Change is painful. Few people have the courage to seek out change. Most people won't change until the pain of where they are exceeds the pain of change.
Friday, June 29, 2007
But sometimes, like today, it hurts a bit.
I know we aren't supposed to be attached to "stuff," but some "stuff" has sentimental value, and today we got rid of two pieces that were a little hard to get rid of.
First, we put some things in a yard sale with a neighbor. We didn't have enough items to have our own, so we asked if we could just combine with them. They were kind enough to allow us to do that. One of the items was a futon that we bought just before moving to Haleyville. It was our "big piece" in a den in our first house in Haleyville. Not a major loss, but it still was a part of us that moved from Somerville to Haleyville.
But, the other WAS a big deal. About 5 minutes ago, a guy drove off with a car. My 1991 Ford T-bird sold on eBay yesterday, and the man came to pick it up today...and actually hauled it off! This was the car that Leah and I dated in. We took it on our honeymoon. It's been to Kentucky many times. Faughnmobile II is no more.
But, while getting rid of stuff like this hurts a bit, the cash in my pocket is really helping things. And, then, when I think of going to the bank tomorrow to put that cash on our loan...things really start to brighten up!
...and it's just "stuff" anyway!
Below are links to all 21 tips.
Tip #1: Use GasBuddy.com
Tip #2: Keep Your Tires Properly Inflated/Use Nitrogen
Tip #3: Combine Trips
Tip #4: Buy Gas when the Temperature is Cooler
Tip #5: Walk or Ride a Bike
Tip #6: Don't "Top Off" the Tank Excessively
Tip #7: Buy Gas on Wednesday
Tip #8: Don't Jackrabbit
Tip #9: Use the A/C Sparingly
Tip #10: Use Cruise Control
Tip #11: Use the Lowest Octane Gasoline Your Vehicle Can Handle
Tip #12: Don't Stop if You Can Avoid It
Tip #13: If You are a Member, Buy Gas at a Discount Club
Tip #14: Avoid Excessive Warming Up of the Engine on Cold Days
Tip #15: Don't Pack Heavy Stuff
Tip #16: Don't Idle too Long, but also Don't Start and Stop the Engine Excessively
Tip #17: Remove Anything that Causes Drag
Tip #18: Anticipate Hills
Tip #19: Buy a Hybrid
Tip #20: Change the Oil (General Car Maintenance)
Tip #21: Use Overdrive Gears when Possible
Got other tips, or thoughts on any of these? Please feel free to leave a comment.
So, I do not understand how today's tip works, I just know it does. When Possible, Use Overdrive Gears. Obviously, this does not mean to use overdrive when you are traveling at 25 mph going to the grocery store. But, when you are going highway speed (especially on the interstate), this is a great way to gain a few mpg.
Thursday, June 28, 2007
It's my way of reminding you that if you will make sacrifices now that most people aren't willing to make, later on you will be able to live as those folks will never be able to live. (pages 5-6)
Change the Oil. In fact, this tip really includes all general maintenance (air filters, tire rotations, etc.). Time and again it has been shown that, when a car is properly maintained in a general way, that car gets better gas mileage.
If someone changes your oil for you, it is worth the couple of extra dollars for a "full service" visit. They will check all the things that need checking to insure good mileage. If you change your own oil, don't forget to check the other things as well.
Wednesday, June 27, 2007
- The first part of the book (chapters 1-5) deals with how to view money. Myths about money are discussed as are attitudes.
- The second part (chapters 6-13) deals with Ramsey's "baby steps" to wealth.
In these reviews, I will simply give my impression of each chapter of the book. I own the book and have read it cover-to-cover three times. While I don't follow everything in it, I see the wisdom behind the book.
Overall, the book is helpful, and I hope you will see the value of picking it up as we discuss each chapter, starting tomorrow.
If you wish to order the book, you may click on the ad below.
Cost of Premiums: Two alternatives will be examined.
1. BCBS Dental Insurance - True dental insurance for an individual and spouse through Arkansas Blue Cross/Blue Shield is $55.20 per month, or $662.40 per year.
2. Dental discount groups - These discount groups are not true insurance, but can be purchased for pretty cheap and give considerable savings at some dentists. One example is Dentemax Discount Dental Plan available through dentalplans.com. The cost of this plan is $150 per year (and that includes any dependent children).
Expenses in Need Without Insurance: I called the dentist office I plan to go to for the first time here soon for prices. $130 for a new patient exam and x-rays, $50 for the cleaning. Assuming both Stacey and I do an initial visit, plus an extra visit each (say $80 for that visit, cleaning and exam), and that we have one filling (at $100...estimated based on this dentist's prices compared with those here) the price for all of this without any discounts or insurance would be: $620. However, I don't think the extra visits or a filling would really be that much from this dentist.
Cost of Premiums + Deductible in Use
1. BCBS Insurance - There is a $50 deductible for fillings and other covered restorative services. Coverage is 80% for preventative and minor restorative services. Thus for the visits listed above with this insurance: $114 'co-insurance' + $50 deductible + $662.40 = $826.40.
2. Discount Plan - In depth checkup twice at $33 each; 6 month checkup twice at $22 each; Adult Teeth Cleaning 4 times at $43 each; One filling at $65. Total cost: $347 at the visits + $150 for the plan = $497.
Conclusion: Dental Insurance really doesn't make sense, unless you are going to be needing major restorative service (in which case the BCBS plan above only pays 50%, and pays out a maximum of $1,000 per member per year . . . so it still might not be worth it). A dental discount plan may be very beneficial, depending upon where you live. I would have to drive at least an hour to find a dentist which accepts the discount plans described, so it's not worth it to us. Since I've only had one filling ever in my life, I don't expect to need any for a lot longer. So dental insurance and discount plans aren't for me. Instead, we'll try to deposit a little extra each month into savings, and spread it out over time in that way, “self-insuring.”
NOTE: Over the following weeks I will return to this series (Insurance: Is It REALLY Worth It?). I believe it will be beneficial to examine car insurance, cell phone insurance, and extended warranties or service protection plans, although perhaps not in as great of detail. If you have other types of insurance you would like me to examine, post a comment, and I'll consider doing so. This is the last post concerning insurances relating to health, though.
Buy a Hybrid.
Many people, though, see "55 mpg," go out and get themselves into major car debt. Hybrids are not cheap. However, if you are going to use the car primarily for city driving (stop and go), and you can get a nice used hybrid at a decent price...and can pay cash for it...then this tip may save you a ton of money.
To help you do some research, here is a link to hybridcars.com. While, obviously, they are trying to get you to purchase a hybrid, the site is still good for a starting point in your research.
Also, it's not too far in the future that we will see cars that are all electric. In fact, Chevrolet is coming out with the Volt, possibly by the end of the year. Here is some information on that car.
Today's tip is Anticipate Hills.
You know how you are rolling along and then, all the sudden, out of nowhere, there is this hill?! Okay, you know it doesn't work that way. We usually know where hills, especially large hills, are. And, when we get half-way up and then press down on the accelerator, we kill our gas mileage!
The best way to handle hills it to give your car some extra "juice" for the last 100-250 feet before ascending. Do this, and you will save a lot of gas, especially if you are in extra hilly terrain.
Tuesday, June 26, 2007
the flea said to the elephant, “Boy, we sure did shake that bridge, didn’t
That little story is all too characteristic of what we see in many congregations of the Lord’s Church. A minority of the people do a majority of the giving and supporting the work of the congregation. Christians must come to understand the shared responsibility they have with their brothers and sisters within the congregation. In chapter sixteen verse two of Paul’s first letter to the Corinthians, Paul instructed that “each one” of the Corinthian Christians was to lay something aside. Every single Christian has shared responsibility in the Lord’s Church; that is true in regards to our financial giving as well. However, far too often in the Church today some people give 25% while others will barely give 2%. This problem has been caused by people not carrying their fair share of the load. The story is told that J.P. Sanders saw a group of ants carrying a dead grasshopper along on their backs. Looking a little closer he saw that some of the ants had climbed up on the grasshopper and were just getting a free ride. God wants His children to get off of the grasshopper and start carrying their share of the load.
One of the greatest examples of this shared responsibility is seen in the Israelites occupation of the promised land of Canaan. In Numbers chapter 32, before Israel entered into Canaan, the tribes of Reuben and Gad requested that they be allowed to settle in the land of Jazer and the land of Gilead. They desired this land because they were cattlemen, and they saw that the lands of Jazer and Gilead were good for cattle. Moses replied to their request in Numbers 32:6 with some very penetrating words saying, “Shall your brethren go to war while you sit here?” Moses was making the point that the tribes of Reuben and Gad had an obligation to support the other tribes of Israel as they went to conquer the land of Canaan. The leaders of these two tribes reassured Moses that they would not abandon their brethren. The Bible tells us that Reuben and Gad were allowed to occupy that land only after they fulfilled their obligation to help their brothers and sisters take possession of the land of Canaan.
In the Church today we are at war with the army of the Devil in the same way that Israel was at war with the pagan nations of Canaan. Paul stressed this point throughout his writing. In Ephesians 6:11-13 Paul encourages his brethren to, “Put on the whole armor of God, that you may be able to stand against the wiles of the devil. For we do not wrestle against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this age, against spiritual hosts of wickedness in the heavenly places. Therefore take up the whole armor of God, that you may be able to withstand in the evil day, and having done all, to stand.” He admonished Timothy in 1 Timothy 6:12, “Fight the good fight of faith,....” And in 2 Timothy 2:3-4 he warns, “You therefore must endure hardship as a good soldier of Jesus Christ. No one engaged in warfare entangles himself with the affairs of this life, that he may please him who enlisted him as a soldier.”
This war which Paul describes can be won, but we need more preachers, more missionaries, and more benevolent acts so that the love and Lordship of Jesus Christ might be demonstrated to a lost and dying world. All Christians must understand that they have a responsibility to the Lord and the Church not to let their brothers go to war while they just sit there and do nothing. All Christians must take their responsibility seriously to support the war effort. That includes people of all ages, people of all economic levels, people of all social statuses, and people of all different situations in life. If one is a Christian then he has an obligation to give to the Church.
While most would deny the truthfulness of “faith only” salvation, too many of those same people in the Church are practicing “faith only” religion. They say that they believe in Jesus Christ. They say that His body is the most important thing in their lives, but they fail to demonstrate that faith by parting with their precious money. James said in James 2:17-18, “Thus also faith by itself, if it does not have works, is dead. But someone will say, ‘You have faith, and I have works.’ Show me your faith without your works, and I will show you my faith by my works.” Which is worse? Preaching “faith only” salvation or practicing “faith only” salvation. I would hate to be guilty of either on the Day of Judgment.
Wendell Winkler in his book Giving With a Purpose, a Promise, and a Performance illustrates this idea of working together by referring to the fact that the Empire State Building does not fall because every brick bears its own weight (44). We must all bear our own weight so that the Church of our Lord may stand strong and tall. Ask yourself the question, “If everyone in my local congregation gave in the same way that I give, what would be the result?” Would you have to let the preacher go, stop supporting those on mission fields, and close the doors because the light bill couldn’t be paid? Or would you be able to support more missionaries, give the preacher a raise, and reach out to the community in ways that your congregation never has before? We must not allow our brethren to fight the good fight and go to war alone. We must carry our own fair share of the burden of the cross of Christ. We owe that to God, and we owe that to our brethren.
- The High Cost of Being Fat (via Get Rich Slowly)
- 73 Great Debt Elimination Tips (via Zen Habits)
- There Is No Such Thing as a Budget Failure Interesting idea here. Applicable to us as individuals/families OR a church budget. (via Not Made of Money)
- And just for fun...How to Clean a Coffee Maker (via WikiHow)
Monday, June 25, 2007
Here are some Monday links:
- How to Start a Roth IRA (and Where to Do It) Planning for retirement personally is an absolute must for a preacher. This might be the best summary of the Roth IRA option (one of several options). Personally, I anticipate opening a Roth IRA in the next several months. (via Get Rich Slowly)
- What to Discuss Before You Get Married Might be helpful in your "Marriage Counseling" file. (via Dual Incomes No Kids)
- Ten Things to Do When You Move Into a New Home This is self-driven; Lord willing, we should be in the preacher's house by the end of the week. (via The Simple Dollar)
- Mom and Dad, Your Financial Decisions Matter Financial stewardship is certainly one of those areas parents are expected to train their children. (via Wisebread)
- And in honor of the release of the iPhone next week...Apple's New iPhone (via The Onion)
Remove Anything that Causes Drag. While there are times that certain items have to be attached to a vehicle, some leave items on a car or van even when not in use, and they cause drag. The more drag, the less gas mileage.
Some of these items include ski holders, bike racks, luggage racks and canoe/kayak carriers. Another that is often not thought about is a vinyl top over the front of the vehicle. Vinyl "catches" air more easily than metal, thus producing drag.
If you don't need these items for a certain trip, remove them from your vehicle and you'll greatly increase your miles per gallon.
Friday, June 22, 2007
Cost of Premiums - Our Maternity Rider costs $230.02 per month, or $2,760.24 per year ($27,602.40 over 10 years).
Cost of Premiums + Deductible in Use - Assuming that the maternity rider is kept in place for 10 years, and used for two births, the deductible and coinsurance each time would be $2,750 for our insurance plan. Total cost over ten years - $33,102.40.
Expenses in Need Without Maternity Rider - The average birth costs $8,000 to $10,000. Our standard health insurance covers complications of pregnancy, so the maternity rider isn't needed for C-sections, etc.
Ability to Pay Without Insurance - Without insurance, we would have to pay the bill over time, as would most people, though my understanding of medical bills is that no interest can be charged as long as you are making efforts to make timely payments.
Ability to Self-Insure - If you know how many children you plan to have and when, self-insuring may be possible. The factors below assume a monthly deposit or payment of $275.85 ($33,102.40/10/12) for ten years and assume a birth cost of $10,000.
- Example 1: Births at the end of years 5, 8, and 10. You could pay for all three births in cash. At the end of year 10, after paying for the final birth, you would be left with $8,951.62 in the account.
- Example 2: Births at the end of years 1, 3, and 8. You would not have enough in the account to pay for any of the births outright. At the end of year 10 you would be left with $3,600.57 in the account.
- Example 3: Things don't always go according to plan. Births at the end of years 1, 3, 7, and an unexpected birth at the end of year 10. At the end of the 10 years you would be left with a bill for $6,640. With insurance, you would have paid $38,602.40 over that 10 years, instead you will be paying $40,000.
- Example 4: Two planned births. Births at the end of year 4 and 7. You could pay for both births in cash, and be left with $17,729.72 in your account at the end of year ten, paying $20,000 instead of $33,102.40 and getting interest for the difference!
- You'll have to do the calculations yourself based upon the cost of your maternity rider and when you plan to have children. But don't forget - things don't always go nearly according to plan. The ability to self-insure is there if you have time to build an account up before it is needed.
Other Considerations - Nearly a million full-term newborn babies are placed in a nursery or observation for an average of 3 days, at $2,000 per day ($6,000 extra). You should check your insurance policy, but a maternity rider may be required to ensure that newborns are added to the policy from birth. With some plans a newborn will be considered for coverage only after reviews from their two-month check-up. This factor could quite easily change the value of the maternity rider if it is required to make the nursery care above, any illness and immunizations of newborns, and doctors visits for newborns all covered from their day of birth.
Conclusion - Maternity insurance is a toss-up. If your newborn will be covered from birth without it, you are going to have to pay high premiums for the rider out of your own pocket, and you don't plan to have several children in a short period of time, it could quite easily be more costly than it is worth. If the lack of maternity insurance will cause the pregnancy to be a stressful time for you, or you believe you can carry it for a short period of time, and if it is provided by your work or at a discounted price, it could quite easily be worth what it costs. You'll have to weigh the issues individually to consider if maternity insurance is REALLY worth it.
So, what goes in those envelopes? Here's a solid answer: it depends.
Wow, aren't you glad you read this post?
Seriously, it all depends on what you want to put in the envelopes. My wife and I probably have more envelopes than many families, but we have a good reason. We would rather the money for certain expenses build up in an envelope that is earmarked for a certain item than be "spendable money" in our checking account. Keep in mind that we are serious about getting out of debt. If there is money in our checking account, we're very likely to spend it on our next debt. Then what happens when it comes time for an oil change? Uh oh!
Here are the items for which we have envelopes:
- Groceries and other "regular" items. We include diapers, formula, cleaning supplies and toiletries in this envelope because we buy all these things at the same stores. We also put coupons in this envelope.
- Life Insurance. We pay every six months, and our premium is low, but we still like having the cash available. We just put a small amount in an envelope each month and then, in June and December, there it is!
- Eating Out. We don't eat out anywhere near as much as we did before we starting using an envelope for this item. Admittedly, this is the envelope we "cheat" on the most, but we are also improving here. We basically put enough money in this envelope for 1 "sit-down" dinner and 2 fast food meals each month.
- Hair Cuts. Neither one of us spends much on hair cuts (which is an advantage we have over many families financially!), but the money still needs to be available when the hair needs a trim.
- Termite Bond. This is the type of expense that can creep up on you and kill your budget. We don't pay monthly on this, but it isn't cheap when the bill comes due. Much like life insurance, we like having the money there in cash when we need it.
- Dry Cleaning. We don't do a lot of dry cleaning, but, well, I'm a preacher, so those suits and sports coats have to be cleaned. This is a very small amount of money, but it's always available in our envelope.
- Car Maintenance. This is, by far, the hardest envelope to figure out. We make sure to have enough in there for oil changes, new air filters, etc., but what about those "big" things, like when the transmission fails? You can't budget for those things. The best piece of advice I can give it to use the money in the envelope for regular maintenance, then just know that there will be other, bigger, stuff happen. This is one thing your emergency fund is for, if needed.
- Birthdays/Gifts. We are lucky. Our family doesn't "overspend" on birthdays, but we do have several. These need to be budgeted. Also, we have baby and wedding showers and anniversaries to think about. And, yes, this money should be enough to pay for both the gifts and the cards. Don't let Hallmark break your budget.
- Christmas. We budget for Christmas year round! We put away a little each month in an envelope, then, when it's time to shop (after Thanksgiving, Amber), we have plenty of money to get everyone a nice, but not-too-fancy, present.
I told you that we had several envelopes. Many people choose not to have so many, but we have this many to protect us from..."us!"
What items do you budget with envelopes, and why?
Today's tip is Don't Idle for Too Long, but also Don't Start and Stop the Engine Excessively. When we first start driving, our parents/guardians get on to us for this all the time. "Don't let the car just idle." Then, though, when you turn off the car: "Well, you're going to have to start it again in a minute. You might as well have left it running!"
I was always so confused.
A good rule of thumb is to set a time limit for idling. If you are going to be stopped for more than, say, 2 minutes, shut off the car. Any less than that, let the car run.
There are all kinds of mathematical formulas you can actually use to figure our what's best. You may not be able to tell it from this series of posts, but I'm not THAT worried about 1 ounce of gasoline! However, I don't want to let my car idle for 10 minutes; I also don't want to start and stop it in 15 seconds.
The main thing is to think ahead. How long will you be sitting still? If it's a very short time, let the car run. If you aren't sure (like taking a cake to an elderly person, for example), it's probably best to turn off the car.
Now, I know what you're saying. You're saying, "I sure wish I had the other tips for this week right here in one convenient link list." Well, you get what you ask for! Here are the other four tips for this week.
Monday: Tip #12
Tuesday: Tip #13
Wednesday: Tip #14
Thursday: Tip #15
Next week, Lord willing, we will finish this series with 5 more tips. Then, on Friday, we will have links to all 21 tips you can use to help save dollars at the gas tank.
Thursday, June 21, 2007
Today's tip is Don't Pack Heavy Stuff. Many times we load down the trunks of our cars or the beds of our trucks with stuff and drive around. The heavier the stuff, the less miles per gallon we get.
For several months, I had about 5 garbage bags full of old clothes in my trunk. We put them there so we could go through them piece by piece without having garbage bags in the house. When we finally did go through them and I got rid of the bags, my gas mileage improved noticeably.
The weight issue also comes in to play in the Winter. While they may remind you of cold weather, knock off those icicles. They will kill your gas mileage!
What would you think about a man who proclaimed an undying love for his wife and children, but when he got paid he spent all his money on a boat for himself instead of buying clothes for his wife and shoes for his children? You might think a lot of things, but one of them would be that he didn’t really love his family. His checkbook simply would not support his claim. When Paul wrote to the Corinthians to encourage liberal giving for the contribution in 2 Corinthians 8 he said in verse 8, “I am not speaking this as a command, but as proving through the earnestness of others the sincerity of your love also.” (Emphasis mine, W.H.) To paraphrase, Paul told them that he knew they proclaimed to love the Lord, so he was giving them an opportunity to prove their love by putting their money where their mouth was. Every time that collection plate is passed on the first day of the week we each have an opportunity to prove the sincerity of our love by putting our money where our mouths are.
When my wife and I were dating I didn’t have a lot of money, but what I did have I spent mostly on her. I bought flowers, clothes, meals, movie tickets, etc. Every birthday or holiday was a day for which I would plan months ahead what I wanted to get for her. Why did I and every other boy trying to win the hand of a girl do that? She had my heart wrapped around her little finger. Wherever you find the heart, you will find a man placing his treasures there. I wanted to prove the “sincerity of my love.” No one ever doubted for a minute how I felt about Shelley Simmons. In contrast, think about the young man who does not have his heart wrapped around the finger of that special someone. He can take all of this money and buy a nicer car or finer clothes for himself because he is not trying to demonstrate his love for someone. I want the whole world and God to never doubt that He has my heart and that I am head over heals in love with Him.
How did you do on that checkbook test? I remember in school how, when I would get an A on a test, I would proudly lay that paper on my desk for the entire world to see, but when I got a bad grade I was so ashamed that I would hide that paper. Some people need to be ashamed of how much they give. Wendell Winkler tells of a little boy who, seeing the collection plate getting closer and closer, also saw a well dressed woman next to him not making a move to give anything. The boy said to the woman, “Here lady, you give my nickel and I’ll crawl under the seat.” If you feel a need to crawl under the seat, the great thing is that you can take the test again next week. Just like the student who must go back and study harder, you must make some changes in your giving if you are to pass the checkbook exam next week. Don’t be a Christian who just talks about how much he loves the Lord. Put your money where your mouth is and “prove the sincerity of your faith.”
Wednesday, June 20, 2007
- Week 1: Giving to the Lord, saving for estimated taxes, envelope money for the entire month, our loan at the bank for our adoption (has to be paid by the 10th of each month)
- Week 2: Giving to the Lord, saving for estimated taxes, car payment (due by the 16th), electric bill, water bill, pest control bill, DirecTV bill
- Week 3: Giving to the Lord, saving for estimated taxes, debt reduction
- Week 4: Giving to the Lord, saving for estimated taxes, house payment for the next month (due on the 1st)
Notice a couple of things.
First, notice that "giving" is the first thing from each paycheck. Wes is writing articles with that theme on this blog and will have more in the future, but we, as Christians, understand that God and His work come first!
Next, notice that our envelope money all comes out at the very beginning. I am planning on writing another article specifying what we use our envelopes for by the end of the week. But, just here, notice that we have all our money for the month right from the start.
Finally, notice that nearly an entire paycheck is spent to get out of debt. Instead of paying what's left over at the end of each week, we have a huge amount earmarked for that purpose.
Now, a couple of points as we close:
- What if I don't get paid weekly? To be honest, that is an advantage with this system. However, many get paid every other week, or can choose to do so. If you do, you can still follow this system, you will just have to be a little more disciplined and make each check do more.
- What about savings for things other than taxes? We are still reducing debt. We have some savings for emergencies, but we are not worried about building up a huge retirement account yet. You'll learn more about the reasons why when I begin to review Dave Ramsey's The Total Money Makeover in the next couple of days.
- What if there is another paycheck? I get paid every Wednesday (making today "payday," yeah!!!), and some months have 5 Wednesdays (August will be the next month where this happens). In those months, weeks 3 AND 4 are both used for giving, saving and debt reduction, and week 5 becomes our house payment for the following month.
As I mentioned, the plan still needs some tweaking, and our "order" would not work for everyone, but we both love this plan and it makes budgeting much easier.
Cost of Premiums
The cost of health insurance premiums constantly rise due to inflation and individually as we age. Through the health insurance provider I currently use, an extremely healthy single male will pay $76,935.60 in premiums from age 20-64 for health insurance with a $750 deductible. For a couple who has children at home from ages 25-49, and continues with health insurance coverage until age 64, they will pay $192,020.40 in premiums for the family throughout those years.
Cost of Insurance & Deductible in case of Use
How much will it cost to be hospitalized, with or without insurance (based upon nationwide average costs)?
- Hospitalized for acute bronchitis - average charge: $9,888, but with my health insurance I would stand to pay $750 + 20% (up to $2,000), or $2,577.60, saving $7,310.40.
- Hospitalized for pneumonia - average charge: $21,388. With my insurance I would pay $2,750, saving $18,638.
- Hospitalized for a crushing/internal injury - average charge: $42,514. With my insurance, I would pay $2,750, saving $39,764.
- Now for a real example. I have a relative who recently was in a car wreck at 70 mph. He was life-flighted to a hospital, but luckily his injuries were limited to a broken femur and a cut artery on his head. They placed a titanium rod in his leg, stitched up the artery, placed him in the trauma center overnight. The next day he was in a regular room, and the fourth day after the wreck he went home (short stay!). Two weeks later he was back to work. Luckily, my relative had insurance. The average cost of a life-flight is around $10,000. The insurance company would only cover $2,000. The bills for the rest of the hospital stay were over $56,000. With his high-deductible insurance, having to pay the bulk of the life-flight, and with co-insurance he will probably have to pay around $12,000. That's much less than the over $66,000 he would have been facing otherwise! That difference will pay for many years of health insurance!
- The first doctor's visit plus the blood and other tests were billed at $355. The insurance company allowed $163.66 of this, of which my part was $56.36.
- The second doctor's visit was billed at $177. Our co-pay, $30.
- The third doctor's visit with blood work was billed at $128, of which the insurance company allowed $83.32, of which we paid $50.77.
- With insurance we paid $137.13 for the three visits, instead of $660, saving $522.87.
- With one monthly prescription at $50/month, with insurance we pay the first $250 of prescriptions and then 50%. With insurance we would pay $425 per year on this prescription instead of $600, a savings of $175. This doesn't take into consideration the amount saved on the prescriptions which went along with the doctors' visits.
Expenses in Need Without Insurance
This of course varies with what need or claim is being made. Our past year's health bill without insurance would have been $1,260. That's the health bill with just one prescription, three doctor's visits, and nothing nearly serious. That also doesn't include any physicals. Insurance would cover a physical up to $500 (for each of us) without any copay. Paying for our health needs without insurance is expensive.
Ability to Pay Without Insurance
Most people, including us, would be unable to easily pay for the cost of health care without insurance and without saving extra money just for that purpose. Especially if we were hospitalized or became seriously ill like my relative.
Ability to Self Insure
If we invested the amount we would otherwise spend on insurance (this year, $2,013.17), and paid out of the account for the cost of health care, this past year we would have invested a net of $753.17. Over 10 years, that amount invested at 5% would yield $116,953.95, which would cover the average cost of any of the top 259 causes of hospitalization. However, this type of investment would require us staying in extremely good health for several years to build such a fund. Self-insuring is mathematically possible, if we stay as healthy as the normal person and don't have any major health concerns in the next 10 years. However, I don't recommend self insuring because there is no guarantee that you will not have a major health concern for several years to build a fund. My relative in the car wreck was just 20. If he had begun building a self-insure fund two years ago, it would have been much too small to pay the bills. Additionally, if you become sick with an illness (such as a heart attack), not only will your self-insure fund be able to pay for the costs, but your illness would then be excluded from insurance coverage for several years or the rest of your life once you did get insurance! That's a dangerous risk.
Return of Payments vs. Premiums Paid In
It is very possible, feasible, and likely that we will pay in much more in premiums than we ever receive in return of payments. If one becomes seriously ill, this balance could easily shift in the other direction. Our health insurance has a lifetime payout maximum of $2 million - much more than we will pay in premiums.
1 in 8 women is diagnosed with breast cancer at some time in their life and 1 in 6 men with prostate cancer. 1 in 3 adults get the flu every year, which would of course cause the health bills that year to be more with extra doctor's visits. Each year 114,000 Americans get sick enough from the flu to be hospitalized for it. With the possibility of major health problems, the unlikelihood of self-insuring, and the extra stress, insurance looks pretty good.
Additionally, many jobs provide health insurance, and pay very little more if insurance coverage is declined. In those cases, considering all of these factors, it would be foolish to decline health coverage.
Based upon these considerations, I believe health insurance is really worth it. It provides protection to possibly cover extremely expensive health care. Health care is one type of insurance I deem worthwhile, especially if your workplace provides health care, or provides it at a discounted rate.
Note: costs of health care gained through this site.
Today's tip is: Avoid Excessive Warming Up of the Engine on Cold Days.
You see those people every morning that the temperature is below 40, turning on their car for 10-15 minutes to "warm it up." Usually what they are doing is letting the defroster clear their windshield instead of doing so by hand.
Back to the engine, though. If you have a regular vehicle (car, truck, van, SUV), the engine only needs about 30 seconds to 1 minute to warm up, unless the temperature is insanely cold.
And, remember, when you are letting that car run for a long time, you are getting exactly 0 miles to the gallon!
Tuesday, June 19, 2007
If You are a Member, Buy Gas at a Discount Club, such as Sam's or Costco. Most of these clubs now have a gas station out front, and many offer pretty significant discounts on gasoline for their members.
I said that this does not apply to me, and that is for one simple reason: I am not a member of one of these clubs. The closest to me is a Sam's Club, and it is about an hour away. And, add to that, it does not yet have a gas station.
Now a word of caution. Some other stores offer a discount if you carry their credit card. As much as I like saving money, I don't do this. More articles are coming on this subject, but my family does not carry a single credit card. We used to, and we "only" used it for gas. Yeah, right! That's why we don't get a "gas card." We know that, if we had one, we'd use the savings to buy a candy bar and soda with every fill-up.
Monday, June 18, 2007
Let's put my life insurance policy to the scales, and consider it based upon the factors (see earlier post "Insurance: Is it REALLY Worth It? - Factors to Weigh" for a description of each of these seven factors).
- Cost of Premiums: About $10,000 for our 30 year term $300,000 policy on my life. However, the policy we purchased is a Return of Premium policy. This type of life insurance returns 100% of the premiums paid in, if those premiums are paid in for the entire length of the term (in our case, 30 years). With my return of premium plan, I am really paying much less than it seems. The cost to me is REALLY the interest I could be gaining on the premiums if they were invested, and inflation.
- Cost of Premiums + Deductible in Use: There is no deductible. The payout would be $300,000, regardless of how many premiums I have paid in. This means that if the policy paid out in the final month, the true return would be about $290,000 ($300,000 less the premiums paid in.
- Expenses If the Need Arises Without Insurance: With funerals averaging over $10,000, that would be the first expense. However, the life insurance policy is purchased to cover funeral expenses, and additionally allow my wife a grieving period before having to go to work, provide for our children's care and education, etc.
- Ability to Pay Without Insurance: At this point in life, there is no way I can provide the protection which life insurance would provide for my spouse. In the future, any protection my savings will provide can be supplemented through the protection of life insurance. A 30 year term purchased at this point and paid throughout that term provides protection for my wife and future children until after those children have reached adulthood and left home.
- Ability to Self Insure: If the premiums are invested at 10%, the $30 a month would build to $67,814.64 over the course of the 30 years. However, it would be within the 14th year before the self-insured account would reach $10,000. This means that the ability to self-insure is really non-existent.
- Return in Payment vs. Premiums Paid In: Unlike some types of insurance, life insurance always provides more protection then it costs.
- Other Considerations: The peace of knowing that if I die at any time over the next 30 years my wife and children will be provided for financially is worth a lot more than the interest and inflation. This type of insurance will remove unnecessary stress if I become ill or injured.
#1 - Cost of Premiums
First, the cost of the premiums should be added up over a period of time. Looking at the monthly premium isn't a very good way of considering the cost of insurance. Add these premiums up over at least a year, or if possible, over the lifespan of the insurance policy.
#2 - Cost of Premiums + Deductible In a Claim
In considering the cost of insurance, one also has to consider how much they will have to pay in the deductible if they have to use the insurance. This is especially important in making a comparison to self-insurance or expenses without insurance.
#3 - Expenses in a Claim Without Insurance
In the event that you have to make a claim, how much would this claim cost if you didn't have insurance? Without considering this cost, you really can't consider if insurance is worth it. In some types of insurance several different types of claims will have to be considered.
#4 - Ability to Pay Without Insurance
If you don't have insurance, based upon your level of income and savings, would you be able to pay for the claim without insurance?
#5 - Ability to Self-Insure
Based upon the costs above, if the money is invested at a moderate rate with high liquidity (5% for my examples), would you be able to provide this insurance for yourself? That is, can you invest the premiums instead of paying them, and then pay out of the account in the event of a claim? How much less protection does this provide?
#6 - Return in Payment vs. Premiums Paid In
In the event of a claim, how much will you receive in returns from the insurance company in comparison to the premiums you have paid in. Is this difference really worth the risk that you will never make a claim?
#7 - Other Considerations
Other considerations may include the stress with or without insurance, your past history or family's history in this area, and many other factors unique to the type of insurance.
These factors will be considered now in several different types of insurance.
Don't Stop If You Can Avoid It.
What does that mean?
You know how most people drive. We are rolling along on a highway at 65 miles per hour and then we see that sign: stoplight ahead. So what do we do? If we are like most people, we keep rolling along at 65 mph until the last moment and then we skid to a stop.
Why not touch the brakes, slow down a bit and keep rolling until the light turns green? Then, when it does, remember another tip: don't jackrabbit. Accelerate intelligently.
You see, when you stop, you are getting exactly 0 miles to the gallon! And, coming to a complete stop is harder on your mpg than slowing down reasonably.
So, while that guy in front of you screams right up to the light, you just take it easy...
...and, who knows, you may just pass him when he is stopped at the light and you are still rolling along. You may pass him at 25 miles per hour, but, hey, it's still a good feeling!
Saturday, June 16, 2007
Before examining specific types of insurance, I think it’s beneficial to consider how insurance works, that is to look at insurance from a purely statistical perspective. When an insurance company pays out to a client, they often loose money on that client. How do insurance companies not go broke? It's pretty simple really. They collect funds from a large group of people, invest those funds, and pay out to the few who qualify for distributions. Insurance is beneficial to many individuals because it provides them with protection they can not provide for themselves. It is profitable for the company because the average person will pay more in premiums (and the interest on those invested premiums) then they receive in payments. Therefore, mathematically and statistically, each of us would be better off without any insurance whatsoever. HOWEVER, IT IS BY NO MEANS MY SUGGESTION NOR MY LIFESTYLE TO LIVE WITHOUT ANY INSURANCE.
Those who purchase insurance do not purchase insurance because they plan to be the average person who pays in more than they receive in benefits. Nor do they plan to have a car accident or disease so they can get their money’s worth from the insurance company. They recognize that they may be the one who isn’t average - they may face a situation which they cannot provide for, and so insurance provides protection in case that happens.
The question, “Insurance: Is it really worth it?” is therefore not entirely simple, nor is the answer the same for every individual. This is a question that must be asked and answered in each category by each individual. Over the next few posts, we’ll simply be examining some things to help answer this question in these areas.
Friday, June 15, 2007
The first tip is Use the Lowest Octane Gasoline Your Car Can Handle. Some, because they have more expensive vehicles, feel as if they have to use premium gasoline. While you should, of course, check your owner's manual or the manufacturer's website, most cars can take regular gasoline. At most stations, that means a savings of 15-20 cents per gallon.
Now, can you take this a step further? Our second tip is one you need to decide for yourself, because it will take some math. It is Decide if Ethanol Blends are Right for You. To give you some help in figuring out the math, read the following article. It is from The Simple Dollar, and is called, "Ethanol Blends: Are They Worth It In Your Tank?"
What, you say? You want all the other tips for this week again? Okay, here they are:
Monday: Tip #7
Tuesday: Tip #8
Wednesday: Tip #9
Thursday: Tip #10
Eleven down, 10 to go. We hope these tips are helping you feel less pain at the pump.
If you do not receive the Gospel Advocate, you are missing a lot of helpful information. However, if you did not receive the June issue, you missed an article written by Wes. The subject? Giving, of course!
This is the 2nd time in just a few months that brother Hazel has had an article published in the Gospel Advocate. Just thought our readers would like to know!
Thursday, June 14, 2007
Our tip for today: When travelling at highway speed, Use Cruise Control. It's not that using the cruise compared to not using it saves gas; it's that keeping a constant speed saves gasoline.
Cruise control helps keep you at a safe speed (if you set it at a safe speed!) and, if you are going a constant 55 or 65, you are being better on gas than if you are moving from 55 to 60 to 52 to...
And one more added bonus. If you set the cruise at a legal speed, you'll avoid spending money on tickets!
102 Personal Finance Tips Your Professor Never Taught You (via Ask the Advisor)
How to Avoid Being Audited When You Are Self-Employed (via Ask the Advisor) Helpful suggestions since most preachers and paid-ministers are considered self-employed for tax purposes.
Wednesday, June 13, 2007
10 Tips for Dealing with Car Salesmen (via Generation X Finance)
Confessions of a Former Circuit City Worker (via Consumerist)
Money Savvy Pig: The Piggy Bank for the 21st Century (via Money Savvy Generation) This looks quite cool...check out reviews at The Simple Dollar and Get Rich Slowly. Pig available in five colors; also available as a cow or football. Hmmm...do you have to be a kid to have a piggy bank?
Use the A/C Sparingly.
We often run the air-conditioner at full blast nearly year-round, only turning it off when it is extremely cold. We need to learn to use the A/C only when it is absolutely necessary. Depending on who you read, the A/C can reduce your miles per gallon by 3-10%. Even if it is just 3% that can be a significant amount, especially on a long trip.
So, how can you avoid using the A/C all the time? Here are a couple of ways:
1. On short trips (to the store, to work, etc.) when you will be going more slowly (in-town driving), roll down the windows. If you are driving at highway speed, this also reduced your miles per gallon, but at speeds lower than 45 mph, it is better than running the A/C.
2. If you must have the A/C (like I do this week!), run it until the car is comfortable, then turn it off. Yes, the car will get hotter, but not in just a few seconds. You can usually stand it for a few minutes. If you must have it blowing, turn it on "vent."
This tip is easier to follow in the Spring and Fall, of course, but can be used year-round to save a few dollars on gas.
Tuesday, June 12, 2007
As you begin your journey, though, something happens. You have to stay in the hospital for a week. Your brakes go out. You find out you need a new roof. These are major expenses that can ruin a financial plan...
...unless you have money set aside for emergencies.
We'll have more to say about emergency funds on this site in the future, but one thing you must decide is where that money is going to go. It needs to be liquid enough so you can get to it in an emergency, but you don't want to make 1% or less on the money either.
One possible place is HSBC's Online Savings Account. Personally, I don't use this one, but I am thinking about it. While interest rates change often, today (June 12) the account is at 5.05%. I'm willing to say that's probably more than you are making at your local bank!
The account has many good features. One of my favorites is free electronic transfer of money. Also, the account comes with a debit card, so getting to your cash in a real emergency is possible.
As with any account, please take the time to look over the information and choose the one that is right for your situation. If you don't see a feature that you'd like to have, send a question to the company.
There are many good places to put money for an emergency fund, and we hope to highlight some of the best here over the next few days, but HSBC has a good history of online banking. Check them out for more information...
...but more importantly, get started on that emergency fund!!!
HSBC Online Savings Account information page
Monday, June 11, 2007
First, consider purchasing flowers a little later in the year. Some of our flowers were purchased at the end of April, some in May, and some at the beginning of June. Those purchased at the beginning of June were much cheaper. They looked a little worse when we first bought them, but our daily watering routine brought out the best in them very quickly.
Second, look for ways to reuse the waste. Stacey had to dig up entirely one section to get rid of a vine that was taking over her flowers. We purchased top soil to go fill in the area. The dirt we had dug up with the vine in it was used in our backyard to fill the holes our dog had dug.
Third, purchase dirt wisely. Sounds crazy, I know. Last year I was filling some holes the dog had dug. Looking around inside Wal-Mart's garden section, I purchased the cheapest kind of soil I found - potting soil. It was over $6 for about a 40 pound bag. This year, we purchased topsoil from outside the store for less than $2 for each 40 pound bag. We supplemented this with plant food (about $6 a bottle) which lasts a long time and can be used on our indoor and outdoor plants.
There are other ways to be frugal in building a flower garden, but these are a few simple suggestions. (By the way, that is Stacey's flower bed in the picture:)
I would like to give a chapter-by-chapter breakdown of the books, indicating both strong and weak points.
Here is where I need your help. Would you, as readers, like for me to write every few days about each chapter, or would you rather me write one (very) long post reviewing the entire book.
Personally, I am leaning towards a chapter-by-chapter review. However, if you would like the other, please indicate this. We want to do what is best for our readers. Please leave comments about your preference. Thanks!
Friday, June 8, 2007
Today’s tip: don’t “top off” the tank excessively. If you continue to pump gas into your car, one of two things will happen. Either (1) you will end up spilling some down the side of your car and onto the ground, or (2) some will evaporate.
To help avoid these, let me add this bonus tip (hey, it’s Friday, right?): keep the gas cap fastened tightly.
If you are anything like me, you top off your tank to get to the next dollar (or 10 cents). One or two extra pumps are not any big deal, but, if you are at $29.10 and want to get to an even $30, you will waste a pretty good amount of gas. It’s better to just trust the automatic shut-off on the gas pump.
Now that you have read the first 6 tips, you should start seeing the possibility of saving a decent amount on your gasoline. We’ll take the weekend off, and then we will unveil another tip each day Monday through Friday for the rest of June. Add them all up, and you could really have some extra dollars around!
Thursday, June 7, 2007
How many times do we drive our car around the block to visit our neighbors? When my family moved to
There are going to be several articles in the coming months and weeks about cheap ways to entertain your family, but why not walk to some of those things? In some ways, that can be as much fun as the actual activity!
If you live less than a mile from work, you might want to consider a bicycle. It may not be great on 100-degree days, but in the Fall and Spring you could save a fortune on gasoline; not to mention the health benefits.
So, the next time your neighbors invite you over for a BBQ, walk over to their place. You’ll enjoy the fresh air, and you’ll save all your gas money.
Wednesday, June 6, 2007
Buy gas when the temperature is cooler, such as early in the morning. No, the price isn’t cheaper, but you get more of the product for your money.
How, you ask? Gasoline “contracts” (for lack of a better, more scientific, word) in cooler weather and expands in warmer weather. That’s why, if you leave a gas can out on a hot day and don’t vent it, it will expand and, eventually, explode! (Remember that part of the make-up of gasoline is gaseous.)
What does all this matter? Remember that a gallon is unit of volume, not weight. When you get more of the product (in this case, gasoline) in less space, you are getting more for your money.
This tip won’t save you much each time you fill-er-up, but, over time, it will save you a lot. If you are going on a long trip, this could save you several dollars off your budget (can you say, Olive Garden instead of Hardee’s?)!--Adam
Tuesday, June 5, 2007
-- Color of Money (Michelle Singletary, Washington Post) About two years ago, I subscribed to receive about 10 categories of e-mail updates from the Washington Post. It didn't take long for me to get aggravated at the abundance of e-mails. Now all I receive from the Post is "Breaking News" and "Color of Money" from Mrs. Singletary.
-- Kiplinger.com One of the standard personal finance resources. Also publish Kiplinger's Personal Finance magazine. A lot of their information is investment-driven (because that's what a lot of people want to read about), but they do probably have helpful information for whatever you're looking for. It just might take you a minute to find it.
-- Motley Fool This resource leans toward investment (especially the Stock Market) information most heavily on the front page, etc. It does have a long list of links on the left for personal finance interests though. It has the most comprehensive list of calculators that I've run across. You might not use the Fool as often as other sites, but it's worth keeping handy.
Color of Money
- Go to work
- Go home
- Go to the bank
- Go home
- Go to your child’s ballgame
- Go home
- Go to Subway
- Go home
- Go get groceries
I live in a very small town, so those trips don’t add up a lot. But, if I do similar things two or three times each week, the extra driving (not to mention, starting and stopping the engine) will quickly add extra miles to my driving. And extra miles means extra gas! It’s better—and more timely—to take 10 or 15 minutes in the morning to plan out your day, making a list of all the places you need to be. It’s also worth an extra minute to plan the best route to those places, so you don’t backtrack. This is especially true if you live in a mid-sized to large city.
Just think, if you combined trips and it saved you an average of 3 miles per day, that’s over 1000 miles a year. If you get 20 miles per gallon, that’s 50 gallons of gas. If gas is $3 a gallon, you just saved yourself $150. Could you not retire a small personal loan or medical bill with that money?--Adam
Monday, June 4, 2007
Traditional air filters begin just over $5 and go up from there. The price of K&N air filters depends upon the make and model of the car, but generally cost up to $50. A few examples:
- 1996 Mazda Protege (my car) - Traditional Filter $10.50; K&N $26.96
- 2002 Toyota Camry - Traditional Filter $10.49; K&N $47.99
- 2007 Ford F-150 - Traditional Filter $17.99; K&N $51.99
So, today's frugality tip - consider upgrading your car's air filter to a K&N performance filter with a lifetime warranty.