Archive for February, 2013

So last night, I had to help a friend go pick up a trailer.  At first I didn’t think anything of it but once we kept driving for about 20 minutes I realized that this would now be at least a 40 minute trip and possibly more like an hour.     My vehicle only gets about 20 miles to the gallon and we were traveling at 70 mph so you can easily start doing the math or at least, I do in situations like this as I calculate the dollars in my head on a mile by mile basis.

40 mile trip @ 20 miles per gallon = 2 gallons.

2 gallons x $4.00/gallon = $8.00

Two tolls $2.50

SubTotal: $10.50

This is just scratching the surface too.  If I factor my hourly wage or what I value my time at, we are now into the $110.50 – $160.50 range but it gets worse!

I still haven’t factored in maintenance, insurance or other vehicle expenses into the equation.   You may say that this is irrelevant because if I’m going to own a car I have to maintain and buy insurance but I believe in the very near future, insurance plans will charge by the mile as will the gas tax eventually be replaced by a mileage tax so those factors will need to play a role.

In any event, if I forgo my labor, maintenance, insurance and other expenses, it cost me $10.50 to help a friend.    If you’re not doing these calculations when you’re doing your charity work, going to the mall to shop, or helping out friends then you may begin to understand the unknown part of your money problems.    This is also a key reason why I purchase about 80% of my stuff online at places like Amazon, Newegg, Overstock and others to avoid taxes, tolls, fuel waste and time waste.

 

Just read it….

http://www.cnn.com/2013/02/20/us/california-hotel-water-corpse/index.html

I travel a great deal for business and the first thing I do when I land in a city and BEFORE I head to the hotel is stop off at a Walgreens or CVS or other shop and buy a six or twelve pack of bottled water.   I rarely use the water from the faucet but do use the water from the shower head to take a shower.   I guess bathing in soiled water isn’t as bad as drinking it!

 

So my oldest child is beginning the journey to enter high school and I’ve never been so stressed in my life.    I had no idea how many different entrance exams existed to get into high schools!    Fortunately, the last of the exams, interviews, tours, and site visits are finally over.   You see my child is exploring some pretty high end boarding schools and private schools, the cost of which range anywhere from $20,000 to $50,000 per year.   It’s a turkey shoot as to which school he may or may not get into as the competition is very fierce for these schools.

Worse yet are some of the financial aid forms that we’ve had to fill out for each school as there is no apparent standardization and each school has varying criteria for who gets aid and who doesn’t.   The most surprising thing of all however was how many students were attending some of these open houses – literally thousands of prospective students.

So now we’re waiting until end of March to get all the acceptance/rejection letter in and we can’t wait to see what happens.   Ironically, in the worst case scenario if we get rejection letters from the schools we’ll likely end up having to move and relocate for the prospect of better schools.   How ironic that education has become the main motivator for relocation versus a career or lifestyle for us this year!

What would you do with $50,000 in cold hard cash?   I spent the day wondering that today because while I am still waiting on a few final documents to finish my 2012 tax return I can see the raw numbers now.   So 50k is about $4166 per month, what would you buy with an extra 4000/month?  Would you go on a nice vacation every month?   What about buy a new car?  Heck you can easily afford a BMW with 4k per month.    I did the math and 4,000 a month at 6% over 60 months (five years) is about $200,000 so you could actually afford a Bentley although I don’t own one myself.

Sadly, I think my 50,000 will probably only support a federal employee’s pension benefits for about 6 months or so given the ridiculous nature of their pay.   Oh well, now time to see what kind of tax loop holes I can find to get some of that money back….

 

So we’re getting ready to do our health insurance enrollment for the next year and my employer is pushing hard on a new health savings account and I’ll be honest…it’s a no-brainer to sign up at least for the first year.

So how does a health savings account work?   It’s essentially a “401k” for your health and there are so many levels of irony here that I don’t know where to begin but I think it does spell the end of health insurance as we know it just like 401k’s spelled the end of pensions as we knew them back when corporations offered them.    Corporations are adept at finding new ways to provide less so why should health insurance be any different?

Back in the day…many companies offered pension plans which was part of a “three-legged stool” whereby an employee would get a retirement pension supplemented by social security/medicaid and savings.   As corporations didn’t want to offer or could not afford pensions, they gave employees the old switcharoo by offering 401k plans as they transitioned pensions out.  To sweeten the deal the corporations offered incentives such as employer match of 6% or more.     Fast forward a few decades later and pensions are a thing of the past….it takes a generation or two to forget they were ever offered to begin with in the biz world.

So now, my employer is offering health savings account with some sweet incentives such as:

1. Your monthly premiums will be cut in half!  Yes, whatever your health insurance costs are today, imagine slashing them in half.

2. The employer will put in a few thousand dollars in money into your account (first year only!) to cover your deductible.

3.  Free preventive care visits (no copay).

4. It’s tax deductible!

So what’s the catch?  Does the above sound too good to be true?   Well there are a few catches.   First, the plan has a high deductible meaning that before the insurance plan pays out a single dime, you must incur the first $3,000 in medical expenses.    This means that if you take regular prescriptions then that’s all on you up to the first three thousand.     Of course, if your employer is going to put in a few thousand into the plan then your first year is free right?  This is the no-brainer part!

After the first year though, the employer isn’t offering a pool of money so the first 3k will be entirely on the employee the second year.   Sound familiar?  It’s the pension to 401k trick!

To be fair, the employees can still choose the old plans which include PPO and HMO at increased costs which doesn’t make them very appealing.  I can’t really complain and I’m taking advantage of the money and the tax deduction to lower my MAGI at the end of next tax year.