Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).
This year, we have four participants who will share their financial reports, exposing the results of their financial choices. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.
Betsey works as a government analyst. She is single, and lives with roommates to keep costs down. She is an aggressive saver, and plans to retire early enough that she can start a business specializing in craft beers. (Read her update from last month.)
After reading Betsey’s comments, you can see video commentary from Sara Stanich, CFP. Sara Stanich appears courtesy of Stanich Group and Cultivating Wealth. This month, Betsey will share information about her emergency preparedness efforts.
Betsey’s Net Worth Statement
Betsey’s Income Statement
Comments and analysis from Betsey S
I started a new line item this month to separate out work travel and reimbursements, since it was making my other spending numbers look really unusual. August was a busy month for me at work and personally. I got three paychecks (thus the extra income) and made my first contribution of the year to my Roth IRA.
I chose health insurance coverage based on an an estimate of my previous year’s medical expenses. I have a high-deductible plan with an HSA attached. My monthly cost is $102, $62 of which is “passed through” directly into the HSA. That’s 25% of the cost of the premiums, with 75% covered by my job. I’m pretty happy with this arrangement because it’s about a quarter of what I was paying for health insurance at my job last year and I felt like it was an excessive amount of coverage for a young, healthy person.
I like the HSA so far. From a policy perspective, I think it’s a good way to get young people into the insurance pool who might otherwise decline coverage, but I also imagine that it does not make sense for people with serious recurring medical expenses. Similarly, if your job covers higher premiums, then a lower-deductible policy might be a better choice.
I like that unspent money rolls forward and can be spent in later years (or withdrawn in retirement), unlike the FSA, where you forfeit unused funds at the end of the year. I also like that I can elect to make pre-tax contributions to cover predicted future medical expenses, like an upcoming surgery or specialist procedure. I haven’t invested any of it yet because the balance is so low it doesn’t make sense, and because high-deductible plans have high deductibles. I want that money available in case of medical emergencies (that’s why I have insurance in the first place).
Times I’ve been happy to have insurance would include every time I’ve ever done an active sport or even just walked down the street without being afraid that a sports injury or car accident would send send me into a medical bankruptcy. Even when I was annoyed at the only option offered by my employer, it was still so much better than having no options.
Feedback from Sara Stanich, CFP
As of the time of publishing, Sara has not provided feedback.
Feedback from Luke Landes
Congratulations on making the first contribution to your Roth IRA for the year!
I’ve had a hard time grasping high-deductible health plans, particularly when they were first launched. It was originally bad enough that employees needed to choose between HMO and PPO type health plans, with the insurance companies and employers doing a poor job of explaining the differences. At some point, insurance companies got creative, and the government assisted, and now the field of health insurance types is much more complicated. But high-deductible plans seem like anti-insurance. The point of paying premiums is that you won’t be responsible for the cost of medical services, and even healthy people can find themselves needing to pay medical expenses sometimes.
The point of insurance is to pool resources, and public health in a public issue. Everyone benefits from a healthy society. But health insurance and medical expenses are both so expensive now. Employers don’t want to cover the costs because those expenses negatively effect balance sheets. What will the investors think if a company prioritizes the health of its employees over squeezing every drop of revenue for profit? I’ve said before, human resource is the first line item to be reduced in tough times, and that means employers will cover less of the expense of health care. More of the cost is passed onto employees, so at least more employees are now seeing how expensive health care has become.
Betsey’s company is paying 75 percent of the health insurance premium, which is a much better ratio than the company that I worked for, before leaving to work on my own (at which time I began paying 100 percent of the premium). Like Betsey, at least I’ve always had options, and I was never ineligible for health insurance for any reason.
It looks like Betsey had a three-paycheck month in August, and that certainly helped to soften the blow of $500 in thus-far unreimbursed business travel expenses. She has also tripled her net worth since the beginning of the year, and that’s a great milestone. Betsey’s on track to clear $40,000 in net worth by the end of the year if the remaining four months play out like the previous eight. She’ll end the year having made significant progress.
Thanks for participating this year, Betsey! I’m looking forward to your next update.