Category Archives: Costs

Reasons For Having A HSA

by

The main reason that I wanted to have a HSA was the fact that I hated to pay all of that money to the health insurance company every year! 

 

Hundreds of dollar each month was taken out of my paycheck and never seen or ever used.  It was very disheartening for me.   

Then in 2005, the company I work at announced that for year 2006, they were going to included a HSA plan in their medical options!  That when I started reading about it.  The first year it was offered, I didn’t bite, but it was very tempted and I really regretted that I didn’t join!  Then in 2007, I finally mustered up enough courage to take the plunge.  Nobody else around me was switching like I was, so I was second guessing myself alot, but the numbers made sense to me, so I switch to the HSA plan.   

My company had a yearly max of out of pocket expenses of almost $5,500 for family coverage, and $2,500 for individual max expenses.  Luckily, I had a Roth and other monies set aside that if the need truly arose, I could tap those funds to cover such emergencies.    

Reasons and logic as to why I went with a HSA:

  • I hate that I never, (NEVER), saw the money under the non-HSA plan.  It’s like renting…
  • We hardly used any money for health needs anyway.  Everybody is pretty healthy and young.
  • I thought the money would come in handy if for some reason I got laid off.  Taxes on it would suck though!!!
  • The tax benefits are phenomenal!  The contributions are tax deductible!  Up to the following top limits:  (for 2010) $3,050 for individual coverage, $6,150 for family coverage (and if you are 55 or older, you get an additional $1,000 amount tacked on to the above limits).
  • My company kicked in a free monthly contribution in addition to the one I was making!!!  Yeah Baby!

There were negatives too with the HSA plan such as:

  • You have to pay the money for all the visits to the doctor’s office, etc (although certain things were still covered with the company plan, like a physical and the kid’s checkups).  We got a credit card option with our HSA provider for HSA charges…
  • If we had a serious medical emergency the first year, then this would have costs us more than it would have benefited us.

As you can imagine, the positive aspect outweighed the negative aspects for my family.    

Here is the real kicker!  We have enough of a money basis in our HSA that we can now invest the money in a dividend stock of some sort and the dividend would pay for our yearly medical expenses (which currently come in less that $250.00)!  Not all plans let you do this though, but many will let you invest in mutual funds though.   

So far my small not-too-risky gamble has paid off with the HSA I am in.  Most of my work peers, don’t share my enthusiasm for the HSA plan, but for me, it’s a win-win!   

Readers, what do you have an HSA, and do you realize what a great money saving device it potentially is?

Saving By Paying Attention – Nonfinancial Entreprenuer Part 3 of 4

by

Accounting for the numbers

A non-financial entreprenuer is a business owner/artist/ or self employeed individual that engages in business actions, but fails to realize what the costs are! 

I’m constantly amaze by how many business (including self-employed and contractors) that are hanging by a thread because they aren’t managing their money well.  This recession has made a lot of them go out of business. 

Here are a few examples: 

  • My nonfinancial friend the artist.  this individual is very talented, but she fails to account for her materials, driving time, and other expenses.  She thinks she’s making a profit, but really she is losing money, not to mention the extra taxes she does have to pay!  If I were closer to her, I would approach her about it, but I can only do so much…
  • Big business that lacks adequate Cost Accounting.  Thru my millionaire friend, I know of a big business owner that is dying a slow prolonged death.  This business owner is charging the same prices he did 5 to 10 year ago, but that doesn’t work out well for his bottome line.
  • The business owner that keeps going because of his employees.  This business is dying too, and the owner knows it.  But the owner want to keep his business going to keep his employee’s employed.  This might surprise some of you but small businesses (and sometime larger ones too), feel close to their employees and their families, they want to see their workers live well.  The problem with not paying attention here is the fact that he’s hurting both his workers and himself.  If he were to close shop, he’d be able to save money instead of losing money each year.  I hate layoffs, but the ones that do get layed off will still have unemployement benefits to live off of, and doing so may prevent the company from going under, causing everybody to be unemployeed.

All of these problems come back to the same root cause.  Running a business without a proper accounting system in place, and accounting for not pricing the product well!  Having a mastery, or an employee that has a mastery, of accounting can be a powerful aid in staying afloat in business! 

If you are a small entreprenuer, buy quickbooks, and take a few quick accounting courses.  Make sure you understand the cashflow properties of your business, and how to cost materials!  Not to mention figuring out your ideal profit margin… 

Note, this was the advice that my millionaire friend told me, while I’ve dabbled being an entreprenuer and contractor at various stages of my life, I’m currently more of a company employee.- MR

Saving Money By Buying Used Clothes For Kids

by

Kid's clothes

Okay, this is a little off subject for me, but today, I want to talk about kid’s cloths.  When they are babies, is it really worth the money to buy that cute little pink “bunny print” shirt for $20.00, or that little “blue sailor” outfit for $35.00 dollars?

As we all know, babies grow at an incredibly fast rate, in fact, it’ll seem like they are hardly in that cute little outfit that you may have bought at Baby Gap, Carters, or Babies R Us.  So to save money, we borrowed hand me downs from neighbors and friends.  At least with my son we did.  With my daughter, my wife buys here cute outfits more often.

Buying baby and kids clothes at neighborhood garage sales and using hand me downs from friends is the way to go.  Trust me, for the first few years they go through the clothes so quickly, that you won’t even notice it…  Besides if you look, you can find some really great deals at garage sales.  Don’t be shy, ask for a lower price if it’s not marked low enough.

So when should you break the pattern of buying used clothes for kids?  Well, IMHO, I think the best time to start to buy new clothes would be around the 1st grade.  After all, this is the time the kids start to develop their own style.  You don’t have to buy all new clothes, we mixed it, maybe 50/50.

Now some of you guys might be thinking… not me.  Well, it wasn’t me doing the buying either it was my wife.  At first I thought, don’t do that…  until she explained to me how much she was saving us by going this.  At a garage sale, you can buy baby clothes for .25 to .50 cents per piece of clothing!  That a huge discount considering buying it new could cost $10 to $20 dollars per piece, please consider going this route.

My wife saved us thousands of dollars by buying baby (and kids) clothes!!!

Hidden Costs of a Relative Having a Baby

by

Usually, when a relative has a baby, you expect to incur the cost of  going to the hospital with a few balloons, flowers and maybe a gift of some baby clothes.

This past weekend, my sister was the proud new mother of a baby girl!  This is my sister’s first child so everybody very happy for her and her husband, especially my kids (and my son in particular).  Since my sister was a rookie at this, and we were the last in the family to have a child, my wife told my sister that she would be willing to help my sister out.  My sister wisely took my wife up on her offer, so off my wife when down to stay the night this week!

So I decided to go over the numbers as a fun exercise to determine what the costs were for my sister having a baby this past Saturday…

Here is what I came up with:

Balloons $10.00
Baby Clothes $10.00
Flowers $20.00
Travel Gas Money $97.00
Eating out kids $47.00
Eating out wife? ??
$184.00

What have I been doing in this process?  I’ve taken over the responsibilities of my wife for the week of getting my kids off to school, and running the typically soccer taxi service duties.

How did I do?

Rocky at first (we missed the bus by the tiniest of margins the first day), but since the first day, everything has gone as smooth as ice (literally)!  Luckily, my boss being the great guy that he is, let me work the past few days from home!

How are things going?

The last few days has been a wear on my wife, she sounds more and more weak when she calls to check to see how things are flowing up here…

For the kid, it almost like a mini-vacation!  I purposely let things go a little slack, and we’ve been playing more games together while my wife has been gone.  I honestly think to some degree they are both enjoying this change…  I have too, to a degree.

But, I’ll be glad when my wife is back! 🙂

Have any of you ever been side swiped by an hidden expense that you don’t anticipate like mine?

-D