Posted on: June 1, 2009 by Matt
During a recent discussion with my employer I was informed that due to our high deductibles that we have the option to enroll in a health savings account. After giving it some thought I opted to take advantage of setting up the account so that I may be a bit more encouraged to keep up on my proactive health checkups.
Currently my insurance coverage requires the first $2,000 to come out of pocket 100% as a deductible prior to any coverage. Once the deductible is met then the plan will cover 100% of expenses. Overall the HSA appears to be a pretty good deal and should help me take better care of myself (which I largely neglect due to cost). So far the benefits I am aware of include:
- My employer will make a $50 deposit per month provided I have an automated contribution made.
- My contributions are tax deductible up to $3,000.
- Withdrawals from the account are tax free when used for eligible medical expenses.
- The account does not appear to have a “use it or lose it” clause.
- Eligible items include many services and products that I either currently use or have used in the past. So in addition to doctor visits I know there are a few other services I will take advantage of.
For the most part – I do not really see a downside other than a slightly smaller paycheck each pay period. The money does go into an account that will allow me to make doctor and dentist appointments (which my girlfriend regularly reminds me I need to do) without having to account for the cost in my checking account budget. I am fairly excited by the idea of having some money set aside specifically for my health and look forward to seeing how it all works out.
Posted on: April 28, 2009 by Matt
Originally uploaded by Gnerk
Shortly after my 18th birthday my mother passed away. I had plans to head off to college about a month later and intended to go just to get away from all the old memories lingering around where I grew up. I had very little in my bank account and all of it was probably going to be needed for books and other expenses related to college.
Later that semester I received notification that I was due to inherit my share from my mother’s estate which amounted to about $11,000. To date this was easily the largest sum of money I have received in one lump sum. I had no idea what to do with the money and was still grief stricken and in shock from the loss of my mother (I really had trouble coping with her death). I did what most college boys probably would have done: deposited the money in my checking account and spent frivolously. Of course the nice lady at the bank attempted to give me some advise but I wanted nothing to do with saving money or planning long term. I more or less told her to just give me the money and shut up.
For the most part I do not remember what I spent the money on. From what I can recollect now I can recall buying:
- Lots and lots of booze on a regular basis: I developed an even bigger drinking problem in college that I carried with me until a little over a year ago. At this point in my life I have come to realize and accept that I am an alcoholic and can not drink. I have been sober now for about 16 months.
- A PlayStation2 that I had to have: I was a guy and in college – of course I needed the newest video game console.
- A beat up car from my girlfriend’s (at the time) brother: This was my first car. I did not get my license until I was 19. It was a little beat up but ran well and I managed to get quite a bit of mileage out of it.
Needless to say – I spent every last dime within a year or so. I do not regret spending it but do think that I made some poor choices. I suppose that if I had to start all over again today I would probably look to start out by:
- Learning how to manage money: Not just large sums but also general personal finance. I was fairly clueless, nobody had taught me anything about money management and I had not taken the initiative to learn on my own.
- Parking the money in a CD where it is locked for 3 to 6 months: Actually – I probably would have opened a few of them that would mature at different lengths of time. Maybe break it into quarters and put 25% in each 3, 6, 9 and 12 months. I was in no emotional state to make any financial decisions and knew little to nothing about handling money.
- If I needed money, get a job: I had limited to no income the first three years of college. I cited having to focus on my studies as the reason for not working but the real reason was I was too busy drinking and generally slacking off. I could have easily worked a part time job.
I do not regret spending the money or wish to change the past but do try to learn from my mistakes. In this case I learned that having a large sum of money float into your life requires that you press a pause button and do some planning and possibly some healing. When the inheritance arrived in my hand I was still grieving (at a point where I maybe should have put college off a semester or two) and was not clear headed. Parking the money and forgetting it existed would have given me some time to work on healing myself. Once I was in a better place emotionally I could have moved forward with learning how to manage money and planning. My lesson did not have to be learned the hard way – I could have listened to the nice folks at the bank but I chose not to. So I guess there is also a general life lesson here as well: Listen to the advise of people who specialize in a field you know little or nothing about.
Tags: Banking, Budget, Budgeting, Cash, Family, Financial Team, Frugal Friday, Future, Health, Personal Economy, Personal Finance, Planning, Relationships, Savings, Spending Filed Under: Banking, Budget, Health, Lessons Learned The Hard Way, Planning, Savings
Posted on: April 20, 2009 by Matt
While driving with my girlfriend yesterday we had a conversation about my credit card that still carries a balance. We started talking about my car loan from an ex-girlfriend and how excited I am to have it paid off in August and I noted that I should be able to pay the balance of the credit card off by the end of October. She asked how much the balance on the credit card is and I told her that I still owe about $1,900 on the card.
She thought for a minute then asked the questions: “Why is it going to take so long? Why haven’t you paid it off already?”
I responded that I just can not afford to pay off the debt and still be able to carry other expenses that we incur. She then argued that I make enough that I should be able to pay off the card in a couple of months at the most and that all the expenses that I claim I need cash for could just as easily be paid for with the credit card. I started to feel a little squeamish. I just do not relish the thought of emptying my bank account and using a credit card for living – especially when I am trying to just pay the balance off.
After further discussion she logically laid out the following thoughts:
- I am paying a high interest rate on the card: Certainly higher than the interest I am getting returned from my bank account. Paying the card down to a lower balance certainly makes sense here.
- I will still have the money available, just in a different place: My argument of not being able to pay for gas, groceries and other expenses makes no sense. I normally use a debit card for all these purchases – if I pay down the credit card balance I can just as easily use my credit card.
- I will probably spend less on the credit card: I argued that I was trying to avoid spending on the credit card because I would probably spend more, not less. Her response: If I am working on paying the balance off and not wanting to increase the amount owed – I will probably think a little harder about impulse purchases. I had not considered that using a credit card would encourage me to spend less before. Her argument is good and plays to my thought patterns pretty well. If I am holding a card that I am hesitant to charge I am really gonna think about how much I really need what I am buying.
- I am just neurotic about money: I knew this already. I freak out when my checking account drops below having a couple hundred dollars in it. There is not a set amount but it triggers me into a bit of a panic mode. I like the security of having money available.
At the end of our conversation I agreed to give her method a shot and see what happens. It should be interesting and I will be sure to keep everyone updated on how it goes. I am hesitant as it seems that most personal finance literature I read expounds the evils of credit cards but she made a good argument (you guys just got the synopsis).
What would you do? Would you prefer to pay down the debt and use the card for expenses or keep using cash and try to pay the debt down slower? I suppose the real question is cash or credit?
Tags: Budget, Credit Cards, Debt, Debt Reduction, Relationships Filed Under: Banking, Budget, Credit Cards, Debt, Debt Reduction, Expenses, Relationships
Posted on: April 13, 2009 by Matt
After I received my tax return from the state of Colorado I reapplied it to the taxes due to the state of Vermont. For the most part – I had anticipated the two states to mostly wash each other out; that my Colorado refund would be pretty much what I needed to cover Vermont.
So I mailed out my check to the state of Vermont a couple of weeks ago and was happy to be done with my taxes for the year. However over the weekend I received a pleasant surprise in the mail that made me even happier - a refund check from the state of Vermont. Somewhere along the way the state figured that I had overpaid my income tax and sent me back the difference. It was not a whole lot if you compare it to how much they did keep but any extra cash at this point is greatly appreciated.
So I am off to the bank this morning to make an unexpected deposit – a good way to lift my mood on a Monday! Let’s hope the rest of the week goes this well…
Posted on: March 23, 2009 by Matt
I have been meaning to get my taxes done for a couple of months now and finally decided to give H&R Block a call. I called them earlier in the week and scheduled some time on Saturday to go in and have them take a look at my taxes. Normally – I have no problem filing myself but this year I moved and continued to work for a company in another state. This lead to being a resident of two different states and paying income tax in one state only. I was worried about the risk of error and figured I would give the work to a professional.
Overall – I was pleasantly surprised with the entire experience. The cost of having my taxes prepared was a bit higher than I thought it should be at $233 but the cost was offset by the increase in return due to deductions I was not aware I could claim. There was about a $400 increase in my federal return from working with H&R Block so I still ended up in a better position than I expected.
The state items on the other hand appear to be pretty close to a wash. The state of Colorado will owe me about $1,500 and the state Vermont will want just about that much back. After getting the states all taken care of I get to keep about $40 as a middle man fee.
Finally – I was able to save some time having someone else handle my taxes for me. In previous years I have spent about two or three hours to get my taxes done and reviewed. On Saturday I was at the H&R Block office for about 45 minutes. Not too bad – I could complain about the fee being so high for such a short amount of time but I prefer to look at it as investing in time for myself!
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