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Health care and health insurance premium costs have been going up rapidly for many years. While it’s certainly not the biggest problem with health care in this country, one problem is the fact that, for many people, they use their health insurance infrequently, and feel like they are paying into a system (skyrocketing premium costs) without taking any of the benefits. After seeing how much my health insurance premiums were going to be going up this past December, I decided to go with a High Deductible Medical Insurance Plan this year, combined with a Health Savings Account (HSA). A HSA account is part of a “Consumer Driven Health Plan”, which supposedly allows the consumer to make more choices regarding their medical treatment and more control over how their medical dollars are being spent.

 Here’s how they work, and what I think will be the benefits of using this plan.

A health savings account is only available if you are in a High Deductible Health Plan. To qualify as a High Deductible Plan, the minimum deductible for a single person is $1,100, and $2,200 for a family in 2008. You are allowed (by law) to put up to $5,800 for a family plan, $2,900 if single. For me, this means I can put more than my max. out of pocket ($4000) in per year. Premiums for an HSA plan are normally lower than other types of plans. Contributions can be made pre-tax, if your employer has the option available, or post-tax and then deducted from your tax return. In general, you are responsible for all out-of-pocket expenses until you meet the deductible, and then there usually is a co-insurance portion. For me, the first $2500 comes straight out of my pocket. (i.e., no co-pays, I pay the entire bill) Between $2500 and $4000 worth of expenses, I pay 10%, the plan pays 90%. So for me to reach the max out of pocket, my total expenses have to exceed $2500 + $15000= $17500. After I hit $4000, the plan pays 100%.

Beneficial Features of an HSA Plan
• You can have the money to fund your HSA put into a bank account, which you can draw from to pay medical bills. Normally, your employer will set this up so the money comes out pre-tax.
• I can keep any money left in the HSA account, it rolls over to the next year, and I can take it with me if I leave my employer. (I can then still use what is left, but cannot contribute to it unless I get into another high deductible medical plan.)
• The HSA account available to me pays 4% interest per year. (This will vary based on your plan and the bank they use)  After reaching a certain limit, $2500 I believe, I can invest in a variety of mutual funds.  You will need to have a cushion, though, because should you need the money you have to sell your investments. But, using my situation as an example, after I have amassed my max yearly out of pocket, I could begin investing that money.
• If I do leave my employer, I can use any money in the HSA plan to pay Cobra premiums, if necessary. You may use your HSA to pay for COBRA premiums and Medicare premiums.
• Similar to an IRA, if you use the funds for non-medical expenses, you pay a 10% penalty plus income tax. However, once you reach 65, the penalty portion disappears, and you basically have a tax-deferred account you can use for medical or non-medical expenses.
• Similar to a flexible spending account (FSA), you can use the money for vision, dental, or over-the-counter medical expenses.

Criticisms of HSA plans
• Several health related groups feel HSA’s only benefit the healthy, and this will cause an increase in less healthy people’s insurance premiums. Although it can limit maximum expenses as well, so I am not sure if this is valid. Because prescriptions count towards the max. out of pocket, people who take a lot of expensive medications may end up paying less than they normally would.
• Many people also believe that because people have more choice, they may choose not to seek medical attention because they may have to pay out of pocket, and this may have a negative effect on their health.

Why did I do it?
Because after looking at the plan details and crunching the numbers, I have decided if I come out $1.00 ahead at the end of the year, it is a moral victory. I am hoping to do better, of course. The savings in premiums for me ($2400) is basically equal to my deductible under the previous HMO plan I was in, so I am “even” up to that point. Since I normally put about $1000 in my flexible spending account, I am now up to $3500, only $500 less than the total max out of pocket for the year. 

Now, if I were a healthy, single person, in my early 20’s I think this would be a no-brainer, at least for me.  But I am in my mid-thirties, and married with two small children. Have I made the right choice? I think I have, but only time will tell. So far this year, things have gone pretty well. I will keep you updated.

HSA Resources:
US Treasury 
Council for Affordable Health Insurance

Filed under: Health by RC - 2 Comments →

 Finding cheap gas prices is no longer only for the frugal-minded among us, it is now becoming a necessity for everyone. It seems like prices have gone up $0.10 to $0.15 per week for the last few weeks.  The more you drive, the more you spend on gas, and the more important it is to find the lowest price possible. Even though I travel the same route to work everyday, I often find myself driving around town, and of course, I notice when a certain gas station has lower gasoline prices than others, and of course, I always seem to see a lower price right after I fill up! With prices changing so frequently, it is hard to find the station that is the lowest. Some change their prices at different times of the day, and even though you may go to a station that is usually the lowest, it may not be the lowest the time you go there. Even a difference of a few cents per gallon can add up of a period of time. I have used one of these websites in the past,  Gasbuddy, to look up prices, but the other,  Mapquest Gas Prices,  is new to me.

 Gasbuddy: Allows you to search by city, state, or zip and brings up list of the cheapest prices in your area. Gasbuddy also gives you an overview of historical prices, trends, and includes Canada as well.

Mapquest Gas Prices: Allows you to type in an address, intersection, or zip-code, and pull up the gas stations with the lowest prices in that area, all on the same map. Additional features include a gas price calculator, browsing by city and state, and alternative fuels such a E85 and bio-diesel. The map feature on mapquest is great, and it seems as though it would be very useful when travelling or on a trip.

While I like being able to see multiple stations on Mapquest Gas Prices, both sites are quite useful for finding cheap gasoline in your area or on the road.

image by a siegel

Filed under: Cars/Auto, Frugality, Saving Money by RC - 2 Comments →

According to the IRS, the direct-deposited economic stimulus rebates will go out about 5 days earlier than planned, starting tomorrow. The mailed rebates will also start a week early as well, starting May 9th. I have not yet come across a revised schedule of the dates, but I would assume they would all be going out on an accelerated schedule as well. Keep an eye on your bank account this week if you are eligible for direct deposit.

I participated in 2 carnivals last week, The Happy Rock hosted the 149th Carnival of Personal Finance-Chasing Dreams Edition, and included my post “Two of the Most Important Habits for Increasing Your Income”.

My favorite articles from the carnival :

I’m Not Going to Cut Back on my Cup of Coffee-by Andy @ Saving to Invest. I’m a  coffee drinker,  I try to get it at work every day so its free, but when I need it I need it!

Five Ways to Survive on One Income- by Kyle @ I’d Rather Be Shopping. My wife is a SAHM so I can relate to this one.

The GBlogmaster hosted the Carnival of Money Stories # 56- Once Upon A Time Edition at Can I Get Rich On A Salary and included my post “The Cost of Procrastination and Being Unorganized”.

My favorite articles from the carnival:

Top 7 Energy Saving Tips for this Summer by Fire Finance. I am running the A/C already, so its time to look at ways to reduce my summer cooling bills!

Just One More Time by the Financial Blogger who gives us reasons why its not always good to do things “one more time”.

Think Your Way To Wealth is now featured on Alltop.com, in the personal finance category. It is a site aggregation  website with many categories, showing “all the top” stories from around the web; I encourage you to check it out and have a look around.

Filed under: Roundups by RC - 2 Comments →

Gas prices are have gone through the roof over the last few weeks, and food prices are rising as well.  Sam’s Club and even Costco are talking about rationing rice. There are quite a few ways to save money on gas while driving; here are 30 ways to cut your food bill and associated grocery shopping costs as well.

Your Eating Habits and at Home

Grow Your Own- No, that’s not what I mean ;). Grow your own vegetables and herbs (which are quite expensive if you go by weight), and fruit if you live in a place you are able to. Don’t have a big yard? Try building a square foot garden.

Drink less milk, soft drinks, and alcohol- You don’t have to stop drinking any of these, but try cutting back a little. Your waistline will thank you as well as your wallet.

Go Fishing!-If you live near water, try to catch your dinner. This can be a great activity to do with kids as well.

Try meatless meals- Cut meat out of your dinner lunch or dinner menu several times a week.

Eat breakfast for dinner- Make omelettes for the family one night during the week and serve everyone for a few dollars.

Skip a meal on the weekends- Have a large breakfast on the weekends, then have an early dinner, and skip lunch. It won’t hurt most of us.

Plan your meals carefully- Plan out your dinner menu ahead of time, and include the leftovers, if any, in your planning.

Plan your meals based on what’s on sale- Check out the ads for your local grocery stores before you plan your menu to incorporate the sale items.

Eat less junk food- Cut back on salty and sugary snacks, switch to fruits, vegetables, and other healthy alternatives, which are usually cheaper.

Don’t waste food-  Keep an eye on your perishables, and if you find yourself throwing out food, cut back on how much you buy or freeze things before they go bad.

Experiment with simple or exotic cooking- Buy a cookbook or two, and look for easy, simple meals which don’t cost much or have a lot of ingredients. Experiment with foods from other cultures, which frequently don’t use as much meat as we do here in the U.S. either.

Don’t use the vending machines- The cost of items in vending machines is usually 2 to 3x as much as you can get it yourself.

Bring your lunch to work- Brown bag it to work or bring leftovers. This can cut down on wasting food as well. Bring your own drinks from home, or drink water.

Split entrees with your spouse or significant other- When eating out, try splitting an entree.  Many restaurant’s portions are so big, you end up with leftovers.

Buy a freezer- Investing in a freezer can allow you to freeze things before they spoil, batch cook for future meals, and stock up on perishables such as meat and chicken when there is a good sale.

Before Shopping and At the Store

Make a list- Make a list based on what you need, and stick to it. You will spend less money by doing this.

Buy in bulk- Anything that won’t spoil before you use, buy in bulk. Be sure to check the unit pricing, but 9 times out of 10 it will be cheaper to buy in bulk.  If you can’t use it all when buying in bulk, try to split it with a family member or friend.

Buy what’s in season & local- This applies especially to fruits and vegetables, but can apply to seafood and other items as well, depending on where you live.

Shop the sales- Check out the weekly flyers for the best deals, and shop around if you don’t have to drive too far out of the way.

Buy whole cuts of meat- Buying a whole chicken or larger cuts of beef or pork are normally cheaper than individual cuts and smaller packages.

Don’t buy non-grocery items at the grocery store- Save your non-grocery purchases for trips to Walmart or the pharmacy, or other discount store. The markup on these items is usually high at grocery stores.

If you don’t clip coupons start- If you don’t clip coupons, start. By combining them with items on sale, you can get the most bang for your buck. Don’t use them for items you wouldn’t normally buy, however.

Search the net for coupons too-Search the Internet for online coupons at places like smartsource.com, as well as the myriad of grocery coupon sites.

Try generic or store brands- These are frequently quite a bit cheaper than name brands, and often taste just as good. Experiment with them to make sure you like them.

Stock up on sales- When you see a really good sale, stock up on that item for future use. Be sure you are going to use it all, of course.

Look for mark-downs- Check out the meat department for markdowns, where they lower the price on meat (and sometimes other items like dairy) when it is getting close to its “sell by” date.

Don’t go shopping hungry- We have all heard this one before, but it is true. You are more likely to buy more if you go food shopping hungry.

Don’t bring the kids-Kids are always going to want something, whether it is a toy, candy, or spider-man popsicles. This will keep you from buying things that aren’t on the list. (Spider-man popsicles are usually on my list though)

Watch the register- Keep an eye on the register while your groceries are being rung up to make sure you are getting the right price on the things you buy.

Check your receipt-Take a quick look at your receipt to make sure you didn’t get overcharge or double charged, or the store didn’t forget to put something in your basket.

What are your best tips for saving money on food and grocery shopping?

Filed under: Frugality, Saving Money by RC - 9 Comments →

A key to getting out of debt and on the path to financial success is to avoid using credit cards as a crutch when you don’t have the money to pay off an unexpected expense.  Even if you have been working to pay off your credit card debt in a responsible manner, a sudden medical bill or costly automobile repair can run your credit card balance right back up again.  One of the best ways to stop this from happening is by setting up an emergency fund to pay for life’s little surprises when they appear.

What is it ?

An emergency fund is exactly what it sounds like. A separate pile of money (i.e., a fund) that you use in the event of an emergency, like an unplanned car or home repair, unexpected medical expenses, and other similar unplanned and frequently unpleasant expenditures. The definition of what an emergency is is up to the individual, but it is important to remember that most things that can be planned for do not constitute an emergency, like regular car maintenance, replacement of appliances that are getting old and functioning poorly that you know will need to be replaced soon, vacations, Christmas shopping, and other expenditures that don’t really constitute a true “emergency”.

Why do I need one?

The main reason you need an emergency fund is that without it, or substantial savings in reserve (which would in effect serve as an emergency fund) it can be very difficult to break the cycle of debt you may be in, especially if an unexpected expense rolls in.  If every time you car breaks down, you use a credit card to pay for it, and you don’t pay it off every month, your balances will go up, you start paying interest, and the next thing you know you may be struggling to make the minimum payments. By starting an emergency fund, you are planning ahead for the unexpected, knowing that one day it will happen (which it will).

How much do I need?

If you are deep in debt, you should start with a small amount, say $1000 or so, and then focus all of your extra money you can scrimp together to pay off your debts.  I have just passed this point, using $2000 (since I have a family) and now I can focus 100% on paying off the rest of my debt. After you have paid off your debt, most people recommend 3 to 6 months of living expenses as your emergency fund, to protect you from smaller emergencies as well as a job layoff, etc.

Where and how do I start?

If you already have a savings account, it is OK to start there, but many people like to set up a separate account that cannot be accessed quite as easily (like a savings account can be with an ATM card).  Online saving accounts such as ING Direct are a great place for this, because the money is not quite as accessible, although you can get it in a couple of days.  They also pay higher interest generally, currently around 3.0%. You should begin by putting a certain amount out of your paycheck every two weeks, as much as you can afford, and can set this up automatically as well.

Once you have a “cushion” provided by your emergency fund, you can focus on debt reduction without having to worry as much about the unexpected events of life getting you into as much financial trouble as they once may have.

Reminder-  When you take money from your emergency fund, be sure to start putting it back to replenish it right away!

Filed under: Building Wealth, Debt Reduction by RC - 5 Comments →

 Last summer, I almost bought a new lawnmower.  I was having trouble getting my current one started a few times, and I started thinking to myself how nice a new lawnmower would be.  It would save me time, and would be easier to use, I remember thinking to myself.  But after I thought about it for a while, I realized I should probably keep the lawnmower I have and “run it into the ground”, as they say. It’s easy to justify a purchase in your mind, but when I examined whether I really needed a new one, I came up with the following reasons I don’t need to make this purchase yet.

 I don’t really need a new one because my old one still works- Sometimes, its pretty easy to talk yourself into thinking you need something when in reality it is not a need but a want.

I may save a little time, but it won’t add up to anything significant- Saving five or ten minutes every time I cut my lawn (which is pretty often in the summer) may add up over the course of a year or so, but will I really translate that time I am out doing yard work anyway into something useful or productive on the weekends? Probably not.

I can use the exercise by continuing to use a non self-propelled lawnmower- I am not 100% sure, but i would likely spend a little more money when I do eventually buy one for a self-propelled model.  But in reality, it is probably good for me to “push” my old for as long as possible.

It keeps one more piece of junk out of the landfill a little longer- I have no doubt that when this one gives up it won’t be used by anyone else, so the longer I use it the longer it stays out of the landfill.  However, another positive is that I am not starting to wear out a another (new) lawnmower, which means the one I am not purchasing yet will not be getting worn out and on its way to the landfill faster as well.

Image by Tom Chambers

Filed under: Frugality, Spending Money by RC - 3 Comments →

 Setting up your bills for automatic payment can be great, you don’t have to worry about paying late, late fees, and you can even save yourself postage in some cases. But many people trying to organize and simplify their finances often have a big concern. You do give up some control, so to speak, of your money when you give someone permission to go ahead and take it out at a predetermined time. Many people still aren’t very comfortable with giving up that control, and may also be concerned with providing their financial information over the internet, even if many of the companies seem quite trustworthy, such as utilities, city services, etc. If I set up all my bills for automatic payment, and I am still trying to get my finances under control, will I cause myself more problems by over-drafting my account, or running low on money before I get paid again? Also, many of your bills could be due close to the same time of the month, and you may be worried about paying them all at the same time of the month and how that will effect your available bank balance.

One way to dip your toes in the water and become comfortable with automatic bill payments is to start small. You don’t have to set up all of your bills for auto-pay at once, and if you are still trying to get your finances into shape, you probably shouldn’t do so anyway.  To get started, start by picking your smallest recurring monthly bill, or two, and set them up for auto-pay. After a month or so with no hiccups, go ahead and add another one or two.  Before you know it, you will have the majority of your bills being paid automatically, with little to no stress on your part on whether you you will be able to handle or be comfortable with the payments automatically going through.

Image by r-z

Filed under: Budgeting, Spending Money by RC - 1 Comment →

My two kids, ages 1-1/2 and 4 have been slightly under the weather this past week, with coughs, runny noses, and all the other things little kids get, and I started to feel it myself yesterday.  Not too severe though, so I think we will all be feeling better in a few days.

I participated in three carnivals over the past week:
Gather Little By Little hosted the 148th Carnival of Personal Finance and included my post “Should I Stop Contributing to my 401k to Pay Off Debt”. Great job with the carnival, with photos of North Carolina interspersed with the posts.  I will likely being going to North Carolina in a few months for a vacation, but the photos made me want to go now!

Rather Be Shopping hosted the Festival of Frugality #121-Tax Day Edition and included my post “How to Develop a Frugal Mindset” as an editor’s pick.  Great job with the festival.

Be Thrifty Like Us hosted the Money Hacks Carnival #8 and included my post “Lower Your Medical Bills through Negotiation, Haggling, and Cost Comparison” as an editor’s pick, and did a great job with the carnival.

Be sure to check out the carnivals and festival to pick up some really good info.

If you haven’t done so already, be sure to subscribe to Think Your Way To Wealth via RSS reader or email  so you can receive the latest updates. Thanks!

Filed under: Roundups by RC - No Comments →

 With all of the advertising, commericals, and public perception influencing consumer spending these days, its hard to determine what causes us to make certain decisions when it comes to spending money. While many people enter into a money spending situation with the best of intentions, it is very easy for some of us to “rationalize” our purchases to a point at which they are not in line with our original intent. Often, we tell ourselves “little white lies” in the heat of the moment to make ourselves feel better about certain purchases. Some of these rationalizations include the following:

I need this. Besides food shelter, clothing, and heat, there are really not many things that we really need.  While many things are not really extravagant or wasteful, separating your “needs” from your “wants” is an important part of making smart money decisions.

It’s such a good deal, I have to buy it. How many times have you talked yourself into buying something because it was on sale?  Obviously, the merchant is still making money on the deal, so most of the time we probably don’t even know how good of a deal we got. There is also the variation of this one, It was on sale, so I really saved X dollars. Sure you did.

I will cut back on X if I let myself buy Y.  You might tell yourself that you will stop buying coffee on the way to work everyday so you can buy a new pair of shoes. It may work for a day or so, but frequently we fall back to our old habits in a short period of time.

I can afford the payments, I’ll be getting a raise next month, year, etc. This is usually for larger purchase or something with a recurring payment, such as a car payment, cell phone plan, etc. While you may be getting a raise, you probably don’t know what it will be, and if you have to tell yourself this, you probably shouldn’t buy it right now either. 

I deserve it or I need to reward myself. While you do need to reward yourself on occasion, this one can easily be “overused”.

This will make my life easier.  You can often rationalize a purchase because you “just know” this new item will make your life easier and give you more free time, but often that is not the case.

I’ll try it out and cancel it if I don’t like it. It could be a gym membership, or premium cable channels.  Chances are, not only will you not cancel the service, but you may not even ending up using it.

I’ll put this on my credit card but pay it off before the bill is due. I’ve done this one many times in the past. Usually, what would happen to me is I would not pay it off right away, and when the bill came the next month I had forgotten about it, and ended up scrambling to try to pay it off.

This other brand, model, or item is a little more than I planned, but it is worth it.This can be true when buying a better quality item that may have a lower overall cost over its life, but frequently we don’t really take the time to do the research to determine if it is true.

One of the keys to becoming a “saavy” consumer, is to carefully plan your larger purchases, and to avoid getting yourself into situations where you may falter. Waiting a certain period of time, like a week or month, can also give you time to determine if you really “need” something, as opposed to  setting yourself up to make impulse purchases.

Photo by FreaksAnon

Filed under: Spending Money by RC - 5 Comments →

Revolution Money Exchange, a new alternative to paypal for sending and receiving money over the web, is offering $25 free for all customers who sign up between now and May 15th, 2008. (They recently extended the offer until May 15th). I did it a few days ago, it literally only takes 5 minutes to sign up, and a few minutes later the money is in your account. If you sign up through the link above, you can get the $25 free and I will get $10.  You can then refer your friends and receive $10 for each additional person you sign up. 

They do not pay interest, as far as I can tell, but as a bonus they don’t charge fees either.  The account is issued by First Bank & Trust, Brookings, SD, Member FDIC, a real bank, which provides additional security.

Filed under: General by RC - 2 Comments →