Starting An Emergency Fund Gives You The Most Bang For Your Buck

I was reading a well written post from Money Ning about emergency funds.  He was recommending an emergency fund over using the money to pay down debt.  I totally agreed with him, but as I read the article, I thought of it in a different perspective, and that my readers might agree or consider as food for thought.

The Biggest Value In Emergency Funds

The example that Ning used was if you had $1,000, would it make sense to start an mb-201312billscoinsemergency fund or to throw it at paying down debt?

Where it fell into place for me was when I started thinking about it in terms of where you would get the most bang for your buck.

Consider the following examples:

Credit Cards, Student Loan Debt, and an Auto Loan

The two most standard types of debt where I would think the person questioning ‘emergency fund’ vs. ‘debt’ would be student loan debt and credit card debt, and throw in a car payment as well.  Say you have someone with $40,000 in debt, and they’ve decided to tackle that debt and try to become debt free.

First, celebrate that.  If you’ve made that pledge, then good for you!

Second, let’s look at what would happen if you had $1,000 and used it to attack your debt.

In the example above, your $1,000 would pay off 2.5% of your outstanding balance.

This is nothing to sneeze at and probably represents a bigger chunk than would normally be paid with minimum payments.  There’s nothing wrong with that, but is it really enough bang for your buck.

Which leads us to the second option

Should I Start an Emergency Fund

If you have that $1,000 and stick it in the bank, you are obviously set to pay against an unexpected expense, at least for the first grand.

This is great.  Let’s think of a couple of examples of how this would play out:

  • You get in a car accident. Repairs are $6,000, but your insurance picks up everything after your deductible, which is $1,000.
  • You get sick or injured and have out of pocket health care costs of $1,500.
  • You get laid off from work for two months.  Your severance and unemployment can cover all of your expenses except for your $400 per month car payment, meaning you’d be short $800.

In each of those cases, using your $1,000 emergency fund would be completely appropriate.  These are all emergencies and precisely the types of situations where you’d use an emergency fund.

But, what kind of bang for the buck are you getting?

  • In your car accident, your emergency fund covers your entire deductible, so your emergency fund gives you 100% bang for the buck.
  • If you get sick or injured and have your bill, your emergency fund covers two-thirds, giving you a 67% bang for your buck.
  • In the event of your layoff, your shortfall works out to being fully funded, again giving you 100% bang for the buck, with the added bonus of having $200 left over that you don’t have to replenish once you get back to work.

In each of those cases, your bang for the buck far exceeds the 2.5% bang for the buck that you’d be getting by paying off debt.

The Math Works Almost All The Time

Obviously each person has different debt numbers and each emergency will offer different numbers, but the fact of the matter is that unless the cost of your emergency comes in at a greater cost than your outstanding debt, you’ll get greater bang for the buck by starting an emergency fund every single time.

Important Considerations For An Emergency Fund

Don’t take this too far.  Some people might ask why stop at $1,000 and build an even bigger emergency fund.  I think $1,000 is appropriate as it’s going to likely cover over half the costs of most short term emergencies.  Yes, there are situations where that might not be the case, but the goal of an emergency fund is not to protect you against every worst case scenario, but it’s designed to put you in front of a majority of situations which could provide short term financial catastrophe.

As you get lower in debt, you might bulk up your emergency fund in small increments, or you might also do so if emergencies might provide bigger risk, for example if you start a family.

In either case, the details in how you approach setting up and maintaining your emergency fund will vary, but the one constant I would recommend is that you should put a small emergency fund in place before paying extra on debt no matter what.

Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Planning For Retirement

You can start planning for retirement at any age and take advantage of long-term investment options. Your investment-planning strategy can help you protect your assets and live comfortably during retirement. It begins by evaluating your current financial situation and setting future goals, including the steps to achieve these objectives. While planning for retirement, most people want to establish living arrangements with minimal debts and financial obligations. Because social security income is usually less than what an individual earned while working, it may not provide enough protection and funds to allow for the standard of living that many people desire to have during retirement. Additionally, the shifting economy may not afford every person an opportunity to build their social security income to a desired amount. Therefore, it is beneficial to consider investment choices that will lead to a better quality of living as you age. To gain more information about the investment opportunities that are available to you, speak to an insurance agent near you.
Among the matters that should be taken into consideration for retirement planning are health care and life insurance. Health care costs have risen over the last decade and may continue to increase as you approach retirement age. Some retirees may also be required to pay expensive premiums for health insurance and maintain costly prescriptions. For this reason, incorporating a plan for long-term medical care is a very important aspect with creating a sound retirement plan. Life insurance is a resource for individuals in retirement to borrow against the cash value of policy. If you purchase a life insurance policy early and make contributions to build the equity value, you can tap into these funds during retirement and still maintain the monthly premiums for the policy.
In addition to including the costs of health care and life insurance within your retirement plan, there are other investment strategies that can help you secure your financial future for yourself and your loved ones. Whether you have a 401(k) through an employer or you’re self-employed, a sure way to enjoy your retirement is to set up a 401(k) plan with your financial institution. There are several types of plans that are available through banking institutions. A financial advisor can discuss your options with you and help you get started with preparing for your desired retirement income.
This is a guest post.
Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Was Buying Our Halloween Candy At Costco A Good Deal?

We realized last year that we need quite a bit of Halloween candy.  Fall camping at many campgrounds in Michigan means that they set things up for Halloween, with campers decorating their RVs and campsites.  There are Halloween based activities for the kids, and of course trick or treating.

Least year was our first time at the nearby park, and we realized quickly how big this was.  We took about 9 bags of candy and it was gone in a flash.  Our kids came back with an enormous haul, which let us pretty much have enough to hand back out on the actual Halloween back at our house.

This past weekend was our planned trip, and this time we decided to be more prepared.  We doubled our purchase of candy, getting the equivalent of 18 bags.  I say equivalent because we bought it from Costco, where the bag sizes (like everything else) is bigger.  Much bigger.  We purchased two bags, each roughly 90 ounces.  One bag had candy based around chocolate, and the other was more the sugary sweet candy.

I decided to take a look to see if we got a deal or not.

Most bags of candy sold for the purposes of Halloween giveaway is around 10 ounces, so that was my assumption.

At Costco, we purchased two bags, each around 90 oz. each.  That gave us 180 oz. of candy, or approximately 18 bags.

Total Price: $28.58 ($14.99 and $13.59)
Ounces of candy: 182 ounces
Cost equivalent per 10 ounce bag: $1.57

Random check of other prices:

Not on sale bag at Meijer: $3.39
On sale at Walgreens: $1.99
On sale at Kroger: $1.50
Amazon (equivalent pricing): $3.24

So, with doing a random check, Costco came in 2nd, a few pennies more expensive than the sale price available at Kroger.

However, if given the choice I would still pick Costco.  Here’s why:

  • No quantity requirements (except for it being Costco) – For the Kroger deal, you had to buy the candy in multiples of four.  Meaning, if we were hard and fast to our 18 bags of candy, we would either have to get two bags less (16) or two extra bags (20). If you’re buying that many bags, chances are you can be flexible here, but there’s always…
  • Availability – This is probably the key one for me.  I was basing the price comparisons by what Kroger advertised in their circular.  But, I’ve seen deals like this before and more times than not, when I go to the store to grab the candy, there’s an empty spot on the shelf where the candy was that other lucky buyers already purchased (or three bags, just enough to where you can’t get the deal).  You can go track someone down to ask if there’s more in the back, but if anybody has ever gotten anything other than a shake of the head, you’ve been luckier than me.   You could try a rain check, but who wants to chance them not getting more, and then having to rush out last minute, and settle for being the house that gives out the little wrapped pieces of gum that lose their flavor after 3.7 seconds.

Purchasing candy at Halloween isn’t for everybody. If you need less than the equivalent of nine bags, chances are it’s not the place for you.  But, if you do need Halloween candy in bulk, I would recommend Costco without giving it a second thought.

Readers, where do you purchase your Halloween candy?  How do you sniff out deals?

Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Impressions of Obamacare

I recently had the opportunity to work through signing up for Obamacare, though it was not for me.  A family member recently took on a new position, and since their employer does not offer health insurance, she needed to sign up for insurance using Obamacare.  She asked for my help.

I won’t walk step by step through the process, since there are already a million articles out there about that, but wanted to share some of our shared impressions.

  • It’s pretty cleanly designed – I was pretty impressed by the user interface.  It was colorful and simple enough to be welcoming, but not distracting.  It also split much of the form entry into multiple pages so as not to be overwhelming.
  • There’s a lot to enter – Most of the information you need is pretty straightforward but there is a lot more information than you probably think going in.  We had estimated it’d probably take around an hour but in reality, it took closer to two hours.
  • Figuring out income is tricky – Many people likely know how much they make, but if you are hourly, or if you aren’t really sure, you’re likely taking a guess.  In our case, we struggled because of the hourly component, and also didn’t really the implications of only being at this job for part of the year, which will greatly affect the total income that will go on the tax return.
  • All of the options lead to second-guessing – We had a rough idea of the needs, and also had a rough idea of the expected costs, but when we got to the lists, it was quite a bit to take in.  The variation in pricing and such made it pretty confusing, and you found yourself just scrolling through.  Also, when you found what appeared to have the same offerings, but for price variations of up to 100%, it made you start second-guessing whether you were really making the right choice.
  • The providers have some work to do – When we found the plan we wanted, it gave a link so that it could be paid to ensure that coverage started on the 1st of the month.  The only problem is that the link didn’t work.  It likely went out to the providers site for payment, so there is some problem somewhere along the way.   We also noticed during the sign up process that the details about each plan took you to the website of the provider, which was fine, but that led to confusion as each provider structured their information to their own design.  Since you’re comparing multiple plans along multiple providers, I think that providers should be encouraged to put the information together in a more common template format.
  • Some stuff needs to be re-arranged – We needed to sign up for health and dental.  It wasn’t really clear whether they are done completely independent (they are) or not, so before we submitted ‘OK’ on the health side, we were nervous that we were locking out of the dental options (we weren’t).  I think this could be solved by having the participant select the coverage that they need up front before signing up for anything, and the system could build your sign-up plan accordingly, making sure that you go directly to dental sign-up.

Overall, it wasn’t a horrible experience but it wasn’t great.  I’d say it was OK, though we were expecting worse.  The biggest takeaway is that health insurance is still full of a lot of unknowns, and that can lead to nervousness and such.  I can see where they tried to take a lot of that out away with their design, but some additional re-work could make even more improvements.   We finished up and I could tell that my family member was nervous.  Taking away that ‘What did I just do?’ element is something that could help consumers a long way.

Readers, have you or someone you know signed up for Obamacare?  What was the experience and what suggestions would you make?  Note: This isn’t a place to debate whether Obamacare should be in place or not.  It’s here and the purpose of this article was to discuss our experiences with that framework in place.  I’d appreciate if discussions could be handled along the same lines.  Thanks.

Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Do Everything By The Book And Still Get Screwed By Health Insurance

Every time we think that we have health insurance figured out, we are proven that we are and will always be wrong.

You can do it all.  Every step.  Check it off.  Verify it.  Dot every i and cross every t.

Doesn’t matter.

The insurance companies will still manage to get you.

Actually, it’s not always the insurance companies.  It’s more the laws and the medical profession as a whole.

In Network But, Oh, Just Kidding

The latest example I saw that just floored me was in a New York Times article last week where unsuspecting people need immediate medical care.  They do the right thing.  They head to their emergency room that they already know is in network and get the care that they need.

It all sounds fine and good, until the bills come, and they realize that while they went to an in-network emergency room, the physician that treated them may not have been in-network.

Meaning, you’re stuck paying through the nose.

Apparently, many hospitals can’t (or won’t) fill all positions with employed doctors, so they contract out some of the staff that they need.  This is becoming more and more common.  It reduces fixed costs for the hospitals, but it means that you really have no idea what you’re going to end up being billed for.

Sometimes, it’s a crap shoot.  The hospital may have some doctors employed by the hospital, and some brought in as contractors.  The one that you get to see?  You can’t really pick.

Granted, patients can find out if the doctors are in network or not, and if the doctor that comes to see them is not, they could always refuse service or ask for someone else, but honestly, if you’re in a situation where you or a loved one needs emergency care, how often do you think this will happen?   If you’re hurt or having a heart attack, or your child has a broken bone, are you really going to wait around in hopes that a doctor is available that can save you money?

Sadly, that’s what our health system in America is coming to, and you may be asked to make this choice.

The hospitals themselves are covered.  In the sheaf of paperwork that you sign when you first arrive, you’re likely signing something that indicates that there is no guarantee of the network participation of anybody that treats you.

Since most hospital visits incur separate charges for the hospital and the doctor(s), many unsuspecting patients are falling into this trap, and when they call to protest the bill, the hospital can point to the fact that they signed the paperwork.

And, the sad thing, this is all legal.

What’s The Better Way?

The bottom line is that the system is broken.  I’m generally conservative, but I’m not staunch enough to think that Obamacare is an unmitigated disaster.  Many conservative people argue that it should be repealed, and many politicians build their platform on trying to do just that.

I’m not so sure, and the main reason is more of a fear as to what would happen if it was repealed.

Think about that for a second.  There are people out there whose goal in life seems to be to get rid of our current arrangement, and they will talk for hours at end about why it is so awful for our country and our citizens.  If anybody started that conversation to me, I would politely stop them and ask them how they would propose to make it better.  What would they put in it’s place that would stop the stupid nonsense and loopholes that screw the average consumer?

My guess, based on the fact that I’ve never heard one good proposal, is that nobody really knows.

On the flip side, Obamacare has not and will not prove to be a big fix.  We’ve already seen that.  It made a lot of promises, and even lived up to some of those as to problems that it was able to solve.

The main  issue I have is that for every problem it solved, it often created another issue.  You have many paying higher than they used to for insurance.  The second problem is that it did not truly reform the system in that there were way too many problems and loopholes left open that didn’t get addressed.

Like going to the in-network Emergency Room and getting billed thousands for the out-of-network doctor that took care of you.

Sorry, until stuff like that gets fixed, you can slap any label you want on the health care system, but the one I would slap on it would read:

Out of Order

Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Patience Can Save You Money

It’s important to be patient when making financial decisions.  This applies to decisions both big and small.

I was reminded of this with a small purchase, but being patient still saved me $19.

We have a couple of streaming media devices, both a Roku and a Chromecast.  These are nice for playing Netflix and other streaming content.  The Chromecast is pretty much exclusively used for playing Netflix, while the Roku has a few other channels that are used occasionally.

I know the ins and outs and it’s pretty easy, so I’ve recently thought about wanting to get a second Chromecast, and there’s a specific reason.  The finished portion of our basement is used primarily as a playroom during the winter months, to give the kids another area in which to play.  This past summer, it’s been used primarily for storing furniture as we moved and re-painted bedrooms (transitioning from a nursery to full big kids room for our daughter).  Now that this project is finally wrapping up and that winter is approaching it will soon be transitioned back to the playroom.

We have a TV down there (a flat screen that actually got broken leaving a nice line in it and moved downstairs, but still works) and it would be nice to have the option to stream Netflix for the kids if we wanted to include any TV time.    A few weeks ago, I got the idea in my head of getting a second device, and started keeping an eye out.

The retail price of a Chromecast is $35, but you can often find them on sale for $25.  I was waiting and watching to see if I could find a $25 deal, when one day I did.

I subscribe to Slickdeals RSS feed, so I see a list of ‘up and coming’ deals.  A couple of weeks ago, I spotted a deal where Groupon was offering a refurbished Chromecast for $25 AND they had a $10 off any $25 or more promo code that you could use.

I figure a refurbished item might just have been returned, and for that cheap, I’m more than fine willing to take the chance.  I figure a device like that is either going to work or it’s not.  There’s not much in between, so as long as I get it out of the box and functioning, it should be good to go.

The end price after the discounts plus sales tax was $15.90, all because I waited patiently for a few weeks.

Importance of Being Patient

It’s important to be patient when making purchases.  When you’re making a big purchase, you want to really think about it and make sure that you can afford it and that it’s the best deal and the terms are best for your situation.  But, even on small situations, being patient works, especially in a case like mine, where I knew that there was a history of seeing these devices on sale every now and then.

Readers, please share a time when being patient paid off, and how much you were able to save.

Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.