Yesterday, my wife quit her job of nearly four years in the middle of the worst economic recession in many many decades.
Wait, that’s probably not framed in the best way. How about this:
Yesterday, my wife quit her job of nearly four years to pursue a doctorate at the University of Maryland.
Either way, neither one of us has a “traditional” job. As such, we’ve had to make a few adjustments in our life for the period between when she left her job (yesterday) and when she’ll start graduate school.
Health insurance is the biggest change, since we were both one her employer provided health insurance.
Fortunately, her employer’s health insurance policy covers us until the end of July. In August, we’ll be using COBRA as a safety net until she starts school. When she starts, we’ll be on her student/staff health insurance. COBRA stands for Consolidated Omnibus Budget Reconciliation Act and gives you the right to get medical insurance under your former plan as long as you pay the full premiums.
What’s nice about COBRA is that you have 60 days to decide whether you want to active it. This gives you a 60 day grace period where you can get coverage but not pay for it. If you do elect it, it’s retroactive and you have to pay premiums for all the time that has passed. People usually only elect COBRA if they need it, otherwise it’s cheaper to find independent health insurance  (generally). This will give us a safety net for August. If we need it, we elect COBRA for a month. If we don’t, then we won’t.
Regular Checkups. We scheduled some preventative care visits, like regular checkups and dental cleanings, right before she quit so that we could take advantage of the annual allowances included in the medical benefits. It’s always important to take advantage of medical benefits, especially preventative care, because it’s something you’re paying for, even if you don’t know it.
Flexible Spending Account. When you leave your job, voluntarily or involuntarily, you are still entitled to spend the full amount in your flexible spending account. It’s known as the FSA loophole . We spent the remainder of her FSA on some basic medical supplies, new glasses and contact lenses.
Since she had to have applied to graduate school in the fall, we had an inkling that she wouldn’t be staying at her employer for the full year. While we weren’t sure she’d accept one of the programs she was accepted into, we figured we might as well plan for it by front-loading her 401(k) contributions. We contributed the full 2009 contribution of $16,500 in the first six months of the year.
This wasn’t a difficult call to make since the stock market was at historic lows and our time horizon is forty years. We’ll know in a few years whether this was a mistake or not, though I am willing to bet about $8,000, pre-tax, that it won’t prove to be.
We’ll be rolling her 401(k) over to Vanguard as soon as possible, in order to simplify our finances .
I think that about covers it on the financial front. Think I missed anything?
(Photo: fuzzcat )