Medical Bills

Posted on February 5, 2008 in Money talk 2 comments

Yesterday I received a letter from the hospital where I delivered my son two months ago. This is what it said:

“Dear such and such, your total for services rendered on 12/3/07 is $7880.00. Insurance paid $0, your responsibility $7880.00. Please pay within 30 days.” Ok, so maybe it wasn’t quite that short but that was the general idea. They give no detail as to how they arrived to that total or what that total entails. I am going to call them to get a break down of this bill. I don’t question the amount I just can’t believe they don’t give any billing details.

That letter was the last bill from my pregnancy and delivery charges. Here is a detail of all the bills we received:
Obstetric services $3850
Anesthesia services $570
My Hospital charges $7880
My son’s hospital charges $2170
Son’s Pediatric check up $273
For a total of $14,743

Our insurance is supposed to cover 90% of that leaving us with an out of pocket of $1,474. But of course is never as easy as it sounds. Notice that the letter we got yesterday says the insurance paid $0.00 towards my hospital stay charges. My husband’s HR department spends more time looking at our medical charges than they do looking at employees issues, I swear. Nothing is ever right with the way insurance processes things for us. We are already owed more than $200 for past overcharges. We will see how this one gets settled.

Choosing a 529 Account

Posted on January 16, 2008 in Investing Talk, Money talk 0 comments

As I mentioned a few days ago, our resolution this year was to be more disciplined about saving for our children’s college education. We had been waiting for our youngest son’s social security number in order to be able to open his 529 account.

We finally got it last week and his account has already been set up and funded. We have been very blessed in that my in laws have given a very generous initial contribution to both of our children’s college funds. We have been lucky not only by the amount they have given but that they gave them this gift so early in their lives. They both can benefit from compounding interest in their savings for the next 18 years. That makes for even more savings. But that doesn’t mean we can slack off in saving for their college expenses. I had my husband change the number of deductions he claims on his paycheck to lower the amount of money we get refunded from our taxes. With the “new found” money we are sending $50 a month to each of our sons 529s. In addition we will continue sending any mileage reimbursements from my husband’s job.

Right now our sons’ 529s are with the State of Nevada. Some of the things we considered when choosing a plan were:

  1. Minimum contributions: a lot of the plans nowadays don’t have high limits for initial contributions. For example College Savings Iowa only requires $25 for initial contribution and a payroll deduction of $15 per pay period.

  2. Investment options: We chose a plan that had a wide range of investment options. This is good because you have a lot of options but it can also lead to confusion. A 529 plan is not for speculating with the funds that are in there. To prevent this a lot of plans limit the number of times in a year you can change where your funds are invested or allocated.

  3. Fees and Expenses and Investment manager: For us these two were closely tied. We are very confident with the way the Vanguard group manages its funds. So we wanted a plan managed by them and that offered mostly its funds because they have some of the lowest fund expenses.

You can compare different 529 plans using this tool. You might even be able to save on your state taxes, depending on where you live.

Belated Welcome to the Blogging Community

Posted on January 9, 2008 in Money talk 0 comments

I am ashamed to admit that during the past month I haven’t been able to visit as many of the blogs in the frugal blogroll as I would like. Taking care of a newborn and a toddler can be time consuming. However, I couldn’t help but notice this new blog written by two sisters: Sisterly Savings. I wish I could have a sister to share blog duties with me. Visit them here, so you can read about their journey in the frugal world and how they can help you save money with all of the great deals they spot. They asked me to be a guest blogger for today. I hope you can join them and read my guest post here.

Even though I am not a tax expert, I enjoy the subject and like to talk about it. Personal Income Tax was one of the classes I had to take in school in order to sit for the CPA exam. Believe it or not it was one of the classes I enjoyed the most. It was one of those classes where I felt that any knowledge learned helped me and impacted my bottom line directly. Like I already said, I am not a tax expert, nor do I pretend to be. But I wanted to know if my readers would like to see a weekly series on the subject. It could be once a week and we could cover tax topics, maybe your questions, or maybe a tutorial on how to do your own taxes. I have added the poll on the side bar to sound out interest. You don’t have to sign up to answer it, just say yes or no.

Talking About Money is Still a Challenge

Posted on January 4, 2008 in Money talk 0 comments

My husband and I have been together for almost nine years. During that time the way we talk about money has evolved.

At first, during the first couple of years, we talked about money not very often. We were too busy looking into each other’s eyes, whispering sweet nothings into each others ears, etc. But we still do that now, we are each holding a child in our arms. You know what I am talking about, during the early stages of any relationship confrontation is almost always avoided and couples agree on mostly everything.

Then we got comfortable with each other, we got married and our finances were forever consolidated. Now, talking about money could not be avoided because money was a common denominator in our relationship. Then it became a challenge. Our conversations were filled with tension and defensiveness. At this point we were just learning about each other’s different approach to finances, how each processed this information and how each dealt with it. It was a rough time but the more we had these arguments the better because the more we learned about each other and the more we learned how to tackle this difficult topic.

Nowadays, talking about money is more talking and less fighting about it. It is still challenging because we still have different views on things, so we can’t expect the other to completely agree on something right away. But we have learned to listen to each other’s arguments for and against a situation. Now we have an understanding of where the other is coming from and our approaches to finances. But at the end we are more likely to find a resolution we are both happy about without feeling angry, alienated or resentful.

All in all, talking about money is hard but the key is in continuing to do so. Practice makes master. Don’t shy away from talking about finances because you feel it may hurt your relationship. If you learn to handle this topic it will only strengthen it.

A Better New Year’s Resolution

Posted on December 28, 2007 in Life, Money talk 0 comments

It’s that time of year again: when people get motivation from the start of a new year and embark on hopes and wishes for the next year in the form of new year’s resolutions. However, these resolutions very seldom stick through the end of the year and it is actually estimated that by the end of January most people have given up on their goals for the new year.
So, what can you do to make your resolutions stick?

  1. First, choose something you really want, something that really matters to you and it’s likely to motivate you to stick to it. In the case of our family saving for the college education of our children is very important. I don’t have any expectations for my children but I have HOPE. We also want to make sure that we are prepared to help them achieve their dreams. So, for this year our resolution is to be more disciplined about putting money away in their 529 plans.
  2. Base your resolutions on things you are already doing, don’t expect drastic changes to take hold for a full year. We have noticed that automatic savings work really well for us. The money is deducted first thing from my husband’s paycheck and it only takes a little adjustment in our budget initially and then we don’t “feel” it anymore. Therefore, we will do the same to put money away in their 529 plans.
  3. Make it baby steps. Don’t try to do to too much or you will feel overwhelmed. If in the past you have failed in keeping your resolutions, consider choosing just one this year. Limit yourself to one thing and you are more likely to achieve it. This is our only resolution this year. There are many other things I will like to accomplish this year: lose baby weight, save for the down payment on a car. But right now, saving for our children’s college education is what I want to focus on. I will work on the other things I want to do too but this is my priority.
  4. Create an action plan. Get specific. Don’t say I will pay off debt this year, say I will pay $XX in debt this year. Create a road to get you there. Commit $xx.xx amount of money every month for this goal. Set a specific strategy to achieve what you have set out to do. Up until now, we have been putting money away sporadically, dependent upon any mileage reimbursements my husband gets from work. This year, we will send $50 a month per child to their 529 in addition to any mileage reimbursements.
  5. If you fail, pick yourself up and try again. Set sight on the road not the destination. Focus on the process not the ending result. Yes, it is very important to have a specific goal in mind but more success is achieved if you change your behaviour or attitude. What is the point of paying off $2,000 in debt this year, if next year you’ll engage in the same destructive behaviour that got you in trouble in the first place?
  6. Write it down somewhere so you can keep track or revisit later in the year. It will help you keep accountable.

Do you set resolutions for yourself? are they more health related (lose weight), relationship related (spend more quality time with your family) or maybe more on the financial side (save more or spend less)? If you do, don’t give up on them just because you failed once, twice or more. It’s not all about the finish line, it’s about the race.

Getting Ready for Next Year Part 2

Posted on December 28, 2007 in Money talk, Saving Tools 1 comment

On part one I talked about how to minimize your taxes and maximize your deductions. On the second part of getting ready for next year, I am going to show you how to maximize your paycheck by minimizing your withholdings.

  1. First, figure out how much money you need to have withheld from your paycheck every month. This step will require a bit of work but the exercise is very worth it. By now you have probably received your last pay stub. With it, plus some additional information you can estimate your 2007 tax liability using this tax estimator (first link on the left side). I think they recently redesign this calculator. The couple of things I notice are missing are deductions for 401K contributions and also for student loan interest paid. If any of those two apply to you I will deduct them directly from your gross income when using this calculator. By now it is too late to make any adjustments to your paycheck if you owe or are owed a refund but it is very useful to know where you will stand come April 15th of next year.
  2. Once you have determined your estimated tax liability, adjust your paycheck to more closely match what you need to have withheld. For this I use the paycheck calculator found here. Basically what you need to do is the following: if your tax liability this year is $2600 and you estimate that next year your income won’t change drastically and your situation will remain mostly the same (i.e. you won’t be adding any dependents, or buying a house, get divorced or get married) then you can assume that your tax liability next year will be very similar to what it was this year. If you want to make sure you don’t end up owing at all then you can add $xx amount to this year’s tax liability and have that amount deducted from your paycheck. So, let’s say you decide that you would like to have $3000 deducted from your paycheck and you get paid every two weeks. You need to have $116 withheld from each paycheck for Federal Tax purposes. You need to play around with the number of federal allowances you can enter in the calculator until the amount being deducted from your paycheck is closer to what you need deducted. Once you have determined the number of allowances you should be claiming submit a new W-4 form to your payroll/HR office to make the changes.
  3. You can also use this paycheck calculator to estimate what your paycheck will be if you have had significant changes to what gets deducted for employee benefits. Maybe your health insurance premium has increased, or you have decided to increase your 401K contribution. Enter any of these changes in the voluntary deduction section.

This really is a work in progress, so you might need to revisit this calculation sometime mid-year. Even then, last minute changes can ultimately influence your calculation. Every year I engage in these calculations at the end of the year. Also, during the year I calculate our tax liability every few months. Yet, I am still looking at a sizable refund for next year (adding a dependent will do that). I, however, enjoy knowing where I stand in terms of our tax liability. I rather engage in this exercise a few times during the year than be surprised once a year with how much I may end up owing the IRS. If you have any questions about how to use any of these calculators please feel free to leave a comment and I will answer promptly.

Getting Ready for Next Year Part 1

Posted on December 25, 2007 in Money talk 0 comments

The end of the year is upon us and there are a few simple things we can do to make the best of these last few days. As a CPA taxes are always in my mind, April 15th is never far off. For these next few days here are a few things you can do to maximize your deductions and minimize your taxes:

  • Make sure your property taxes for this year have been paid. This may involve contacting your mortgage company and making sure they have paid this bill for you. Or like in our case, even though we have an escrow account our mortgage company sends us a check to hand over to the local property tax office. We’ve had this check for a few days now so we need to head to the local office and pay the taxes before the year is over.

  • Pay your December mortgage payment before December 31st. We usually pay our mortgage on the 1st of every month. Not this month, I want to make sure I am able to deduct the interest I paid on my mortgage this month on next year’s tax submission.

  • The holidays are the time of giving, how about getting some benefit from it? Consider cleaning up your closets and de-cluttering your house. Take any clothing or furniture donations to your local Salvation Army and Good Will and don’t forget to ask for a receipt. The IRS now requires receipts on donations of $250 or more.

  • Don’t leave any money on the table: check the balance you may have available in your Flexible Spending Account and make sure you use it. It’s cold season, so maybe a trip to your local pharmacy to stock up on cold medicine is in order. Check here for items you can buy using FSA dollars.

  • Did you get a nice Holiday bonus? or maybe cash gifts? Then consider sheltering that money from taxes and making a contribution to an IRA. You actually have until April 15th to make contributions to IRAs for the year 2007. But if you have the money now don’t be tempted to spend it and invest it on your future instead.

These are just simple things you can do to make the pain of paying taxes next year less.

Will Our New Baby Bust Our Budget

Posted on December 13, 2007 in Baby Expense Tracking, Money talk 2 comments
Waking up many times at night to care for a newborn, gives you lots of opportunities to come up with new ideas. As I sat in the rocking chair last night feeding our baby, an idea popped up in my head: Forget about tracking our monthly expenses for a month, how about tracking how much money we spend taking care of our new baby for a WHOLE year? It’s a good time to start, he’s only 10 days old, so I don’t have a lot of receipts to compile yet. What do you guys think? Does this sound like an interesting exercise? I have a couple of dilemmas though:

  1. This is baby #2, so I already had all of the furniture from baby #1. Should I assign zero cost to baby #2 or allocate half of the cost to him? The accountant in me says that I should only account for any marginal or additional costs incurred. This means I would consider the passed down furniture and clothing as a sunk cost and not bother adding it to the accounting for the new baby.

  2. At the same time, even though I have stockpiled a lot of diapers, I feel I need to include this in my expenses. Even when I spent the money over the past few months. I think that the cost of diapering is very relevant to the final accounting of how much this baby is going to cost us this year and should be included.

These are the expense tracking categories I have thought of so far: diapering, feeding, clothing, gifts and medical care. I do not think I should include the cost of delivering the baby because I want to focus more on daily expenses over the next year. Have I missed any category?

This article put a tag of $10K or so spent by the time baby reaches his first birthday. I hope I am able to beat it, not only because I didn’t have to incur any big ticket items but also because I don’t foresee spending that much. Umm, I hope this exercise is not another eye opener as the monthly expense tracking one was.

Writing a Will, Who to Leave Kids To

Posted on December 7, 2007 in Money talk 1 comment

I am going to make a confession here. The one place where we have dropped the ball in our family financial planning is in having a will in place. Here we are just having welcomed baby #2 and we do not have one yet. If something were to happen to us right now, our children would be very well taken care off thanks to our life insurance policies but that’s it. We don’t have in writing who we want taking care of our children until they are old enough to take care of themselves.
We have weighted many options and have come up with someone to do it. However I wish we had someone else. And do you know why I feel this way? Mostly because I don’t think the family we want to trust our children with are very good stewards of their money. It’s not that I think they will blow through our children’s funds. There are things we can do to ensure that doesn’t happen. It’s just that the way they lead their financial lives is not the same as we do. However, is not all about finances either. For us it is very important that our children are raised with strong religious beliefs and also that they remain close to the rest of their family. And to ensure that, we couldn’t have chosen a better family than the one we have.

Ultimately I hope my children never have to grow up with another family that’s not us. But life always brings up the unexpected and it’s better to be prepared. I hope that if you have children, and even if you don’t, have been a better planner than we have and have a will to ensure your final wishes are followed through.

So, How High are Food Prices Compared to a Year Ago?

Posted on November 27, 2007 in Money talk, News 0 comments

We have all been feeling the pain of higher grocery prices lately. High price culprits range from higher transportation costs due to higher energy prices, to wildfires damaging avocado crops.
My husband read my rant about egg prices yesterday while he was at work and graciously brought me a trade magazine* that has price comparison (Week of Nov 9 to same week a year ago) for a few food items. Here are some interesting finds:

  1. Block of cheddar cheese is up 28% from last year.
  2. Eggs are up 100% from a year ago.
  3. Beef and Pork were in general lower than a year ago, whereas chicken meat prices were up at least 25% from a year ago.
  4. For the frugal dairy choice, Non Fat Dry milk, price is up almost 100% from last year but trend is edging to lower prices.

We are not the only ones feeling the crunch, of course. The magazine is peppered with headlines about lower income reported in the third quarter for major food companies such as Kraft Foods, Dean Foods and Sara Lee. So, as much as we like to complain about how these companies are passing down higher cost to their customers, it seems they are taking quite a bit of the hit as well.
I really don’t see any relief in sight. Higher energy prices are not budging down and it seems that categories in our budget that seemed flexible and where people could work the most to lower their expenses (Food and Gas) have become rather inflexible and becoming a larger percentage of where our spendable income goes to.

* Source Food Business News for November 13th, 2007

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