Three years ago my wife, then my girlfriend, quit her job in New Jersey and moved down to Maryland. In doing so, she also gave up her employer sponsored health insurance, which was a big deal.
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Three years ago my wife, then my girlfriend, quit her job in New Jersey and moved down to Maryland. In doing so, she also gave up her employer sponsored health insurance, which was a big deal.
Everyone’s been focused on brokerage failures and bank failures lately, wondering what happens and who backs them in the event of a failure… that is until we learned that AIG (American International Group) was in serious trouble. This begs the question very few have asked before, what happens if my insurance company fails? The quick answer is that most states have a guaranty that will back the fund up to a certain dollar amount.
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Six months ago, I became a professional blogger (or problogger, as the lingo goes) but the process of going professional was easily six months in the making (three years if you ask my wife).
I don’t know if it’s come through in my writing, or if you’ve read long enough to tease this out, but I’m a predominately conservative person with regard to risk (not political leanings). However, given the right opportunities, I’m willing to make aggressive moves that some would consider extremely risky. Resigning my full time position to pursue what is essentially a freelance writing gig ranks as extremely risky in my pantheon of risk. While you’re never 100% safe in your job, it’s certainly more stable than working for yourself. Being self-employed has its benefits, stability certainly isn’t one of them. This article will detail how I mitigated those risks, as best I could, and how I prepared to become a professional blogger.
This article is pretty long and might not be all that useful to many people, but several other bloggers and my friends have asked about how I prepared to become a freelancer/problogger so I thought I’d put it all together.
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This is a post by Connie Brooks, a new mommy in Louisville, KY.
Having a baby is one of the most incredible experiences in the world.
There are no words to describe the moment you hold your baby in your arms for the first time. When their little eyes look up to you and you realize you made the little tyke. There are no words to describes the feeling of pride the first time you see them turn over, or when they crawl and then eventually walk.
While these memories are priceless, having a child is a very costly endeavor. Most parents expect to pay for the obvious things once the baby arrives like food, diapers, and clothes but they often don’t anticipate “the other stuff.” When we had our daughter, we expected to pay for more food and diapers, but we never planned for “the other stuff.” From the moment I found out I was pregnant though, a seemingly limitless chain of bills started showing up. We were literally supporting our baby from the moment we knew about her. It doesn’t have to be that way.
If you are thinking about having a baby any time soon, here are some of the expenses (“the other stuff”) you’ll want to plan for, even before your baby arrives:
1. Prenatal Care
As scary as it is to think about, most miscarriages happen within the first three months. Chances are your Ob-gyn will not even want to see you until you hit the three month mark because of this. After that, you can expect to go once or twice a month for the next six months, and even more frequently for the final three months.
Every time I went to my Ob/Gyn, it cost me an insurance co-pay of $30. We had hyperactive prenatal doctors so we ended up going even more often than average. Our cost for pre-natal doctors visits over nine months was around $500. Your cost will vary depending on your insurance plan.
2. Prenatal Diet
Your baby is literally depending on you for its nutrients. If you don’t have a healthy diet, then your baby will not get what they need, and that could have long term consequences.
The truth is, we weren’t eating very well when I got pregnant. We ate out once, sometimes twice a week, and ate a lot of beans, rice and eggs otherwise. Doing that kept our before baby food budget to around $300 a month.
After I found out I was pregnant, our food budget literally doubled. We stopped eating out, and I bought fresh organic fruits, vegetables and yogurt. The only food I craved when I was pregnant was steak (which was odd since I am a semi-vegetarian!). The steak was expensive too because I chose to buy only top quality grain-fed beef.
I did not care how much our food ended up costing us, I wanted my baby to have every building block she needed to grow. Over a twelve month period (I breast fed for three months afterward, so we kept our diet the same.) Our food ended up costing us $7,200. Prenatal vitamins added in another $270 over nine months.
3. Maternity Clothes
– I gained around 20 pounds while I was pregnant, so my clothes fit me for most of my pregnancy. However, by the eighth month, there was no containing my belly. I had to face facts and invest in a few good quality maternity clothes. I bought a week’s worth of clothes as cheaply as possible. I also used my husband’s shirts and bought things like hip-hugger pants that I could wear after my baby. The total cost of my maternity clothes was around $400. If you’re careful you might be able to get by cheaper, but it could easily cost more depending on your needs. Try to maximize sales whenever you can!
4. Baby Clothes & Supplies
We were very blessed because our friends and family gave us nearly everything our daughter would need for her first few months. If you don’t have a strong supportive network, then this will be a real expense.
Wal-Mart and Target have the most reasonably priced baby clothes. If I had to put a price on what we were given I would say that it amounted to easily $800 to $1000 worth of diapers, clothes, shampoo, and supplies. Again, we had an extremely generous family, who put all they had into helping us prepare for our baby. In retrospect, If I were the one paying for the items, I would have spent around $400 total on clothes and supplies for my daughter’s first few months – and that would have been plenty.
5. Nursery & Travel Items
The crib for our daughter was $500. Her mattress was $100. We bought a crib that would turn into a toddler bed, and eventually a full sized bed as she grew. Her car seat and stroller ran us about $400 – again because we bought for the long term and wanted something that would last through several children if necessary. You can definitely do this cheaper than we did! The total cost for her nursery was around $1,500 after decorations.
6. The Big Day(s): Hospital and Delivery Costs
How much this ends up costing you will depend on your insurance, how difficult your labor is, and how well everything goes.
In my case, nothing was simple. I spent two days in the hospital being induced and ended up with a c-section. My daughter had a fever when she was born, so she spent a week in the hospital on antibiotics undergoing a lot of tests. (She was fine, thank God!) They kept me for four days after my surgery. I can honestly say that for a month after we came home I dreaded going to the mailbox and pulling those medical bills out!
The total cost for her delivery was nearly $4000.
7. The Paperwork
After my daughter was born, we did have to take care of some paperwork. Particularly ordering several copies of her birth certificates. This was another unexpected cost. I’m not sure why I thought that the hospital would provide us with one – they didn’t. They sent her birth records off and we had to order an official copy. Those were $10 each, and we ordered 3, so we $30 spent on her paperwork.
8. The Aftermath
In the first few months following her delivery she and I both went back to the doctor a couple of times for routine checkups. This was not a huge expense, but it was one I did not expect. The follow-up visits probably ran us around $150.
From conception to birth, our daughter cost us about $14,000. Fourteen thousand dollars. Oh, and that does not even take into account the diapers or the eventual formula costs once I went back to work. It also does not include childcare, which thankfully, we did not have to get.
If you are considering having a baby, please make sure that you get a hefty savings account going before you take the plunge. Many of these costs we had not planned for, and that made it more difficult than it had to be. When we planned out our finances before getting pregnant, we always planned out what we thought the costs would be after we had her, and we did not take into account what it would cost just to get her to delivery!
I am very sure that if I had it to do over again, I could do it for less money. I think that I went into it from the mindset of doing what I thought was right for my baby, and the finances took a backseat. That being said though, my daughter’s birth story is an excellent example of how having a baby can easily cost you a fortune – so it’s something to think about.
How about you? Do you have children? What would you say it cost you and your spouse to have your baby? Leave us a comment below!
One of the great paradoxes of our nation is that we spend far more, by a great margin, than any other country on healthcare yet we don’t live the longest. According to a report from the NCHC [PDF], which was based on other research, we spent $2.3 trillion on health care in 2007 or about $7600 per person. (that article lists a lot of other sobering statistics).
Part of the reason is because the system is so complicated and convoluted. When a doctor orders a battery of exams, it he or she motivated by expertise, fear, or greed? Is the test what is actually needed because the doctor needs to rule out a particular condition, or does the doctor fear malpractice suits so he orders every possible exam, or does the doctor need to up his pay this month because he has a vacation soon? While I’d say that most medical practitioners operate out of expertise, there is a subset that operates, if only sometimes, in the other two groups too.
That’s where Stay Healthy, Live Longer, Spend Wisely by Davis Liu comes in. It’s a guide to help you navigate the complexities and vagaries of the American healthcare system.
About Dr. Liu
Who is Dr. Davis Liu? He’s a board-certified family physician with the Permanente Medical Group in Northern California, graduate summa cum laude and Phi Beta Kappa from the Wharton School of Business and the University of Connecticut School of Medicine and has written several opinion pieces that have appear in the San Francisco Chronicle and the Sacramento Bee.
Do Your Homework, Question Everything, Pay Nothing (At First)
That’s the subheading of a section in which Dr. Liu explains how you can be a smarter consumer of medical care, specifically with respect to the billing process. He tells one story about his brother who saw a general practitioner and specialist for a throat issue. His brother confirmed with the insurance company that the visits would be covered yet was billed anyway. Fortunately, due to diligent note taking which included which representatives they spoke to, the issue was resolved and the brother didn’t have to pay anything.
The lesson here is that you should question everything, since most medical bills contain errors, and confirm with the insurance company as to whether something is covered (unless it’s a true medical emergency).
The book has a lot more in it than I explained so here’s a listing of what’s included in each of the eight parts:
- The Most Important Policy You Will Ever Own: This part discusses health insurance in general from how much coverage you need to what an HSA is, from COBRA to health care costs.
- Mastering the Ten-Minute Doctor Office Visit: Every aspect of a typical visit with a physician is covered including how to be a “wise patient,” versus a typical one. It stresses the importance of knowing your medical history and making each visit count.
- Do the Right Thing Regularly and Repeatedly: This part stresses the importance of routine checkups and preventative medicine, such as routine screening, immunizations, and age specific checks.
- Meet Your Medical Team: Any and every medical professional you’ll meet is discussed in this chapter along with anything you may need to know about their profession. Do you know what a Rheumatologist or a Nephrologist or a Ophthalmologist is? If you said you did and you’re not one, you’re probably lying.
- The Truth About Medications: It’s hardly a hard hitting expose on branded medicines but he discusses branded vs. generic (and points out studies of the placebo effect, a topic discussed in Predictably Irrational too) and even goes through over the counter drugs.
- Caveat Emptor, Or “Let the Buyer Beware”: This section talks about all the unproven, untested remedies from body scans to herbal remedies. He’s a little apprehensive about them but does recognize that some provide benefits.
- Twenty-First Century Medical Care: Dr. Liu is looking forward in this chapter, looking at new and different techniques that may play a larger role in medicine in the future.
- Take Control: Excellent Health Pays: In this last part, he talks about how you can be proactive about your health such as using the internet for research (which can be counter productive, depending on your mentality) and being active.
Stay Healthy, Live Longer, Spend Wisely is far more comprehensive than I gave it credit for when I first opened it. I expected a book that discusses health insurance, government plans like HSAs and FSAs, and medical expense related ideas but this one really went above and beyond that. The sections discussing all the specialists, the various medications, and even looking to the future of medicine was a nice bonus. Another nice bonus was Dr. Liu’s style, I can see why he would be asked to write opinion pieces in the newspaper because he has a very easy style that likely translates into a comforting bedside manner.
If the whole world of medicine intimidates you, this book can help by giving you a good basic understanding of the whole breadth of the medical world.
We’ve made it through four of the seven deadly sins of personal finance and touched on many good topics so far. The first few were easy – have an emergency fund, don’t raid your retirement, budget, and plan and project for the future. We’re starting to get into a bit of the hazier areas of personal finance, where the answers are quite so clear cut and where much of it depends on you and your specific situation. You could argue that failing to budget isn’t so bad a sin, the reality is that math will do the budgeting for you if you decide you don’t want to. When you run out of money, you’ve hit your budget.
I doubt anyone can argue against today’s deadly sin…
Being Improperly Insured
The reality is that insurance is a very difficult subject to tackle because it provides you protection against the unknown. Since you’re protecting against the unknown, it’s difficult to know how much protection you’ll actually need. Insurance is also very temporal. When you pay the premium for the month or the year, that protection is gone once the insured period passes. I’ve been driving for nearly five years and never once made a claim. That’s five years of auto insurance premiums gone. (I’m not complaining, I consider myself very lucky!)
But you can’t look at insurance that way and many people do. Insurance is a hedge against unknown events that could potentially bankrupt you and it’s a way for you to purchase peace of mind. So, how do you ensure you have the right amount of insurance? How do you avoid getting too much coverage or too little? Sadly, it’s mostly a judgment call but here’s how I approach it.
My approach towards insurance is that it should protect against catastrophic events. Not everyone is like that and that’s certainly not the “right” or “best” way to approach it, I don’t know what the “right” or “best” way is (or if there even is one). My tolerance of risk is such that I’m comfortable with assuming some self-insurance (high deductibles) in order to pay lower premiums.
How should you approach it? I can’t answer that other than to say that you have several factors that will affect how you adjust your coverages and deductibles:
- Assess your financial situation. If you have a fully funded emergency fund, consider increasing it and self-insuring through higher deductibles. If your current automobile insurance has a deductible of $500, increase it to $1000 and put the premium savings into your emergency fund. If you work in a volatile industry or have irregular income, consider adjusting your insurance so that any negative events don’t cause extreme financial distress.
- Known your own “riskiness.” If you’re a bad driver who is prone to accidents or mishaps, lower your deductible. There’s no sense in being prideful and making the wrong financial decision by increasing deductibles or removing certain coverages. If you live in a dangerous neighborhood, lower your homeowners deductible so that you’re better covered in the event of a break-in or fire.
- Know the statistics. Some cars are burglarized more than others, some neighborhoods are rougher than others, and some ethnicities are more prone to some medical problems. Be aware of these statistics, many of which can be found online, and use them to adjust your coverages.
- Your tolerance towards risk. If peace of mind is priceless to you, adjust your insurances so that you obtain that. You can’t quantify stress and all we know about its effects are that it’s bad on the body. Paying a few extra dollars so you can sleep better at night and prevent a few gray hairs is money well spent. Frugality is important but your health is more important.
I’m sure there are actuaries who know insurance backwards and forwards who would disagree with me, if you are such an actuary I invite you to let us know what you think.
The following were my thoughts after Gary first sent me an email about his health and work-life balance, that email has been transformed into a two part article titled Stay Focused, Stay Balance, Stay Healthy (Part 1, Part 2).
When I first started working at my first company, there was a training class on Work-Life Balance and a panel of managers there to share their experience. The panel was quite diverse from an experience perspective, they varied in tenure from ten years to thirty and ran up and down the organizational charts. That’s when a well respected manager of 20-something years of service said to us – “I work forty hours a week, get the job done, and I don’t sacrifice my family, my life, or my health.” He said he left work at 5 PM every single day so that he could be home to see his daughters. This was his job, but this wasn’t his life.
His perspective hit us like a punch to the gut. Here we were, young bucks thinking that the company wanted hard charging workhorses to push sixty-plus hour weeks to get the job done. The reality is that you can get ahead if you do a good job and only work the standard forty hours most of the time (there will always be times when you need to work hard but that should be an exception, not the rule).
When Gary wrote me that story about his medical problems, that hit the same chord. Gary was on the work side of the work-life pendulum and it affected his health. When he tried to get back to a more balanced life, his employer probably thought he was shirking or past his prime. Perhaps he transitioned down too quickly. Whatever the case may be, he was outputting less and it affected his employer’s perception of him. But, when you’re forced through a battery of medical exams, it puts your life in perspective and I felt that perspective needed to have a voice.
You might think Gary has an axe to grind against his former employer. He doesn’t. We’ve traded nearly two dozen emails (at least!) and he never once mentioned being let go until that story. In fact, that part of the story surprised even me.
Whose fault is it? You might be surprised to hear that I think it’s my fault he was fired.
He writes about how the corporate mentality of today is to run a workhorse until they’re burned out and gone. This wasn’t the case when he first started because the employer-employee relationship has changed dramatically since then. I often write about how you aren’t dating your job and how you should look for a new job with more pay, more opportunity, or more responsibility and growth potential. Companies are forced to work their employees hard because there is little incentive to go slow and grow stars because those being groomed could easily jump ship in a heartbeat.
The moral of this tale?
If you don’t have work-life balance, you will have neither.
Thankfully Gary persevered, his health improved, and was able to share that story and the many more that will soon follow.
This is a post by Gary Bonner, a regular contributor on Blueprint for Financial Prosperity.
It was during those 5 hours that I reflected on how I got myself into this health mess. The company was relentless in demanding results on the very visible, very important project that I was providing a considerable amount of shoulder to lift off the ground. This project was a transition and I had to continue doing my former duties as I developed a new project. The requirements consumed me. Even when I was home I didn’t rest because I was planning for the next day’s work in my head.
Laying there listening to the beeping monitors, in between interruptions for x-rays taken by a portable machine and the nurses checking in on me, I started thinking about my family and my loved ones. I thought about how I hadn’t paid any attention to them and had let life events pass me by in the name of “getting the job done.” Then it dawned on me. I remembered a moment twelve years ago, when I had sat on the side of my father’s bed (he was a victim of cancer) as he peacefully took his last breath. My mother, his wife of 50 years, his older son and daughter-in law, his only brother plus his nephew and wife stood next to him.
Then the thought just crystallized from somewhere deep inside: “No one lays on their deathbed wishing they had spent more time at the office.” And here I was. I had crossed the Rubicon with Caesar back into Roman territory. I would never look at corporate life the same. I would do what I had to do but I wouldn’t, couldn’t, bite off more than I could chew ever again.
Over the next several months I underwent a series of stress tests, special echo cardiograms, and finally an angiogram. This procedure runs a tube, with a camera at the end, through your groin muscle through your body cavity to look at the arteries of your heart. You are awake but your body is “knocked down” by a Valium I-V. If there had been blockage, the doctor would have inserted a stent to insure good blood flow. Fortunately the cardiologist, a doctor of world wide respect in his field, announced that there was no blockage and that I had one of the strongest heart muscles he had ever seen.
I wish that was the end of the story.
That was in November 2004.
When I returned to work nothing had changed, the attitude of management had become more unrelenting. I withdrew from the new project to return to my old job. I steadily refused to put in extra effort and felt the heat turn up on me. Timid to fight back because I wasn’t feeling well and didn’t want to get fired and lose my medical benefits, I operated in a world of conflict between my personal health needs and, from my viewpoint, the demands of a high pressure job. My health broke again. I wound up back in the Emergency Room 3 times between 2005 and 2007.
The last time I said to my doctor who had wheeled me to the ER, “You know, my ticket book from the ambulance company doesn’t only contain round trip tickets. There is a black one that says ‘one way’. I am tired of playing Russian Roulette with my health.”
I needed a lot of rest to stabilize and restore my health. While out on disability the company terminated my employment. (As of this writing I am exploring to see if I have any legal remedies for their action)
I lost out on an opportunity for a lump sum retirement payment and will have to accept a monthly annuity that will be modest at best. Why? Because I demonstrated to the company that I had the capacity and ability to accomplish results with a good work ethic. I gained a reputation as a “go to guy” if you were faced with a hard problem.
One of the rules of business is “if you find someone who can get something done right the first time, give him more to do.” In the 20th century, management took care of their workhorses by grooming, feeding and taking care of productive people. Now, in the 21st century, things are done differently. If a company rides a workhorse until it breaks down, managers just pull their pistol and shoot the horse. They’ll get another one.
Our world runs at lighting speed and is faster than the one I joined thirty-five years ago as a “go-getter.” People now hitting their stride in the work world are quicker, better informed and very energetic. The same was said of my generation by my parents. It is important to know that the fastest and best workhorse today will one day be eclipsed by a younger and faster one. How you use your resources now will determine how long you will stay “in the harness” and how much you will enjoy life. At some point “overtime” will mean something much different than it does today. I found out the hard way.
There are much easier ways: stay focused, stay balanced, stay healthy.
This afternoon, I’ll share with you the thoughts I had when Gary first emailed me this story (we had never intended for this to become a post, it was just a conversation between two people that I felt told a powerful story) and why I asked him to share it with everyone.