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Pet Debt: Avoid going into debt over emergency vet bills

Pet owners all across America would more likely than not do anything for their pets, including shell out hundreds — if not thousands — in dollars to cover potential medical bills due to a pet-related emergency. Some of those bills can certainly rack up, and, if not properly prepared, could leave pet owners in serious debt.

NerdWallet Personal Finance Expert Kimberly Palmer joins Yahoo Finance to discuss how pet owners can avoid falling into debt over hefty vet bills and animal care costs.

Palmer shares insights into the affordability of pet insurance plans:
"What's important to know is that you can often buy pet insurance at a relatively affordable price. So, for example, the average cost for pet insurance for a dog is about $53 a month. It's important to know, though, and this is something that surprises a lot of pet owners, the price of your pet insurance actually goes up as your pet ages. And at the same time, because of inflation, we're seeing the price of pet insurance go up anyway... But it is definitely more affordable than if you suddenly have to pay for these unexpected medical bills because your pet does either get injured or needs some kind of medical care. "

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

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Editor's note: This article was written by Nicholas Jacobino

Video transcript

[AUDIO LOGO]

RACHELLE AKUFFO: Would you go into debt for your furry friend? Well, a quarter of people would do just that to get life saving medical care for their pets. That's according to a NerdWallet report and a USA today survey finding 91% of dog owners have experienced financial stress over pet ownership costs. But there are ways you can keep both your pet and wallet healthy. To break it down for us, Kimberly Palmer, NerdWallet personal finance expert is here.

Good to have you on the show here. It does seem like a lot of people underestimate just how much some of these health related costs for pets can really run you at a time when people can barely afford to prepare for a $250 emergency. What do people need to know about this?

KIMBERLY PALMER: What's really hard about pet care is that you really don't know what to expect, you don't whether your pet will become sick or injured. And the time to buy pet insurance, which can help you manage those costs is well before your pet needs it.

And so it's really important for people to consider, what do you expect? Do you want to be able to turn to pet insurance, if your pet does need some medical care or do you want to pay for that yourself? And in some cases, risk even putting your own financial situation at risk. As you mentioned people are willing to do a lot for their pets, including go into debt. And that can be really challenging for pet owners.

RACHELLE AKUFFO: But you think if people are willing to go into debt, why they're not take the insurance. Compare some of the costs that people could be looking at monthly if they do have insurance versus some of the costs, I know anecdotally for me my dog ate a piece of chewing gum and was allergic to it. 9,000 later, but if you don't have pet insurance, that's an upfront cost you have to bear.

KIMBERLY PALMER: That is such a great example of the unexpected expenses that can really come up for pet owners. What's important to know is that you can often buy pet insurance at a relatively affordable price. So for example, the average cost for pet insurance for a dog is about $53 a month. It's important to know though and this is something that surprises a lot of pet owners.

The price of your pet insurance actually goes up as your pet ages and at the same time because of inflation, we're seeing the price of pet insurance go up anyway. And so pet insurance is not cheap, but it is definitely more affordable than if you suddenly have to pay for these unexpected medical bills because your pet does either get injured or need some medical care.

RACHELLE AKUFFO: As you look at some of the more expensive things that some of this pet insurance does and doesn't cover, what do people need to in case they think, I've got pet insurance I'm covered because there are some outside costs that are also in addition.

KIMBERLY PALMER: There are. What's so important to know is that in general, you pay for a deductible when your pet needs care. And then the pet insurance kicks in to cover a percentage of the remaining cost. So that's why it can make it so much more manageable to handle those costs.

But an important thing to know is that pet insurance generally does not cover pre-existing conditions as well as wellness care. Unless you add that on to your pet insurance, which of course, makes it more expensive. And so the tricky thing for pet owners is that if you know your pet needs some care because it already is sick for example, it's probably too late to get pet insurance at that point because of that exclusion of the pre-existing condition.

So a lot for pet owners to consider.

RACHELLE AKUFFO: And so then when you think about that cost versus say all the other costs that people have to take on at a time when inflation starting to moderate but still very high for some of these costs, how should people think about incorporating some of these costs. So that they're not hit with a shock if there is an emergency for their pet?

KIMBERLY PALMER: That is really the important question and it's why it comes down to an individual decision. So what you want to do is weigh the risk of suddenly being faced with some big ticket items because of medical care for your pet versus pet insurance taking that out now, maybe when you first get a pet and you're evaluating what risk do I want to take on.

You could set aside money on your own and budget ahead of time for those expenses that can come up or you can turn to pet insurance where you're paying a monthly fee, an annual fee. And then you can go to pet insurance if you need it when your pet needs some medical care. So it's something to weigh the pros and cons of, think about your budget and what might fit into it.

What you don't want to do is to put yourself at risk and take on debt that is really hard to handle because that can lead to even more financial stress down the line.

RACHELLE AKUFFO: That peace of mind premium certainly worth the cost if you're able to cover it. I appreciate you breaking that down for us. Kimberly Palmer, NerdWallet personal finance expert. I appreciate you taking the time. Have a great weekend.

KIMBERLY PALMER: Thank you.