What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Finding health insurance
2. Dealing with food inflation
3. Thinking about job offer
4. Enough shopping around?
5. Return of premium life insurance
6. Craigslist scammer
7. Debt after death
8. Costco math
9. List of principles
10. Rolling over 401(k)s
11. Frugal solution to car salt
12. Reflecting on spending mistakes
I’ve had a rip-roaring winter cold the last few days, the first one I’ve really had in a long while. As I write this, I mostly just want to go right back to bed and get a good batch of sleep.
I wish I had some sort of magic formula for feeling better until a winter cold has passed, but I simply don’t. It just takes a few days until your body’s immune system figures it out and eliminates it.
Until then, misery.
On with the questions.
My husband will be switching to a small business which does not offer healthcare. I’m not sure I would be considered a freelancer (I occasionally work as a locum tenens type healthcare provider: my work is intermittent and irregular). Either way, we’ll be losing out health insurance and we don’t know where to find anything that is actually affordable: the only healthcare.gov option in our state is $2500 monthly with a $12,000 deductible [which equates to paying $42,000 a year before the insurance company will pay a dime and we’re healthy, we won’t even come close to meeting that deductible]. We’ll have four kids but our income is too high to qualify us for any kind of discount through the website. Is there any other way to approach finding affordable healthcare? Blue Cross Blue Shield dropped individual plans in our state and I’m finding dead ends every other way. Any suggestions? What are your thoughts on the Christian Health Ministries? It’s really the only affordable option I can find right now and even then I don’t like the idea of paying for well child checks and vaccinations out of pocket.
Unfortunately, health care options in this country are disastrous, especially with people who do not have employer-backed coverage. The fundamental problem of insurance is that people who do not have employer-backed insurance are perceived to be a greater risk than those who do, thus actually finding someone to ensure you when you don’t have such coverage is expensive. The mandate to have insurance wrapped in the ACA was an attempt to fix that, but it only marginally worked.
There really is no good solution in your case. Options for people in your situation are pretty limited. They’re either expensive or limited in most cases.
Christian Health Ministries is an interesting case. While the rates are low, it’s basically a cost sharing service where you’re putting money into an escrow account to pay for the medical expenses of members as they occur, but there is no guarantee of payment and, as you note, what they do and don’t cover is a bit quirky. They do pay out what they have, but if it’s not enough to go around, they simply don’t cover everything. It’s far better than nothing and it is very low cost, but it is not a virtual guarantee of coverage, although it does seem to qualify as coverage for the provisions of the ACA.
How do you deal with the cost of food going up when your income is the same? I get a COLA on my pension every year but food goes up a lot more than that and that means I have less for other stuff.
Cost of living adjustments these days often don’t match the changes in the cost of food. In some years, food definitely goes up more than a typical COL adjustment. In other years, they’re the same. Your observation is probably true if you live in an area where there is significant growth happening and the overall cost of living is going up faster than the national average.
So, what can you do about it? You can move to an area with a lower cost of living, for starters. That will immediately give you a lot more breathing room in your budget. You can also simply learn to budget your money more wisely.
Another thing I would encourage you to watch out for is a slow elevation in your food tastes. Are you really buying the same stuff you were buying five years ago, or have you slowly slipped into buying more “premium” versions of everything, like coffee or creamer or dishwashing detergent or ketchup? Take a look at the brands you regularly buy now and what you used to buy and see how the prices compare.
I am 43/M married to 40/F, no kids, paying down a mortgage but no other debt. I make $70K (systems analyst) and she makes $45K (teacher). I like my job well but the pay is not super competitive. Last week, I was ed by a friend of a friend who offered me a job at his company – I have to apply and interview but the job is basically mine if I want it. Similar work to what I’m doing now, but pay bumps to $93K starting out. New company culture seems fine – a couple of friends say they like it there and I can’t find any horror stories online. What should I do?
Decide what it would take for you to unquestionably stay where you are, then go talk to your current boss about it. Simply tell him or her the truth – you like where you are at, but you have friends who are making more than you for similar work. Don’t mention the job talks. Open with the fact that you’re happy here and stress that you really want to stay, but $25K a year is $25K a year and that’s hard to ignore. State that you want to work together to put a plan in place to get you to a competitive salary. See what the response is.
If the response sees you getting the salary bump you want to the level that would convince you to stay, then you should stay. If you get a negative response or if you get a very minimal offer to stay, pursue the other job offer.
That’s how I’d handle it. If you’re happy where you are, you should definitely tell them what’s going on and give them a chance to match or come close to matching.
Remember, salary isn’t everything and you know you’re happy where you’re at. While you may want the salaries to be closer, don’t just go to where the salary is highest.
My wife and I decided it is time to move to another bank. Our current bank charges fees for almost anything you can imagine and it’s ridiculous getting hit with $40 in fees each month for normal banking services.
We live in the Chicago area and there are a lot of banks. We have called around to several with local branches and found one or two that are strictly better than our current bank.
How many banks should we before we pull the trigger on the best one?
You’ve hit upon a good point. A person can basically spend unlimited hours shopping around for a new bank or for other similar things like insurance. When do you stop?
When I am shopping around, I usually keep calling places until I find one that seems like the right one to me. When I find that my attention and focus is drawn back to one particular option, I know I’m close to being done.
At that point, I usually sit on it for a few days, then look through the options again. If I still find that the same option is on top, and I usually do, I go with them.
I don’t have a set number, but there’s almost always one option that starts really looking like the right one.
I am looking at life insurance and one company offers a “return of premium” insurance policy. It’s like a normal term life insurance except at the end you get your premiums back if you didn’t die. It costs a lot more than the regular term policy. What’s the catch here?
A “return of premium” policy is exactly what you describe. You pay, say, $100 a year for a 30 year term policy and at the end of 30 years, if you’re still alive, they cut you a check for $3,000.
Compare that to a normal term policy that might have a $50 a year premium instead.
Now, the question is, if you just the second policy, can you invest the extra $50 a year well enough to make it to $3,000 by the end of 30 years? By my math, if you put it in the stock market in a broad based index fund returning an average of 7% per year, you would be money ahead with the normal term policy.
There’s a catch, of course: would you actually invest that $50 per year or not? If the answer is truthfully “no,” then there are worse things to do with your money than a “return of premium” life insurance policy.
I think someone just tried to scam me on Craigslist. They wanted to buy something from me with a check from a local bank. Something about it seemed wrong so I said no and they got really upset. I think they were trying to bounce a check off of me. How do you avoid scammers on Craigslist?
You basically don’t avoid scammers on Craigslist. Instead, you just have a few policies that sweep most scammers aside.
For example, have a policy where you only accept cash at the time of sale as a form of payment. You do not accept checks or PayPal or gift cards or anything else. Cash, period.
Stop by your local office supply store and get a pen that’s good for detecting counterfeit cash and take that to the sale with you. Mark some of the bills that they try to use with that marker and make sure they’re legit.
Those two little steps will avoid a lot of the typical scamming going on on Craigslist.
I was reading an article today about the average American dies with 61k in debt. What happens to this debt? Are relatives supposed to pay the debt?
Most of the time, that debt is applied to the estate of the person who died. Their assets are sold off and the proceeds are used to pay off those debts. Anything that remains is then given to the survivors according to the estate plan.
So, let’s say Aunt Marjorie dies and has $61K in debt. You sell off her house and her car and her possessions that weren’t specifically left to anyone and then the proceeds from those sales are used to pay off those debts. This might leave, say, $30K, and that’s then distributed to the beneficiaries of the estate.
This is assuming that all debts are strictly in the name of the deceased person, of course.
We recently renewed our membership at Costco. They now offer two memberships – one for $60/year that’s juts normal and one for $120/year that gets you 2% off everything you buy. My wife just instantly said that we wanted the normal membership and I didn’t make an issue out of it but I went home and ran the numbers and I am not sure that it is a bad deal. Could you help me figure out whether it’s worthwhile?
For that higher priced membership to be worthwhile, it has to save you more than $60 an a year. To save $60 in a year, that means that you have to buy enough stuff so that 2% of the amount you buy is $60. That amount is $3,000.
So, if you’re going to spend more than $3,000 in the coming year at Costco, the more expensive membership is better. If not, then the less expensive membership is better.
The kicker with Costco – and the reason I lean toward the $120 membership – is that if you save less than $60 over the course of a year, they’ll refund you the difference.
The only real drawback to the $120 membership is the additional up front cost. That $60 may have been more useful to you elsewhere.
In your recent blog post “12 Key Principles for Financial Success in Today’s World” you indicated that you\’ve been making “a giant list of all of…principles”. From your writings, I’ve come to deeply appreciate your life philosophy, not just about personal finance. So would you mind sharing your “giant list” of principles with me?
Quite a few people wrote in and asked about this “list of principles” that I’m making. I will probably use it as a Saturday post at some point – on Saturdays, I tend to stray a bit further away from strictly writing about personal finance than I do on other days.
The list of principles is something I’m compiling as part of my ongoing effort to write journals for each of my kids. I’m in the process of writing a journal for each of them that contains a lot of material – reflections on who they are as people, family history, my own life history, advice for life problems that they might face, and a lot of principles to live by. I intend to give them to them when they reach adulthood and are old enough to appreciate it.
I want to convey to them the principles I live by and why so they can hopefully understand me more as a person and also find useful life advice to draw upon if something were to happen to me.
Once I’ve really codified that list, I’ll share it here in a post.
Item #5 in Helaine Olen’s “Single Retirement Planning Basics” at the end of the article “Retirement Planning for Singles Can Be Extra Tough” () doesn\’t make sense to me. Assuming the 401(k) contributions are pretax, I prefer to consolidate accounts from different jobs whenever possible with direct rollovers to a single IRA. What do you think? “5. Don’t roll over your 401(k) if you change jobs; just let it be. This will keep the cost basis of your investment lower.”
I think that the issue here is that Helaine is making an extra assumption that’s going unsaid in order to keep the article short, which is a real issue for many publications that aim for a very short word count.
The issue that Helaine is trying to address (I think) is people considering rolling a 401(k) into a Roth IRA, which can cause a tax issue at a time when many people can’t afford that tax hit.
In other words, there are some specific situations where a rollover makes sense, and others where it doesn’t, and this little phrase isn’t nearly enough to explain the difference.
I think that this is a point that should have been explained with more length and it was probably trimmed to hit a word count target. This often happens when an article tries to fit in too many ideas in too small of a word count.
In short, I don’t think you’re doing it wrong, nor do I think the advice is necessarily bad, just under-explained.
What can a person do to keep car wear from road salt from happening? I wash my car constantly during the winter and it’s at just 130K miles and there are already spots of rust on it.
As a lifelong resident of the upper Midwest, the only thing I’ve ever found that keeps rust from winter road salt at bay is constant washing – and I mean constant. If you don’t wash your car after every single winter storm of any kind, you’re basically begging for rust to eventually hit your car.
The only preventive trick I’ve found is to go get your oil changed in the months before winter and ask for an undercarriage coating. They spray on an oil-based solution that helps with keeping rust at bay under your car.
Other than that… just wash it frequently. That road salt is some vicious stuff.
You talk about how you reflect on spending mistakes when you’re driving places. Can you elaborate on that a little bit because I’m not really clear on what you mean?
I basically apply something known as an to spending choices I made that I regret or at least want to carefully consider to make sure I made the right choice. The idea of an after action review is to carefully consider an action you took in the past and decide both whether it was the right action to take and what is the best action to take going forward.
With an after action review, the first thing you do is you identify what exactly you wanted to happen in that situation. For example, if I bought a big bottle of Gatorade at a gas station, I think through what I ideally wanted to happen when I stopped. I needed gas and I was thirsty and I wanted to solve both of those problems. What would I have ideally done to solve that problem? If everything had been perfect, I would have bought the best bang for the buck gas and I would probably have just filled up a water bottle at a water fountain or from a tap.
Then, you acknowledge what actually happened. I think through what I actually did, step by step. I bought gas that was probably the best bang for the buck gas, then I headed inside without a water bottle. Instead of figuring out what my cheapest option for purchase was, I just grabbed a Gatorade and bought it.
Three, you try to learn from the experience. Where did I deviate from my ideal and why? Well, my big mis-step was heading in without a water bottle in hand. Most gas stations have some way to fill a water bottle, so heading in without one was a mistake. Even without that bottle, I could have found a better bang for the buck beverage than a bottle of Gatorade.
Four, adjust your behavior. When I’m thirsty at a gas station, my goal should be to refill a water bottle from my car, and doing that requires me to keep a water bottle in my car and to remember it at gas stations.
I basically follow that model when reflecting on spending experiences or almost any experience I have in life that I want to reflect on and improve. I use it for social experiences, leadership experiences, and many other things. It not only helps me define a better path forward, it also does a good job of embedding that better set of choices in my head.
Got any questions? The best way to ask is to and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.