Archive for the ‘Personal Finance’ Category

6 Reasons I’m Spending $6,000 on a Vacation

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Okay, the drive was worth it. (Baska, Croatia).

Okay, the drive was worth it. (Baska, Croatia).

I feel like I’m out of touch with money. I watch things inflate and deflate. People with more education get less money. I don’t even know what is what.

It is through that lens I ponder whether it’s totally normal to spend $6,000 on a vacation, and whether or not it is crazy. I suppose it could be both or neither. Either way, the plane tickets are booked for my 4th trip to Croatia, happening in less than three months.

Before I continue with my self-rationalization, let me break down how I’m spending my money for this 10-day trip.

  • $3,900 – airplane tickets
  • $1,000 – villa rental for one week
  • $500 – car rental
  • $500 – various pre-trip costs (passport renewals, new backpack, sunglasses, etc)
  • $1000 – on-the-ground spending (gasoline, food, attractions)

1) I Love to Travel

This is my number one reason, and it should be the number one reason for which you do anything. I suppose this reason could also be translated into: “But I wannnnnnaaaaaaaaa!” and I”m OK with that.

Once I figured out that you can’t take it with you when you die, seeing the world seemed like a logical way to spend my money. I now realize that I wasn’t looking to see the world so much as go somewhere that made me happier. I guess Croatia is that place, because I’m going there for the 4th time in 11 years. I have family there, so it feels like a home away from home.

Traveling, or more specifically – “getting away” – is my hobby. Some people collect coins, stamps or clothing – I collect experiences, stories and good vibes. A particularly rewarding travel experience can create an untouchable lingering peace that remains at least six months after.

For me, it’s mental medicine.

 

2) I’m Taking My Kid

This year is the first time we are taking one of our children on an international trip. Traveling like this is expensive, and I’m figuring that the added expense of another body means an extra $1,750-2000 in spending on this trip. Plainly put, this is the main reason from a numbers standpoint that the trip is costing so much. That, coupled with the fact that some friends and colleagues will be joining us, we are unable to stay with my family who lives there, as is the normal custom. This is adding an extra $1,000 to the trip.

Bringing my 9 year old daughter, though expensive, is an investment in a better trip. I get to see familiar places again, through the eyes of a child having an experience I never dreamed of having as a child.

 

3) I Never Do it Annually

One of the reasons I’m OK doing it big this year (besides the fact that it is our 10 year wedding anniversary and that alone calls for  a bigger experience), is that I only travel every other year. This makes it more affordable, and actually makes the experience more rewarding. Because we often go back to the same place, doing it every year could risk a burnout. As we get more financially secure, it is becoming an every other year thing.

After this one though, it might be prudent to wait three years. That will make our other daughter 7.5 years old, and more mature. Plus it will give us more time to recover from this $6,000 beating, and more time to prepare for adding another warm body to the mix.

 

4) I Have the Money

By saying “I have the money,” I don’t mean that I earn enough to deserve to be able to do this. It means I actually set aside money each month for more than a year. I’ve talked a lot on this site about the importance of saving in advance for large, known expenses. Not only does this mean we can pay cash for it when it comes, it ensures that we aren’t fooling ourselves into spending the money twice. It’s better, in my opinion, to build your lifestyle around an income stream that recongizes that not every dollar deposited every two weeks is meant to be spent before the next check comes.

 

5) Credit Card Rewards!

I am also comfortable spending a bit more to get the exact right plane tickets I want because I have a buffer of credit card rewards and mile points that are helping defray some of the cost of this trip. Last November I signed up for a Barclaycard World Arrival Mastercard, which had a 40,000 mile signup bonus (worth $400) and earns double-miles when you use them to pay yourself back for travel. Since signing up I’ve earned a total of $650 from the Barclaycard, which I put towards our airplane tickets. The good thing about this card is that when you use the points for travel, you automatically earn a 10% point dividend, meaning that this card is earning you 2.2% in rewards.

By the time this trip happens in June, I predict that I will have earned $750 in total rewards, hopefully meaning my actual trip only costs $5,250 instead of $6,000.

 

6) My Financial Plan is Set

I’ve talked about being a “money adult” before. It doesn’t mean that because you are an adult and earn money that you are doing things right. It can take many years into adulthood for us to get our financial plan truly set, a plan that reflects values other than impulse. I’m going to be 33 soon and I can finally say that I feel like my financial plan is set. Lately I’ve been feeling like I’m late to the party, like I should be further ahead at this age. Then I remember that ’30 is the new 20′ and that the Baby Boomers fucked everything up by normalizing high amounts of debt, believing that everything always goes up, and that homes are investments. I’ve owned two homes and they’ve never earned me a damn penny.

So now I’m feeling pretty good about the “adult” things I own: life insurance policies, IRAs, pension accounts, paid-for car, FSA accounts. I’m maxing out two IRA accounts and my defined benefit pension gets $600 each month. I’m driving my taxable income down and saving big money by using flexible spending accounts for healthcare and public transit. All my bills are paid automatically except my credit card, on which I never carry a balance (though this trip may necessitate me carrying a balance for a month or two as I am fronting the money for parts of this vacation that others will pay me later – though I could easily not carry the balance, it is on a 0% interest card and my money is earning more in a savings account, meaning I’d rather borrow it from the credit card company than myself).

 

What about you? Would you spend $6,000 on a vacation?

 

Two Different Planets – Money Views Differ

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I recently read a Wall Street Journal article that completely surprised me.  I guess it shouldn’t have, knowing how most Americans think these days about money, but it still did.  The article discusses how the writer and her husband have different views when it comes to money.  They recently experienced some financial bumps that have caused them to fall into debt.  She seems to think that they are doing just fine; while her husband feels that their emergency fund was inadequate.  You can probably guess which person I would agree with.

It’s a Balance

It is something that we all have to deal with.  How do you save enough for future unseen events or lifestyles while still enjoying life today?  I know it’s something that my wife and I have struggled with over the years.  I am of the saving mindset and my wife of the enjoying life mindset.  However, my wife has seen the benefits that come from my mindset, while not completely abandoning hers.  Now that we have built up our savings and no longer have any credit card debt, we are able to absorb the minor financial shocks that appear from time to time.  That’s now comforting to my wife, she sees the benefit.

What About Another Hiccup?

The author of the article does not seem fazed by having over $10,000 in credit card debt because of their recent bad luck.  If I was in their shoes, I would be worried if something else were to go wrong.  According to the article, they are a single income family.  What happens if she loses her job?  That security she seems to feel like they have now will evaporate pretty quickly.  I’m not going to pretend my finances are in perfect order.  My emergency fund should be more robust, but it’s at about 3 months’ worth of expenses right now.  I would like to get it to 6 months.  For my wife and I, this has not happened overnight.  It has taken time, a few years.  However, we have been better prepared to handle some of the hiccups that we couldn’t handle before.  We recently had to cover some expensive car repairs.  The savings we have dedicated for anything car related took a hit, but we didn’t end up in debt because of it.

Undue Stress

The author writes about how her husband is concerned about the precarious nature of their finances, but that does not seem to bother her.  They don’t fight about money, which is good.  However, she seems too ambivalent about the stress she is causing him.  Maybe I’m reading too much into it.  It just strikes me as incredibly selfish of her.  I understand her point of view of not having money growing up and wanting to enjoy life.  However, I would think that you would also want to make your spouse happy.  In my marriage, I will generally think of my wife before myself.  It’s one of the reasons why we have different fun money (allowances) amounts.  At the time we gave ourselves an allowance, she wanted more things than I.  I tend to be very basic in my needs, so I suggested that her allowance be higher than mine.  I knew this would make my wife happy.  It was an easy decision.  So, if I knew that certain behaviors or practices were causing stress for my wife, you can be sure that I would attempt to alleviate it.

Different Views

I don’t think that you have to have the same views on money when you are married, but I think that you need to be in agreement on your goals.  If a husband and wife have differing financial goals or even the importance of the goals, I think in the long run it will prove to be a problem.  In my mind, it highlights a lack of communication and that is a killer for a marriage.

Credit Score Curiousity

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I have never been one to worry too much about my credit score.  I pay all my bills on-time and close accounts that I do not use periodically.  We have savings and I don’t need to sell annuity assets.  But I do monitor my credit report 3 times a year.  Since you can access your free credit report from each of the 3 bureaus (Experian, Trans Union and Equifax) once per year at https://www.annualcreditreport.com/, I simply access one of them every 4 months.  This helps me identify any fraudulent activity on my account.  It was interesting then, when my Discover card started giving me one of my credit scores on my statement the last few months.  I was curious more than anything at my score.  Since I do not plan on borrowing anything any time soon, the score is purely for my entertainment.

Not Too Bad

As of my last statement, my score was 811 out of a possible 850.  Apparently, that rates me an “Exceptional Borrower”.  In short, I pay my bills on time and have never defaulted on any obligation.  The on-time part for me is easy.  I have automated all of my bill payments.  As life has gotten more hectic, I have tried to minimize the chance for mistakes.  I still keep track of everything, almost daily, but I want to make sure that I don’t forget a due date.  I know some people are hesitant to automate things in case there are errors, but for me, since I check things quite often I can catch the errors ahead of time.

What Went Into the Score?

Along with the score, Discover provided a breakdown of the components that calculate the score.  The largest was your payment history, 35%.  Basically, are you paying your bills on time?  Since, most financial institutions will report your information to the credit bureaus every month, any late or missed payments will impact your score quickly.

The next largest item was the amount you owe, 30%.  How much do you owe, relative to your credit limits.  The closer you are to your limits, the more likely you are to be in trouble financially.

Next item was the length of your credit history, 15%.  Essentially, the more data they have on you the better.  It is easier to predict what kind of borrower you are with more information.

The last two items both weight equally, new credit opened and types of credit.  The new credit opened is looking at how many accounts you have opened recently.  If you have opened a lot of new accounts in a short time frame, that could indicate financial distress.  For me, I think I have opened one account in the last year.  I took advantage of a store card’s promotional discount when I did some Christmas shopping.  They offered something like 25% off my purchase for opening a card.  I opened the card and paid the balance off at the end of the month.

The last item is types of credit, meaning what kinds of accounts you have.   For me, I have a mortgage, auto loan, and revolving accounts (aka credit cards).  I assume this is the mix most people have with the possible addition of student loans.

You are not a number

As I said, the score is really for my amusement only.  The number I am more concerned with is my net worth.  Is that number growing sufficiently and fast enough?  The credit score certainly helped me earlier in life achieve the best possible terms I could when I did have to borrow money.  My current interest rates are 3.75% for the mortgage and 1.99% for the auto loan.  There is no way that I could have received interest rates like that if my credit score had been low.  However, I did not have to do anything out of the ordinary to get that score.  I simply had to pay my bills on time.

Do you actively monitor your credit report?  Are you concerned about your score?

Personal Finance is a Middle Class Escape Plan

billion dollar lottery

I don’t know what more to say than this – saving money for retirement is boring. I am losing my mind from it.

I don’t know how anyone does it…oh wait, no one does. People spend. People have fun. People cross their fingers, say a prayer to Baby Jesus, and hope that whatever they are doing works out. They are lucky if they are American. Things will probably work out for them, even if they don’t save enough. We won’t let them starve.

But we will make them work until they drop dead. For some, that’s a fair trade.

Saving money is so boring that it almost made me more obsessive about money than I was when I was in debt. I didn’t even think that was possible. As I mentioned in my last post, I was checking my Mint.com account ten times a day and counting the hours until my next paycheck, so I could work on my goal of fully funding two years’ of Roth IRAs in just 14 months.

What if Saving for Retirement is the Wrong Choice?

What if all the personal finance bloggers you follow are wrong? What if the old saying “you can’t take it with you” is the best advice of all? What if the debtors have it right? What if the best way to enjoy your life is to promise lenders that someday you will repay them if they give you a bunch of cool stuff now. What if you drop dead on your first day of retirement, and the fruits of your labor pad someone else’s pockets?

These are all questions without answers.

As much as we try to speculate and give advice, I’ve been clear to you that I don’t know the answers. I know how I feel and what I want, and what makes it easier for me to sleep at night. I know that I like the feeling of not owing a penny to anyone. I like being able to tell my landlord that I’m moving, packing up my apartment and heading somewhere else.

Being debt free gives you many types of freedoms, but it probably prevents you from having everything you want. Unless you are some type of money monk who has learned to completely control impulse, you have to tell yourself “no” fairly often.

Even though we are pretty secure, I still must practice discipline. Even today, as I do research on our upcoming trip that will cost at least $5,000, I have to say no to the $3,000/week villa rentals that are bathed in luxury. What I will end up with will cost less than that and will still be pretty nice, I just can’t bring myself to go all out and spend like crazy.

Even If It’s Wrong, It’s Still a Way Out

Personal finance is a way for middle-class people to escape a system that is designed to make the elites rich without risk and keep the poor dependent on handouts like credit and welfare.

This is something I learned in 2008 when it became clear to me that debt freedom is where I wanted to be.

When things got tough, I saw the rich get bailouts, the poor get handouts, and the middle class get left out.

This is a recipe for disaster.

When a society’s “middle class” is destroyed and the chasm between the wealthy and the poor widens, everyone eventually loses.

Personal Finance Means Escaping

Personal finance, defined as paying special attention and devoting special care and effort to one’s own personal (and family) finances, is the only way make it possible to be okay. No government bureaucrat is going to step in and personally pay off your debts.

This means that personal finance can be viewed as escapism.

And yes, for many of us, this means that paying special attention to our own personal finance problems means that we can’t be fully engaged in changing the overall system for everyone.

And yes, I recognize that is what the elites want.

But I’m OK with that.

I’ve worked in politics for ten years, so I have a pretty good grasp of what is going on. I don’t mean to burst anyone’s bubble, but it’s pretty naive to think that this downward spiral can be reversed without massive pain and suffering.

So in a way I am advocating that the middle class stop playing the game. Jump off the treadmill of consumerism and ambition. Learn to say that enough is enough, and more importantly, learn to be satisfied when you’ve had enough.

If you are full, push your third helping away.

If you have a perfectly good TV, throw that Best Buy ad in the trash.

As a personal finance blogger, I feel a bit like Ayn Rand, who advocated that the poor mistreated elites simply drop out of society and stop “helping.” Her job was to make it seem like it is the poor and ordinary who are oppressing the rich and extraordinary.

But instead of talking to the elites, I am talking to the middle class.

The poor haven’t dropped out – they never showed up to play in the first place. In many cases, someone who appears “poor” is someone who has learned to live with less. In many cases, someone you think is “poor” may actually be more well-adjusted than you.

Personal finance is a way to drop out of the race to the bottom. The only way to win is to not play. So instead of looking for new zero-interest credit transfer offers to keep your ship of debt afloat, find a plan to pay off your debt for good.

Stop kicking the can down the road and hope that someone will come along and help you out.

The only person who can help you is you, and personal finance is your toolbox to fix your problems.

Just make sure you are seeking out personal finance advice from small non-corporate blogs and ignore “advice” from corporate shills.

Escaping the Worry

My writing and thought patterns as of late have been about escaping the crushing feelings of failure when one emerges from debt slavery into the world of “do I have enough money.”

I think I am finally making progress. I looked at the spreadsheet I use to track my finances yesterday and realized I hadn’t looked at it in over 10 days – a goddang miracle.

This is because I’ve engineered my finances to essentially be on autopilot. All my bills are autopaid, either by my credit card or my bank account. The only bill I pay each month is my credit card. The one thing I’m trying to stay focused on is hitting my investing goals every two weeks. It’s been a struggle, but I’m finally getting there.

What Would I Sacrifice for Retirement?

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

That’s the question I started asking myself after reading this article.  The article discusses how forgoing cable, average bill $80, could amount to a million dollars saved over the course of 50 years.  So, naturally I began to think what I was willing to sacrifice in order to retire.

Current Expenses

I think I would be hard pressed to cut any of my current expenses in order to increase my retirement savings.  I currently contribute 7% to my 401k, 6% to a traditional 401k and 1% to a Roth 401k.  My employer matches the 6% and kicks in an additional 2%.  That’s a total of 15%.  In addition to that, I began contributing to an HSA (health savings account) this year. You can see with The Game of Life infographic that insurance is gaining importance all over the world, especially for things like your private health.

In total, between my contributions and my employer’s contribution, I am saving $6,550.  I only anticipate needing around $3,000 to cover medical expenses this year, assuming this year was like last year.  That means I might be saving an additional $3,500 or 3.7% of my salary.  If I don’t need that money, I can save it for retirement.

So, given that background, I would have a hard time convincing my wife that we need to make sacrifices to save an extra $50 or $100 a month.  Sure we could cut cable; our combined TV, phone and internet bill is $160 a month.  Problem being, I enjoy having all of them.  I am not willing to make the sacrifice in the present for the gain in the future.  Now, if I wasn’t able to save nearly 20% of my salary, it would be a different story.  I would be eliminating non-essential spending just so that I could save something.  I have made some sacrifices that might not be readily apparent.

Hidden Sacrifices

These sacrifices might not be visible at first glance, but they are what have allowed me to save what I do for retirement.  One of the first is my cell phone.  Both my wife and I have TracFones.  It was a conscious decision on our part to keep our cell phone bill as low as possible.  We have discussed someday getting a smart phone, but right now the extra expense just isn’t worth it in our eyes.  We could easily spend $100 a month for the two of us, but that also means pulling that $100 from somewhere else.

We also do not take many vacations.  I can count on one hand the number of trips that we have taken in the last 10 years.  The reason for that was primarily driven by the purchase of a house and having children.  But the reality was there was only so much money to go around.  We needed to prioritize where our money went and vacations did not rank that high on the list.  Another hidden sacrifice is my car; it’s going on 13-years old.  Sure, I could go out tomorrow and buy a new car.  However, since I don’t have enough saved to pay for the car in cash that would mean a loan.  The payment for that loan would have to come from somewhere.  The only place large enough would be my retirement savings.   I don’t need a new car that badly.

The Future

I have run calculations that say I am on track to retire in my 60’s.  I am comfortable with that.  It is always possible that my mindset could change in the future.  If that should happen, I know there are additional sacrifices that I could make or even additional income that I could pursue.  What sacrifices have you made for your retirement?  Are you on track to retire when you want too?

Moving Beyond Money

spending problem

Does money run your life?

Even if you answered ‘no,’ I’ll bet that it does. Unless you inherited a trust fund worth millions or you live off the land, money is the method by which your work is converted to goods. More accurately, it is the social accounting system by which your adherence to the economic system is measured.

It is a factor in almost every decision we make on a daily basis.

Money is why we get dressed every day. It’s why we venture out in the cold early morning to punch a clock, likely performing tasks we hate. Either that, or it’s because we love our families and want a warm, dry home for them.

Like it or not, money runs your life, and if you aren’t making ends meet, chances are you think about money a lot.

Even if things are going well for you, I’ll bet you think about money a great deal. I know I do.

Despite having worked hard to achieve this:

  • 100% Debt free. No car loans, no student loans, no credit cards, no bookies, no mortgage.
  • Adequate Emergency Fund ($20,000 cash, plus almost $30,000 in unused credit card balances I can tap)
  • Near-passive side income of a few hundred dollars each month
  • Fully funding Roth IRAs and additional funds to taxable brokerage account
  • My wife is able to stay at home with our 4 year old
  • $3,700 saved towards a European vacation

…I still find myself thinking about money almost hourly.

And while I don’t worry about money as much as I used to, I constantly think about my paycheck coming in two weeks as if it were a long-awaited visitor. This is what Eckhart Tolle calls the “self talk,” the incessant worrying and analyzing and conversating with your self.

I would be remiss if I allowed you to believe that I didn’t feel better about my situation given the success that hard work has brought me.

But now that I’m more secure, I find myself worrying about different things, like:

  • Will I be able to save enough for retirement?
  • Will my pension cover my living expenses?
  • Will my pension even exist when I’m old?
  • Will the Federal Reserve and Congress greatly devalue currency?
  • Why do I feel like I’m not making it?
  • Will Social Security be there for me?
  • Should I be saving for my kids’ college?
  • Is it silly to worry about money since we have so many social welfare lifeboats?

 

The Creation of the Consumer

In the good old days, people formed small communities and bartered what they needed. The blacksmith would shoe your horse so long as you share the fruit of the plow. The town doctor would gladly accept payment in eggs and sausage.

In these good old days, those who attempted to “sell” items that weren’t needed were likely not welcomed into town. Think of the stereotypical quack selling a heal-all tonic. If his product provided a real benefit, you better believe some town would have welcomed him with open arms. But the very fact of his nomadic lifestyle was simply a byproduct of his lies.

The American people were not naturally free spenders. In fact, it took a dedicated effort by the marketers of the time to create the Post-Depression consumer out of what was traditionally a penny-pinching people.

These days, it’s not so easy to tell what we need, as the line between wants and needs is blurred. We are to blame, I suppose. Do we really need 24 different types of laundry detergent? Is a new hard drive that stores twice as many terabytes important?

Money Is Noise

Money has become noise, and it’s impossible to tune out. The point is, it has become nearly impossible for any of us to go even an hour without thinking of money.

Maybe I’m just allowing my general tendency towards worrying and paranoia to rule – but just because you’re paranoid, doesn’t mean they are not after you.

And by “after you,” I mean everyone wants you to spend, even those who should be encouraging you to save. I’m not sure how much longer this experiment can last, where we become more resistant to the idea of providing retired folks with a monthly check, while at the same time encouraging them to work until they die.

Wage Slavery

I’ve talked about wage slavery, or being trapped in a cycle of work in order to survive, many times before.

In fact, capitalism itself is more than just an economic system; it is a way to force people to work.

Much like socialism.

What makes it superior to socialism, however, is that you at least have an outside shot of lucking your way into something big, or faking your way in. Though social mobility is ‘almost’ a myth in American capitalism, you at least have a shot of hitting it big.

How are you Helping Your Master?

If money is your master, why are you aiding him?

Why do you spend more than you earn each month? Why do you buy $40 t-shirts? Why do you need a new car every two years? Why are you resigned to working until you are 75?

Is it because he is everything and everywhere, seemingly untouchable?

I’m sure there are many out there who believe money is a religion, and they are probably right. Despite those who tell us that we are on our own, if we lose our jobs, we get 99 weeks of checks. We get a monthly food allowance. We are told not to worry when a new report shows that our country produces more with less.

Higher productivity, higher unemployment.

So What’s the Answer?

I have no idea.

I don’t even know if there is an answer.

To quote Operation Ivy, “all I know is that I don’t know nothing.”

If I tell you the key to success is living on less than you earn, what can I say when you reply that you can only save $250 per month?

While a lot of personal finance blogs will say WOW THAT’S GREAT – SEE, YOU CAN DO IT! I might be quicker to tell you that if you can’t do better than that, you will never get ahead.

Sorry to burst your bubble.

You are doing a good job, but the powers that be are working even harder to ensure that good will never be good enough. If every American were to embrace frugality and reject materialism, how many companies would fail? How many jobs would be lost? Needless to say that there are many people vested in your personal failure.

If you want to live a semi-normal life, you have to spend money – money on kids’ activities like sports; tithing to your church; new clothes every once in a while. There are plenty of blogs giving you advice on how to live ultra-frugally. While this is not incorrect advice, it does cause you to live a boring and meaningless life. What fun is it to scrimp to the bone for 25 years then realize you have no friends or family to share your retirement with? I’m not saying that there is a one-size-fits-all approach, but being an active participant in what we call a “normal middle class American life” means that sometimes you have to spend $50 to get a babysitter so you can take your wife to a $70 dinner.

Perhaps this is where all this anxiety is coming from, the difficulty in reconciling the life you want with the life you must live if you truly want to save money.

Maybe the problem is me. Maybe working until your 70 isn’t that bad, given that most of the truly difficult jobs like factory work are disappearing. Who am I to care if I have to work that long, if it simply means cranking out reports from a comfortable chair in a climate-controlled office?

I suppose I’m just naturally skeptical towards authority.

So what am I doing to move beyond money?

The first step was realizing that I WANT to move beyond money. I used to derive a great deal of satisfaction from obsessing about my financial picture. Watching my debt-load go down every two weeks was liberating. Using math and spreadsheets to test different repayment strategies was a fun way to pass the long road to debt freedom.

But now that I’m there, I’m not going to lie: saving money is boring.

Transferring from my spending account to my savings buckets is boring. Not buying a new TV and audio system is boring. Feeling like I’ve climbed out of a hole only to realize there’s a mountain to climb, one step every two weeks…is scary…then boring.

To help, I’ve automated the paying of all my bills, minus my credit card. Not only does this give me a few less things to worry about each month, it works to take out some money thoughts.

To help, I am saving a decent amount each month for fun things. I’m willing to scrimp and save on most everything, but only if it leaves me with a nice hunk of money to spend on my passion – international travel. Since I only take one major trip every other year and will do it without incurring debt, I don’t feel bad about it.

It’s time to move beyond money. It’s time to stop checking your Mint app every three hours. This is a good thing. It’s hard to get there. It’s hard to enjoy. But it must happen as you become a money adult.

John Miro

Not Quite the January I Was Expecting

Money Tree

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I must admit.  By the end of January, I was beginning to get a little worried.  I was worried that I might have made a mistake in choosing my health plan for the year.  With the high-deductible plan (HDP), I am responsible for all charges until I hit my deductible.  I knew that I would hit the deductible during the year due to my son’s condition.  His annual visit to the cardiologist usually satisfies whatever the deductible is for the year.  I had done an analysis on our 2013 medical expenses and determined that we actually would have saved a few hundred dollars by having the HDP in 2013.  That was why I felt ok in going with that plan for 2014.

The Month So Far

January turned out to be an active month for doctors’ visits.  Every single person in our house ended up seeing a doctor in January.  I was actually quite surprised.  Normally, our family does not get that sick.  We were in January though.  It started with an ear infection for my son to start the month.  That was followed by the same for my daughter within a week.  My wife came down with a pretty good sinus infection about a week later.  It actually took two visits to clear it up.  My doctor’s appointment was not illness related, but injury related.  I rolled my ankle playing volleyball again.  Thankfully, it is nothing more than a sprain.  Given my past history, I just wanted to be sure.  All of those visits made me a little concerned that I had made the wrong choice.

The Damage

With the HDP, we are responsible for paying all medical expenses first, up to the deductible.  So, for all of this activity, we are paying for it.  Now, once we hit the deductible we just have to pay 10% co-insurance.  It was an expensive month.  All told, we spent about $950 for all the visits and associated medications.  It was not quite what I was expecting to start the year.  Like I said, we are generally pretty healthy.

Deep Breaths

After the initial sticker shock, I reassured myself and my wife that we are still in good shape.  With the HDP we were able to open a healthcare savings account (HSA).  We elected to contribute the maximum allowed by law, $6,550.  That amount is being deducted twice a month from my paycheck.  So, I will have enough to cover our expenses during the course of the year.  I just do not have that much in the HSA yet to cover everything.  I did anticipate this going into the year.  I have a dedicated amount on money in my savings account for medical expenses.  I knew that I would have to absorb some costs first before I could reimburse myself from the HSA.   I anticipated at least a time lag in when I would have to pay the bill and when I would receive the money back from the HSA.  I did not want this to adversely impact my budget, so I set aside this dedicated amount.

Fingers Crossed

I am hoping that January is not indicative on how the rest of the year is going to play out.  I am hoping it is just an anomaly.  However, if it does turn out to be a bad year for medical expenses, all will not be lost.  For the HDP, my maximum out of pocket for the year is $7,000.  This means I would only have to come up with an additional $450 beyond what I am saving in my HSA.  I can easily cover that from my emergency fund.  Have your plans for 2014 been tested already?  Have you had to make any adjustments?

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