Good news!

Last fall, when we were going through open enrollment for insurance (through work) for the 2009 calendar year, we decided to put about $500 of pre-tax income into a medical flex spending account (FSA). We estimated it based on the cost of our regular (recurring) monthly prescription co-pays and over-the-counter medicines, doctor/dentist/optometrist co-pays, plus a little bit extra to cover any additional expenses. 

We haven't had any visits to urgent care or the emergency room this year, but we did get stuck with almost $400 worth of physical therapy co-pays that we weren't expecting at the time we signed up for insurance & the FSA. 

It turns out that the information we initially received about the various insurance plans had indicated that physical therapy was supposed to be completely covered - with no copay. When we inquired about it, they found out pretty quickly that it was an error on the employer's informational packets. After months of back & forth on what could be done, they finally told us that they would deposit an extra $375 into our FSA to cover the error.  

We still owe $270 (it hasn't been billed yet, but we know it's coming), so this will cover that and also reimburse us for what we've already paid. 

Since FSA's are a "use it or lose it" account, we'll have to pay careful attention to the balance to make sure that we maximize every cent! We still have several prescriptions and over-the-counter medications to buy to cover us for the next few months, but I think we'll end up with $50-100 left... so I think one of us will be able to get a new set of glasses at Christmas!  :)  

Car Insurance

Car insurance in Michigan tends to be rather expensive, in large part because it's a no-fault state. 

The "Catastrophic Claims Premium" (a mandatory state-wide fee on all auto insurance policies), which covers unlimited lifetime medical benefits for those seriously injured in car crashes, was increased by $20/vehicle/year.  

And general rates increased as well, for a plethora of unknown reasons (insurance risk score, credit score, regional score, etc). My 6-month premium, which had been about $450, increased to just shy of $500. 

I've also been thinking about adding underinsured motorist coverage to our policy, so that if we're injured by someone else who just carries the minimum, we would be entitled to recoup damages from our own policy. I'm not sure how much that will cost, but since so many people in the area have cut back the liability limits on their policies to save money (or cancelled insurance altogether, albeit illegally), it worries me that we could get into a serious accident and then only be able to recoup the equivalent of a few months' salary... 

Homes are Expensive

We had to pick up a few items at Home Depot to continue working on some home repairs. A new circular saw blade, a pair of sawhorses, an extra-long drill bit, can of spray-primer & spray-paint, and a few sheets of OSB. We got to checkout and the total was $99 plus change. 

I don't think twice about dropping $100 at the hardware store, but I almost always cringe at the idea of spending $20 for a pair of pants or top. It's truly unbelievable the amount of money that we've put into repairs & renovations, and the amount of money that we're "hoping" to put in over the next year or so. 

As much as I'd like to renovate and redecorate everything to my taste, it's temping to just stop putting money into any non-essential repairs, and instead use all of it for fun stuff. Clothes, hobbies, vacations. 

Threw out the budget

I only had to work a half day last Friday, which started the weekend on an expensive note. Not only did I have to give up a few extra hours of pay to leave early, but then Hubby & I headed out to my favorite restaurant for a late-lunch ($29). We also ventured to Home Depot to pick up a few necessary supplies ($44). 

Then a friend came over to visit, and we treated her to dinner ($25). We went shopping on Saturday, and I bought some crafting supplies ($21). I'd hoped to spend about $25 total for dinner & shopping, but wasn't too bad. 

The trouble really started on Sunday though, after she left. Hubby & I decided to spend the day relaxing, and went out for lunch downtown ($18). We bought some new window treatments ($65), and we decided to buy something else ($800). 

The damage, $1002. It'll take a month or two to pay that credit card off, and I'll only be able to make minimum payments on my other credit card for the interim. I don't think it'll be possible to pay off my cards by the end of the calendar year... 

Planning Ahead

I try to create a rough budget ahead about a year out for non-ordinary expenses, and about two years out for other major interruptions to cash-flow. 

Right now I'm hoping to completely remodel the kitchen next summer, and hopefully take care another big outdoor project. We'd also like to take a weeklong vacation, where we can stay at decent hotels and eat at nice restaurants and not worry about sticking to a meager budget. And of course there are a couple weddings that I'm in, which will require me to host or help host bridal showers and bachelorette parties. 

Initially I figured that we could afford to tackle both renovation projects, saving and paying cash as we go. With the vacation, the weddings, and a few other expenditures in the works, I don't think we'll be able to save enough to cash-flow it. 

I can't believe I'm writing this, but I'm already thinking about going ahead with both projects anyways and just putting it on the credit card. My card will be paid off completely by then, and Husband's card will probably be in the $6-8k range. We'd probably be able to save enough to pay off whatever was charged by early 2011 (six months or so later), so the interest accrued wouldn't be too bad. 

I want these projects to be complete, and I hate to delay them until the following summer (two years from now). We've talked about changing jobs and moving elsewhere, and having these projects complete would make it much easier to sell the house. We've also talked about starting a family, and I would want these things to be done before then. 

A Raise - or Not

As I'd mentioned previously, my husband won't be getting a raise for the upcoming year. We were originally hoping that the salary freeze was temporary, perhaps only a few months - but we found out that it will stay in place for an entire year. 

Unfortunately, we also just received notice that only a nominal raise is anticipated for next year, probably around 1%. I guess I shouldn't complain much, since it's better than nothing, but 1% seems like such a tiny amount. Increases in the cost of living due to inflation are surely going to outpace that! 

Unless we can free up more money by paying off debt, we're going to have to make some big decisions about our budget. Best case scenario, it'll take us at least 4 years to pay off the credit cards, auto loans, and student loans. But we'd like to buy a bigger home, and start a family - both things that will divert a significant amount of money from our debt snowball. 

Sometimes it feels like all this debt is never going to be gone.

Falling Short for Sept

Although I paid off one of the student loans this month, I'm going to be at least a couple hundred dollars short by the end of the month.

My checking account, after tomorrow's paycheck gets deposited, will have $1725.

BUT:

• I still need to pay my car payment, $350.
• My revolving balance credit card (the one I use for groceries/gas/etc, then PIF each month) is currently at $401.
• I'll need $100-150 for groceries & gas to last the rest of the month.

Assuming that I don't eat out, or buy anything else, that leaves only ~$850 to apply towards outstanding credit card balances this month. Realistically, I'll spend at least another $100 on random purchases for the house and for entertainment, leaving only $750.

I had hoped to pay at least $1000!

Student Loan: 1 gone, 3 to go...

I submitted an e-payment for $1339.35 today, which is the outstanding balance on one of my student loans. It'll be a few days before the payment clears, but it feels GREAT to be done with that loan. 

I took it out to help pay for my summer classes during my last year of school. I had maxed out the "regular" federal student loans, most of my scholarships wouldn't cover summer classes, but I wanted to get my degree done as soon as possible. 

The original loan amount was $2500, at 5% interest rate. 

The minimum payments were due quarterly, and were $120 every 3 months. 

And now they're gone!  :) 

Wedding Bells

For those in the mid-20s age range, it seems like every year is filled with weddings and baby showers. It looks like 2010 is going to be the year of weddings... another person just called tonight to announce their new engagement. 

I'd planned on being able to set aside some money next year towards major home repairs & renovations, to the tune of about $15,000. 

With these upcoming weddings, I think we might have to scale that back and only tackle one of the planned projects. Of the weddings that I'm aware of, I'm expecting that I'll be in the bridal party for at least two of them... and costing us a significant chunk of change for each! 

Bridesmaid's dress ($150). Bridesmaid shoes & accessories ($75). Dress alterations ($150). Up-do hairstyle ($50-75). Possibly nails (?). Bridal shower. Bridal shower gift. Bachelorette party. Wedding gift. Hotel accommodations for wedding night. 

Based on previous weddings that I've been in, the cost has been about $1000 *PLUS* the wedding gift. Yikes! 

Pay cuts?

One of the union's at my husband's employer is currently under contract negotiations. They're arguing over a variety of issues, with insurance and salaries being some of the major items. The employer wants to freeze wages, and the unions of course are protesting.

It's very frustrating because my husband isn't a union employee, and has already had his wages frozen indefinitely. And right now, I'm grateful that we both still have jobs, and that we haven't been forced to take any pay cuts... but if the union is able to secure a raise for its members, it sort of makes me want our jobs to become unionized. I don't really like most labor unions nowadays, but it sucks if union members get a raise and nobody else does.

The worst part is that if they get a raise, then the employer will likely be forced to lay off other non-union employees, and/or to enact pay cuts for non-union employees, just to meet their operating budget. And THAT would really suck.

I think, at least given his current position, a layoff is pretty unlikely. I'm not sure whether we should be anticipating a paycut, when it would happen, or how much it would be... which makes it rather tough to plan and budget for!

Student Loans

Last night I spoke to my sister, who recently enrolled as a full-time undergrad student. She was able to secure a very small grant to help cover expenses, but also had to take out additional student loans. She debated for awhile how much to take out - enough to cover tuition & fees only, all education-related expenses (textbooks, etc.), or enough to cover some of her living expenses as well (she's off-campus, so it would include rent, utilities, food, and vehicle expenses). She ended up taking out the maximum allowable loan, to make sure that she'll be able to cover her bills.

I'm sort of conflicted on this. I don't have a problem with student loans, so long as the amount is reasonable and you anticipate being able to pay it off. I took out about $29,000 in loans for my undergraduate degree. On a 20-year repayment plan, my monthly payments are $200/mo right now, and will drop to $160/mo in three more years (if I paid according to the schedule). I was pretty lucky in that the interest rates on federal loans was significantly lower than they are now (about half!). It doesn't seem like much, but when the total loan amount is more than a new car, and it's over 10 or 20 years, that's huge!

I looked up the maximum amounts in federal student loans that she'll be eligible to take over the next few years, and based on those numbers I'm guessing that she'll end up taking out about $35,000 to $40,000 by the time she graduates. Based on a loan amount of $35k, on a 20-year repayment plan, she'll owe $250/mo in minimum monthly payments... and on a 10-yr plan, it'll be $382/mo.

If she graduates, gets a job in the field, and continues to work for several years, it's totally worth while... she'll make up that amount in higher wages within a few years. But if she can't find a job, or decides to do something else instead, that's a lot of money to owe.

It sucks to have to take out loans that are almost double the tuition bill, just to cover living expenses and basic necessities, but it's almost a requirement. You can't really make it through school as a full-time student when you have to work full-time in addition... and you need a place to live & food to eat. I don't want to encourage her to take out more in loans than she truly needs, because it's so easy to break into the piggy bank and use it for "fun" stuff (been there, done that!) - but I definitely understand what it's like to have to project out 5 mo's worth of expenses & anticipated income and then guess at how much in loans you'll need to cover the deficit.