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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.

Future Me: Excuse me, Jason?

Me: Yes?

FMe: <Slap!>

Me: May I ask what that was for?

FMe: Of course.

Me: What was that for, jerk?

FMe: That was payback for all of the hell you have put me through.

Me: What?!? I’ve never even met you, before.

FMe: Of course you have. I am future-you, and I’m sick of getting screwed by past-me, that is, you.

Me: Huh?

FMe: Listen close. You’re not the sharpest brick in the box and I don’t want to explain this twice.

Me: ???

FMe: A long time ago, when you first met our wife, you were dumb.

Me: I don’t appreciate….

FMe: Shut up. I was dumb then, too. Remember? You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year. On top of many other expensive decisions. Do your recall?

Me: Yes, I do. So what?

FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car. Your kids wear new clothes. You’ve got a house full of new furniture. How did you pay for all of that?

Me: Naturally, I charged it. Zero payments, zero interest for a year! Pretty smart, huh?

FMe: What happens in a year?

Me: I don’t know. I’ve got a full year to figure that out.

FMe: <Slap!> I’ll tell you what happens! Future-you, that’s me, gets screwed! Your raise didn’t come through. You had a baby. The truck broke down. Your wife took maternity leave. A roommate moved out. You took a loss in the stock market. You didn’t plan! You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.

Me: How was I to know?

FMe: <Slap!> Life happens! You never know what is coming next. You need to plan and save for what might happen. Otherwise, you’ll just accumulate more debt to be serviced by yours-truly. That is not acceptable.

Me: So? What are you going to do about it?

FMe: <Slap!>

Me: Really? Again?

FMe: <Slap!> I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help. Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux. My wife, your beatiful bride, wants a vacation that I can’t afford. You’ve screwed me, dude.

Me: I’m sorry. What can I do to fix it?

FMe: Buy me dinner, first.

Me: Huh?!?!?

FMe: Stop the excess spending. Spend less than you make, for a change. No credit.

Me: None?

FMe: None. Nada. Zip. Zilch. Only spend what you can afford. Budget. Pay off those nasty bills. Don’t leave me hanging.

Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?

FMe: Exactly. That’s the path to wealth, freedom, and financial independence. Live in the real world.

Me: Gee, thanks, Future-Me! Now I know.

FMe: And knowing is half the battle.

What would your future-you have to say to you?

Cutting Healthcare Costs

Finance

It’s not a secret that health care can be expensive. Many people pay two and three digit bills for their prescriptions. A visit to the doctor’s office can hurt the budget. Glasses cost hundreds of dollars? How can you cut this cost?

Drugs

If possible, go generic*. There is no difference between Trazorel and trazadone, aside from the cost. Wal-mart, Target, and many other stores offer common generic prescriptions for $4-5. When you are talking to your doctor, ask if there is an drug option that has an available generic. When you are talking to your pharmacist, ask if there is a generic alternative available.

Get the price match. The Cub Foods pharmacy near me matches the Target generic drug price, giving us $4 generics for the asking. This is often an unpublicized deal, so make sure you ask. If your pharmacy will not match nearby prices, consider going elsewhere.

See if there is a 90 day plan. Many insurance companies sponsor a 90 day prescription plan that gives you a 90 supply of drugs for the 60 costs as long as you are willing to accept the drugs by mail. For expensive prescriptions, this 33% discount can be a substantial savings.

Physician

Does your clinic offer online consultations with your doctor or nurses? Some clinics offer a chat or email option to talk to your doctor without requiring a visit that will add fees and copays to your expense sheet. Most clinics and hospitals have a free nurse line for basic questions, like “When is my baby‘s fever dangerous?” It’s a great chance to save some money. I know, from personal experience, that they won’t be shy if they feel you need to come in, but they generally won’t try to convince you to come in if aspirin will fix the problem.

Stay in-network. Check with your insurance company to make sure the doctor you want to see if in your network and therefore, available at the cheapest out-of-pocket price. If not, and you really want that doctor, ask your insurance company if they accept nominations for the network and ask your doctor if he’d be interested in being nominated.

Stay home for your cold. Don’t go to the doctor for every minor problem. The best remedy a doctor can give your for your cold will reduce it to a seven day malady. On the other hand, if you do nothing, it will go away in about a week. Why waste the money? This counts double for the emergency room and urgent care. Strep throat is not an emergency. Wait until morning and go to the clinic, paying the lower fees instead of the large ER costs. Make an appointment for a doctor visit, if possible. Urgent care is billed the same as a regular visit, but most insurance plans double or triple the copay for urgent care visits.

Cash Flow

A Health Savings Account(HSA) is a pre-tax account to save for qualifying medical expenses similar to a Flexible Savings Account(FSA). The main differences are that HSAs are only available for people with high-deductible insurance plans and do not have to be spent on medical expenses. Non-qualifying expenses move from pre-tax to post-tax, meaning you will be charged federal income tax for non-qualifying withdrawals. FSAs are “use it or lose it” plans. If you don’t use it, it will go away, usually at the end of the year. That makes December a great time to stock up on over-the-counter medicines and possibly replace your eyeglasses, as both of those are qualifying expenses. Find out if you have either option available. If you use either one, set aside a place to store every imaginable medical receipt, so you can be reimbursed. Make sure you understand the FSA-eligible expenses.

An Ounce of Prevention

Get routine checkups. The earlier you find a problem, the more options you have. This goes for everything from cancer screenings to blood tests. Get a physical every year and know what is happening with your body. We may be living in the future, but replacement parts are still hard to come by.

Maintain Your Health

It’s cheaper to be healthy. Eat right, exercise, quit smoking.

I enjoy a good meal. It’s one of my favorite things. I won’t cut rich foods out of my diet, so we reduced portions. Beyond the first few bites, the flavor isn’t nearly as enjoyable or even noticeable. There’s no more enjoyment for huge servings than small ones.

Get more exercise, even if it’s just a 2o minute walks twice a week parking on the far side of the parking lot, or taking the stairs instead of the elevator.

Vision

Go online. This one is worth a write-up all by itself. I have 6 pairs of prescription glasses–all varieties of frames and coatings–that have cost a grand total of about $150. There is no noticeable difference between my cheapies and the designer alternatives. While I work on the write-up, the best site to introduce you to the concept of online glasses is GlassyEyes. Reviews, coupons, and discount likes. They have step-by-step instructions on turning an intimidating idea into a simple and cheap solution to an expensive problem.

How do you save money on health care?

* There are no generics available on new drugs until the initial patent expires. This gives the pharmaceutical companies a change to recoup their research and development costs. Without this patent period, new private drug research would evaporate. Don’t hate the brand names, but don’t show undue loyalty.

5 Reasons Why I Splurge On Travel

Misc

Guest Post Author Bio: Miss T blogs at Prairie EcoThrifter. She grew up in the Canadian prairies and still lives there today. She is passionate about saving money, being healthy, looking out for our environment, and most of all having fun. Her blog shares tips on how you too can live a green, debt free, and fun life.

This week I am participating in a Yakezie blog swap where I am to answer the question ” Name a time when you splurged and were glad you did.” I had to seriously think about this for a minute and then it came to me. What do I consistently spend my money on that brings me the most enjoyment? Answer: Travel.

To say I love to travel would be an understatement. Travel for me is a life changing experience that I desire to re-live over and over again. I can think of a million reasons why I love to travel, but I thought I would boil it down to five.

1. Learn about myself. When I travel I gain a deeper understanding of myself and the world in general. Much of the experience is dependent on how different the environment is from what I am used to. When I traveled to Europe the first time, I got to try some different food and see how great it was to have a siesta in the middle of the day, but the transition was relatively painless. When I traveled to Central America last year for my honeymoon, I was a lot more out of my comfort zone. I was sleeping with tarantulas and geckos and trying food I couldn’t even pronounce. Plus, I couldn’t speak the language.

When I am in this kind of situation, I encounter things that I have never encountered before. I am forced to be on the alert because I don’t have any prior knowledge to rely on. Since everything is new, I am automatically forced to try to make sense of it all.

For many of us we have never really looked inside ourselves and examined what we are made of. When we are somewhere new, we have nowhere to hide. This is the point where you become really intimate with the ideas you have of yourself, of your ego, of life, which you may have been really identified to, and derived your sense of self from.

Your ego is essentially your self image; it’s the persona you display to society. Your ego survives only by constantly seeking approval from that which it wants to identify with. This is the society you are raised in. What happens when your family, friends, and your typical environment is not there to reinforce the ideas you have of your self? You ego becomes shaky; it starts to lose it’s hold on you. By traveling to the unknown, your ego falls apart and the true you is given the chance to emerge.

You begin to challenge and question everything you have ever believed. If you can be brave and not run away and use this as way to grow, you will see that all your beliefs belong to society and that they were never really yours to begin with. This can be extremely scary, liberating, nauseating and a million other things all at the same time.

I remember going through this very process when I traveled to Cuba. I knew intellectually that there were people in this world that weren’t as fortunate as me, but I was never able to fully understand that until I saw how some people lived in Cuba. I couldn’t help but reflect on what it would be like to never be able to own a home because the government owned everything and personal freedom didn’t exist. I wondered what it would be like to be so poor that I would have to walk around grimy city streets barefoot because I couldn’t afford shoes and it wouldn’t matter how many cuts I would get from broken glass because I had to get myself to work everyday on foot. That trip really shattered my ego and my mental models and when I arrived back home, I approached my own life very differently.

2. To do what I love. Interestingly, there are very few other areas of my life where I feel more at home and happy then when I am traveling. I really enjoy experiencing the unknown and all of the possibilities it has to offer. I guess I feel totally free; free from obligation and expectation. I am able to explore on my own terms and be who I want to be without negative consequences. When I am planning a trip, my excitement consumes me. I can’t help but wonder; what am I going to see? Who am I going to meet? What am I going to learn?

3. Re-live my youth. Unlike many of my peers, I skipped the university experience. When I graduated high school I went straight to working full time at my family’s business. It wasn’t until later in my life that I went back to university and got an education and got the job that I have now. I never had the opportunity to have 4 months off for 4 years and travel when I was younger. I was too focused on making money and buying my first house. I wanted to be an adult as fast I could.

Traveling now allows me to capture some of those stolen moments. The best thing is I have more money and resources behind me now so I can travel without incurring debt and causing financial strain which would have happened if I had done it in my younger days. I also have a partner to travel with, my husband, which allows us to grow and experience with each other by our side.

4. Redefine my boundaries. Being in a completely different environment than what I am used to excites me. I am somehow willing to try anything, regardless of what the consequences can be. When I was in Europe for the first time, I decided to try para-gliding in Austria. It was an amazing experience. However, if you would have asked me when I was still at home if it would run off of a mountain and free fall to the ground, I would probably have said “no way”. Being somewhere different allowed me to push my boundaries and cast my fears aside. Not only was it liberating and a ton of fun but it has made me push myself harder and further in other areas of my life which has only led to success.

5. Enhance my education. Learning through textbooks is not the same as learning hands on. I much prefer learning through experience. I find I never forget what I experience whereas I can forget what I have read.

Traveling allows me to enhance my education of the world around me through experience. I get to see first hand how something is made or used, or taste a food that I have never heard about before. I get to experience history by walking through castles and basilicas instead of reading about it or watching a documentary on TV. I get to discover the world for what it is first hand instead of through someone else’s eyes. I am able to learn about something honestly instead of through a tainted image painted by someone else.

The knowledge I have gained through my travels to date has enhanced my life and opportunities in so many ways. I have never learned something that hasn’t proven useful.

Travel isn’t cheap and to many is viewed as a luxury but to me it is something worth splurging on from one year to the next. The personal gains I get from my investment are invaluable!

Fall From Grace

Finance

When you accumulate a certain level of debt, it feels like you’re wading through an eyeball-deep pool of poo, dancing on your tiptoes just to keep breathing. Ask me how I really feel.

It shouldn’t be a surprise that I’m in debt. We have gone over this before. The story isn’t one of my proudest, so I’ve never talked much about how it happened.

Our debt was entirely our fault. We messed up and dug our own poo-pool. There were no major medical bills, no extended unemployment, just a strong consumer urge and an apparent need for instant gratification. Delayed gratification wasn’t a skill I’d considered learning. The idea of it was a thoroughly foreign concept. Why wait when every store we visited offered no payments/no interest for a year? We didn’t give much thought to what would happen when the year was up.

We got married young. We bought our house young. We started our family young. We did all of that over the course of two years, well before we were financially ready. Twenty years old, we had excellent credit and gave our credit reports a workout. Credit was so easy to get. By the time I was 22, we had a total credit limit more than twice our annual income. We fought so hard to keep up with the Joneses. A new pickup, a remodel on our house. Within a month of paying off the truck, I got a significant raise and rushed out to buy a new car.

Every penny that hit the table was caught in a net of lifestyle expansion. I was bouncing on my tiptoes.

Four months into my new car payment, I was laid off. There’s me, hoping for a snorkel. A week later, we found out our son was going to be a big brother. Our pool had developed a tide.

We killed the cable and cut back on everything else and…managed. Money was tight, but we got by. I got a new job, but had we learned any lessons? Of course not. We got a satellite dish, started shopping the way we always had. Times were good, and could never be bad. We had such short memories.

Fast forward a couple of years. Baby #3 is on the way while baby #2 is still in diapers. Daycare was about to double. Daddy started to panic. I built a rudimentary budget and realized there was no way to make ends meet. There just wasn’t enough cash coming in to cover expenses. That’s when I made my first frugal decision: I quit smoking. That cut the expenses right to the level of our income. It was tight, but doable.

There was still one serious problem. Neither one of us could control our impulse shopping. For a time, I was getting packages delivered almost every day. It was never anything expensive, but it was always something. Little things add up quickly.

Last spring, I realized we couldn’t keep going like that. I started looking into bankruptcy. Somehow, we managed to toss ourselves into the deep end of the pool. We had near-perfect credit and no way to maintain it.

While researching bankruptcy, I found our life preserver. We put together a budget. We cut and…it hurt. It’s taken a year, but every bill we have is finally being tracked. We have an emergency fund and we are working towards our savings goals. It hasn’t been an easy year, but we are making progress. We’ve eliminated 15% of our debt and opened out budget to include some “blow money” and an occasional date night. We are always looking for ways to decrease our bottom line and increase the top line. Most important, we are actually working together to keep all of our expenses under control, with no hurt feelings when we remind ourselves to stay on track.

We are finally standing flat-footed, head and shoulders above the poo.

Update: This post has been included in the Carnival of Personal Finance.

A Moment of Clarity

Finance

: Image by Matt Stratton via Flickr

Ten years ago, I buried myself in debt. There was no catastrophic emergency or long-term unemployment, just a series of bad decisions over the course of years.

We bought a (short) series of new cars, a house full of furniture, electronics, hundreds of books and movies, and so much more. We threw a wedding on credit and financed an addition on our house. We didn’t gamble or drink it away, we just spent indiscriminately. We have a ton of stuff to show for it and a peeling credit card to prove it.

What changed?

In October 2007, we found out brat #3 was on the way. Don’t misunderstand, this was entirely intentional, but our…efficiency caught us by surprise. It took several years to get #2. We weren’t expecting #3 to happen in just a couple of weeks. #2 wasn’t even a year old when we found out she was going to be a big sister. That’s two kids in diapers and three in daycare at the same time.

The technical term for this is “Oh crap”.

I spent weeks poring over our expenses, trying to find a way to make our ends meet, or at least show up in the same zip code occasionally.

I finally made my first responsible financial decision…ever. I quit smoking. At that point, I had been smoking a pack a day or more for almost 15 years. With the latest round of we’re-going-to-raise-the-vice-tax-to-convince-people-to-drop-their-vices-then-panic-when-people-actually-drop-their-because-we-made-them-too-expensive taxes, I was spending at least $60 per week, at least.

Interesting side story: A few years ago, Wisconsin noticed how many Minnesotans were crossing the border for cheap smokes and decided to cash in by raising their cigarette taxes. The out-of-state market immediately dried up. Econ 101.

So I quit, saving $250 per month.

Our expenses grew to consume that money, which we were expecting. (Remember, we were expecting a baby!) Unfortunately, our habits didn’t change. We still bought too much, charged too much on our credit cards, and used our overdraft protection account every month. At 21% interest!

Nothing else changed for another year and a half. My wife would buy stuff I didn’t like and we’d fight about it. I’d buy stuff she didn’t like and we’d fight about it. When we weren’t arguing about it, we’d just silently spend it all as fast as we could.

Bankruptcy was looming. We had $30,000 on our credit cards and our overdraft protection account was almost maxed out. Have you ever thought you’d have to sell your house quickly?

One day, while I was researching bankruptcy attorneys, I ran across Dave Ramsey. When I got to daycare that evening to pick up the kids, I noticed they had The Total Money Makeover on the bookshelf, so I asked to borrow it.

I read the book twice, had a very frank discussion with my wife about the possibility of bankruptcy, and we set out on the path to financial freedom together.

What made you decide to handle your finances responsibly? Or, perhaps more importantly, what’s holding you back?

Money Problems – Day 6: Reducing Expenses

Finance

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 6, we’re going to talk about cutting your expenses.

Once you free up some income, you’ll get a lot of leeway in how you’re able to spend your money, but also important–possibly more important–is to cut out the crap you just don’t need. Eliminate the expenses that aren’t providing any value in your life. What you need to do is take a look at every individual piece of your budget, every line item, every expense you have and see what you can cut. Some of it, you really don’t need. Do you need a paid subscription to AmishDatingConnect.com?

If you need to keep an expense, you can just try to lower it. For example, cable companies regularly have promotions for new customers that will lower the cost to $19 a month for high-speed internet. Now, if you call up the cable company and ask for the retention department, tell them you are going to switch to a dish. Ask, “What are you willing to do to keep my business?” There is an incredibly good chance that they will offer you the same deal–$20 a month–for the next three or four months. Poof, you save money. You can call every bill you’ve got to ask them how you can save money.

I called my electric company and my gas company to get on their budget plans. This doesn’t actually save me money but it does provide me with a consistent budget all year long, so instead of getting a $300 gas bill in the depths of January’s hellish cold, I pay $60 a month. It is averaged out over the course of the year. It feels like less and it lets me get a stable budget. Other bills are similar. You can call your credit card companies and tell them everything you take your business to another card that gave you an offer of 5% under what ever you are currently paying. It doesn’t even have to be a real offer. Just call them up and say you are going to transfer your balance away unless they can meet or beat the new interest rate. If you’ve been making on-time payments for any length of time–even six months or a year–they’re going to lower the interest rate business, no problem. Start out by asking for at least a 5% drop. In fact, demand no more than 9.9%.

Once you’ve gone through every single one of your bills, you’ll be surprised by how much money you’re no longer paying, whether it’s because somebody lowered the bill for you or you scratched it off the list completely.