Savings: Your $12,000 savings provide a solid starting point. To manage your finances effectively, create a budget that outlines your monthly income, expenses, and how much you can allocate to cover your dental costs without depleting your savings entirely. Having a budget in place will help you make strategic financial decisions.
Financing Options: When it comes to financing, you have a few options to consider. Personal loans typically offer lower interest rates than credit cards, making them a favourable choice for larger expenses like dental work. Given your positive experience with a short-term personal loan, it might be wise to explore this avenue with your bank (ASB). On the other hand, if you choose to use a credit card, be cautious about the interest rates. Ensure that you can pay off the balance promptly to avoid accumulating high-interest charges.
While you can use a credit card for dental expenses and close it after paying off the balance, be aware that closing a credit card can potentially impact your credit score. Also, maintain an emergency fund for unexpected expenses, and remember that your dental health is essential. The key is to choose a financing option that aligns with your financial goals and allows you to access necessary dental care while managing your expenses wisely. Reach out to your bank to discuss your financing options further, as they can provide personalized advice and clarify the terms and interest rates available to you.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
