Real World Finance$

So, I finally made the leap this past week.  We are purchasing our own private medical insurance starting in January.  After getting notice from my employer that my current HSA plan will be going up in cost by 7% this next year, I decided it was time to move out on our own.

We will actually be on the same plan through the same insurer, but only on a private policy rather than a group policy.  Here’s the details of the 2 plans.

Group:

• Deductible - $2,000/$4,000 (Individual/Family)
• Out of Pocket Max - $4,000, 0% Coinsurance thereafter
• Employer HSA Contribution - $500
• Max HSA Contribution - $5,950 annually (before tax)
• Current HSA Contribution - $3,250 (before tax)
•  Monthly Premium - $634 (before tax)
• Total Out of Pocket - $10,858 (before tax)

Private:

• Deductible - $6,000 (Family)
• Out of Pocket Max - $6,000, 0% Coinsurance thereafter
• Max HSA Contribution - $5,950 annually (before tax)
• Monthly Premium - $318 (after tax), $374 (before tax assuming 15% tax bracket)
• Total Out of Pocket - $10,438 (before tax)

So, by contributing the max this next year to our HSA account, we will still save over $400 on our medical insurance.  We’ll have around $1,200 in our HSA account at the end of the current year, so I expect to have a balance of close to $6,000 by the end of 2009.  That means, for 2010, we’ll have savings set aside to pay our entire deductible for a year should we need it and have access to another $6,000 for paying down debt.

To make the savings even better, I’m planning on actually putting my HSA funds into one of our E*Trade savings accounts at 3.3% interest during the year and make a gross contribution by year end to get the tax write off.  I may have to move some money earlier in the year to pay medical expenses for my braces though(which I finish paying for come May).  Either way, the 3.3% interest is a much better deal than the 1% in the HSA currently.

In reality, we won’t see much of a savings in 2009, but in years past that it should get considerably better.  The fact that we can spend our health care dollars this next year, saving for future years tax free, leaves me feeling very good about the solution.  That’s what we’re doing to save money on our medical insurance, what about you?

It’s that time again.  I got a chance to see how we are doing with just one month left to go this year.  Despite the stingy market, we have done pretty well.  We are under budget for spending this year and over budget on income (not a bad place to be huh?).  But let’s look at our current net worth, shall we?

• Assets - just a slight increase this month.  Still, the problem seems to be mainly with the market, so it’s not too concerning.  Despite putting another $600+ in my 401(k) the total value is up by only $5!  It’s a little depressing if I think about it too much, but not so bad when I take a the long term approach.  We’ll shake this dust off soon enough and I’ll be better off for it.
• Debts - Good progress here again.  It’s been a very consistent drop this year.  Our credit card debt started the year at like $54,000, so being close to breaking the $45,000 mark at the end of the year feels good.  Just regular payments are accelerating the rate at which that amount goes down.   I’ll also have to keep an eye out should the government actually do something about mortgage rates and they drop down to 4.5% as is being talked about now.  A streamline refinance would be a great solution for us if available.  We could either save $160 a month and put it towards other debt, or keep paying the same and pay the house off sooner.  We’ll cross that bridge when we come to it.
• Net Worth - Obviously, we aren’t going to be getting back to a $0 net worth still this year.  Of course if our retirement investments had simply held value and not dropped like they have, we’d have another 4-5k towards our net worth and be much closer.  Still, we’ve made good enough progress and will continue down this path.
• Look Ahead - December is looking to be a good month.  I should get paid 3 tims this month as I am currently scheduled to get paid on 1/1/09, so I’m assuming they will move that back to the previous business day and put it in the month (otherwise, January will get 3).  In addition, I will get that extra paycheck from teaching at the end of the month.  We aren’t spending a lot on Christmas this year as we are taking a vacation in early February.  In all honesty, I’m expecting to be within $10k of our $0 net worth mark before year end.  Next year is looking pretty good as well, thanks to about $40k of business loss of which 40% will come back to me.  That will give a nice extra tax refund I hadn’t really planned on and that will get applied to some extra debt payments.

Yep, we were one of the crazy few up and about bright and early this past Friday.  After getting to be a little after midnight we were up again at about 3:30 in the morning.  We got dressed again and headed to the car and got to our neighborhood JC Penny just after they opened at 4:00.

We spent 30-45 minutes there.  We took advantage of the sales to stock up on our winter wardrobes (good timing since there was snow on the ground this morning).  We dropped a couple hundred dollars, and we hadn’t really purchased much in the way of clothes the last 2-3 months, so it was within our budget.  We have a vacation planned the first week of February, so we aren’t doing much in the way of Christmas this year.

The store was busy, but wasn’t really crowded.  The store near our home doesn’t have a lot of other shopping nearby, so the real die hards were elsewhere.  We got checked out, headed out to the car and then back home to bed by 5:00.  A little silly maybe, but that was the extent of our Black Friday shopping.  One stop to buy only clothes that we really needed anyway.  No impulse shopping, no fancy electronics, not junk that’s going to collect dust in someone else’s home.

Besides, we are working on doing a homemade Christmas this year and using our talents to make gifts for each other.  My wife has been having fun with her knitting machine and learning how to felt knitted items, so those will be some great hand made gift items that cost a fraction of what they would cost in a store, and they will be worth so much more because she made them.   Hope your Friday was as financially easy as ours!