Archives for November 2019

Thankful: Replacing “I Have To” With “I Get To”

Posted on November 26, 2019 // 11 Comments

One trick that I picked up these year was to replace “I have to” with “I get to” when I start feeling tired, stressed, and grouchy. It’s a simple way to remind myself to be thankful for many of the everyday things we “have” to do. Here are some recent examples:

  • I get to wake up in the middle of the night to soothe a crying child.
  • I get to make a healthy(ish) dinner in between school homework and various activities/lessons and worrying that the kids get enough sleep.
  • I get to maintain my older house from peeling paint, broken appliances, overgrown trees, termites, and other pests.
  • I get to clean dog poop off in the cold rain after he steps in it without me realizing.
  • I get to make a budget, search for points redemptions, and compare prices for our upcoming summer vacation.
  • I get to drive back to school again to drop off a forgotten lunch or school project.
  • I get to help my parents with a mundane tech support task.
  • I get to remember to call my friend on their birthday.
  • I get to fly on a crowded plane across the country with young children to visit family for the holidays.
  • I get to worry about getting all of our estate planning affairs in order.

There are so many things that I “get” to do because I am healthy and able-bodied, live in a safe area, have a reliable source of income, and have a loving family. I’m always surprised at how easy it is to take such things for granted when you get engrossed in your own situation.

Happy Thanksgiving and I remain thankful for you as a reader! I hope that you find yourself surrounded by some of your own blessings this weekend.

Filed Under: Family //

TopCashBack: $25 to Spend at Walmart Freebie (New Members)

Posted on November 25, 2019 // 6 Comments

TopCashBack.com rebates you back a percentage of your purchases made through online stores like Macys.com or Walmart.com. There are many such cashback portals, but TopCashBack promises to rebate you 100% of all commissions earned. If you are going to shop online for Black Friday, Cyber Monday, or any day, you should try to use a cashback portal. Many will boost their payouts on certain days.

Black Friday is usually when TopCashBack has the best offers of the year for new members. Right now, they are offering a $25 to Spend at Walmart Freebie. This is the highest amount they have ever offered. Here are the directions:

  1. Sign up at this specific link for new TopCashback account (my referral link specific to this offer). It’s free to join and they won’t ask for credit card info. Be sure to check your email and click on the link to confirm your email address.
  2. After entering your e-mail and pick a password, you should be redirected to the Walmart freebie offer page. This will include details and directions. Click on the pink “Get Offer” Button.
  3. Purchase anything for $25.00 or more from Walmart (exclusions apply), and get $25.00 cash back. Note that Cashback CANNOT be earned on Walmart Grocery service, Food, Household Essentials, Purchase and Redemption of Gift Card, Cellular Purchases, Prepaid Phone Cards, Sam’s Club, Pharmacy, Travel, Tires, Optical, Newer Model Apple Products. Try Free Store Pick-up or Free Shipping over $35.
  4. You’ll need to be a little patient, as it will take up to 7 days to show up online. After another 14 days the $25 cash back will become payable. Cash back can be credited straight to your checking or PayPal account.

Net result: You spend $25+ at Walmart and you’ll get the stuff + $25 cash back. Offer ends November 30th, 2019 at 23:59 PST.

p.s. Existing TopCashback members should check their e-mails for a special cashback offer. I got $5 back on any $25+ purchase from any retailer.

Also see: Rakuten (formerly eBates) ($10 bonus) BeFrugal ($10 bonus) also have new user sign-up bonuses that can offset some holiday shopping purchases. I have cashed out of all these within the last 6 months.

Filed Under: Deals & Offers //

Andrews FCU 3-Month/84-Month Certificates at 3% APY

Posted on November 25, 2019 // 6 Comments

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Andrews FCU has a few special certificate rates going on right now. These aren’t my idea of doorbusters, but interest rates are low again and these do manage to break the 3% APY barrier (barely).

  • 3-Month Share Certificate at 3.01% APY ($1,000 min). This is their “Black Friday special”. Offer valid November 25, 2019 through December 6, 2019.
  • 84-Month Share Certificate at 3.05% APY ($1,000 min). The Special 84-Month Certificate has a penalty equal to 360 days of dividends.

Note that all 3-Month Certificates are automatically set to renew at the 12-Month share certificate rate and term upon maturity. You must manually tell them if you want to simply withdraw.

Please see my Andrews Federal Credit Union Application and Account Opening Review for more details on the opening process. Note that applying for this credit union will result in a hard credit inquiry. They checked my TransUnion report back in 2016.

Filed Under: Banking, Deals & Offers //

The Permanent Gift Guide 2019 – Give Stuff That Lasts Forever

Posted on November 21, 2019 // 13 Comments

I’m reading through all these gift guides and so much of it seems just trendy and disposable. Do any of the authors actually own all the stuff they list? How many of these gifts will end up forgotten in a few months? I decided to create an alternative “Permanent” Gift Guide, consisting of things that (1) I actually own, (2) I’d buy again if I lost it (it sparks joy), and (3) I expect to last for a very long time (or at least comes with a lifetime replacement guarantee).

Coleman Classic Gas Camp Stove – $44

We found one of these while cleaning out my in-laws’ house, which means it is probably 30+ years old. This is the classic Coleman double burner camp stove, which is simple and sturdy. Even if you aren’t a camper, this is useful as an extra burner during Thanksgiving or a backyard party (connect any propane tank with adapter). Use it during a blackout or as part of your survivalist gear. We already had our own Coleman single-burner butane stove, and I had this beefier-looking red copycat on my wishlist.

Moka Pot Coffee Maker – $30
A lot of people love espresso, just like the Italians. But traditionally Italians only drink espressos in cafes. They don’t have huge, fancy espresso machines at home; they have Moka pots! (Okay, they now like Nespresso pods.) Something like 90% of Italian homes have a Moka pot. Read this Atlas Obscura article for details. I also learned why Cuban households also love Moka pots. Comes in different sizes. Bialetti is the original but there are other Moka pots that are cheaper and with good reviews.

LEGO Classic Medium Creative Brick Box 10696 – $28
When cleaning out my parents house, what were the toys that still worked and my own kids could pick up and start playing with instantly? Legos and Hot Wheels. As a kid, I never ever followed any of the directions that came with a Lego kit, so I am partial to these big assortment Lego mixes. Lego wants their bricks to be biodegradable, which is nice but at least their stuff lasts forever and can be used forever!

All-Clad Stainless Steel All-in-One Pan – $180
I first heard about this brand when they kept winning comparisons by America’s Test Kitchen. However, they are quite expensive. Now, you don’t need All-Clad everything, but do I think a large stainless steel fry pan or all-in-one saute pan from All-Clad is an important kitchen addition that will pretty much last you forever. (Skip the non-stick All-Clad and go with T-Fal for best non-stick value.) Resurrect occasionally with Bar Keepers Friend.

Patagonia Houdini Jacket – Men’s and Women’s – $100
This ultra-lightweight jacket (3.4-3.7 oz) packs into it’s own chest pocket (so there’s no extra bag to lose). This means you can throw it anywhere, from your cargo shorts pocket to your purse to your travel carry-on. It’s good for wind and light rain (not fully waterproof though) and just those times when you’re a bit chilly. It’s relatively expensive but the quality is high and it has traveled with me everywhere for several years.

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Lodge Pre-Seasoned Cast Iron Skillet – $15
With over 10,000 reviews (!) and a 4.5 out of 5 star average rating, these heavy-duty beasts are trendy again. Great for searing and pan-frying, oven-safe, no worrying about scratches or dings. They will outlive you for sure. Got a rusty one? They are easy to resurrect; here’s a quick video on how to season your cast iron. Here’s a slightly-more expensive version with a silicone handle and the bigger 12-inch version.

Darn Tough Full Cushion Wool Socks – Men’s and Women’s – $25
You wouldn’t think socks would come with an unconditional lifetime warranty, but they do from Darn Tough. If you wear a a hole in them a decade later, they will still replace them for free. Made in Vermont and comes in different thicknesses for use in both the heat and cold. High-quality wool keeps your feet dry and doesn’t stink. These are pricey, but I am slowly collecting them as part of my minimalist wardrobe.

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Zeroll Original Ice Cream Scoop – $16
If you walk into an ice cream shop, this is probably the brand that they use. Once you try it, you will wonder why all the other ice cream scoops in the world are so bad in comparison. It has conductive fluid that makes it easier to get through rock-hard ice cream. It creates the perfect ball shape for placing on cones. The 3-ounce size makes medium-sized ball, but other sizes are available. Why not own the best ice cream scoop in the world for under $20?

Osprey Packs Farpoint 40 Travel Backpack – $160
After doing a lot of research on travel/hiking backpacks, I decided to plunk down a lot of money on an Osprey Pack. They have an All Mighty Guarantee that will repair any damage for any reason free of charge, no matter when you bought it. So far, I have not been disappointed. Quality materials and construction. (My previous pack was from REI, but they discontinued their lifetime repair/replacement guarantee in 2013.)

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Le Creuset Enameled Cast-Iron Dutch Oven – $350
I cook multiple times a week with our Staub and Le Creuset enameled cast-iron dutch ovens. Cast iron isn’t a lot of maintenance, but you do have to keep it dry after each use to prevent rusting (and seasoning it again takes time). With enameling, you can just wash and leave it wet. The dutch oven shape also makes it perfect for braises, stews, and soups. (They also look nicer at dinner parties.) They do run $200-$300 but spread out over years of use it’s not that bad. I love ours, but honestly I don’t know how much better they are than this Lodge Enameled Dutch Oven which regularly runs under $60.

Hot Wheels 20 Car Gift Pack – $20
I gave my old Hot Wheels to my daughters, but will be giving some new Hot Wheels to my nephews. I will admit that some of my old ones seem much more heavy with more metal content than the new ones, but none of the new ones have broken yet either.

wusthofclassic

Wusthof Classic Knifes – $350
I remember wondering if Wusthof and Henckels were worth the price as I zapped them onto our wedding registry. Then someone actually bought us a set of Wusthof Classic knives and we proceeded to use them nearly every day for over a decade. They have been professionally sharpened a couple of times (less often than recommended), but they still work perfectly with no chips or rust spots. I bought a $40 Asian cleaver from a shop in Chinatown a couple years ago, and it only lasted a few months before large rust spots appeared. My mom told me I didn’t treat it right. Probably. I told her I’d rather spend $80 on a knife and have it last decades even after not treating it right. So I bought this one.

Let me know if you have suggestions (preferably due to personal experience).

Filed Under: Deals & Offers, Frugal Living, Funny //

Discounted Delta Gift Cards: 10% Off at Costco

Posted on November 21, 2019 // Leave a Comment

Costco has 10% off face value on Delta Airlines gift cards for a limited-time. Face value $500 and $1,000. No expiration date. You must sign-in as a Costco member to purchase.

Delta Gift Cards can be used toward airfare on any Delta-marketed flights worldwide at delta.com, at the airport, or by phone through Reservations. The cards can also be used on Delta Vacations packages that include air transportation.

Filed Under: Deals & Offers //

Peerstreet Case Study #2: NJ Commercial Property Foreclosure Recovery

Posted on November 18, 2019 // 9 Comments

I’ve invested over $50,000 of my “alternative” money into PeerStreet real estate notes because of the ability to diversify into 50+ different high-interest loans backed by physical real estate. Here is a case study of a commercial property loan where Peerstreet negotiated an exit when it was already very deep into the foreclosure process. You can find additional case study links and the most recent update to my overall portfolio performance in my Peerstreet review.

Initial investment details.

  • Property: Commercial property in New Jersey.
  • Target Net Investor Rate/Term: 9.25% APR for 17 months.
  • Amount invested: $1,133 out of $1,700,000 loan.
  • Appraised at $4M = 43% LTV.
  • Loan secured by the property in first position.
  • Bridge loan to redevelop into a 179-unit apartment building.

Timeline.

  • May 2018. Loaned out $1,133, my share of $1,700,000 total.
  • June 2018. One single interest payment was made.
  • August 2018. No more payments.
  • September 2018. Legal notices sent.
  • November 2018. PeerStreet and the borrower agree to a forbearance agreement. The terms of the forbearance include, the borrower paying $8,500 and in return, PeerStreet will not file the foreclosure complaint until the end of November. The borrower states that they are in the process of refinancing the loan.
  • December 2018. The forbearance agreement has expired and the borrower has not cured or paid off their loan. The loan file has been sent to a local law firm to initiate legal proceedings against the borrower. Foreclosure counsel filed the foreclosure complaint on December 13, 2018. The complaint has been sent out for service.
  • February 2019. All parties have been Served. Once the time to answer expires, we will move for defaults.
  • June 2019. Foreclosure counsel filed the final judgment package and are waiting on the court to enter the same. Judgment should be entered in the next 3 to 6 weeks
  • July 2019. The foreclosure process continues and PeerStreet is in negotiations to sell the note back to the lender. On 7/31/2019, PeerStreet provided the originating lender with an updated payoff statement as repurchase discussions continue. PeerStreet continues to wait for the Court’s ruling on its Motion for Final Judgment in the foreclosure.
  • September 2019. The Escrow Agent advised that it has received the bulk of the funds for the repurchase of the loan at $1,850,000.00.
  • October 2019. PeerStreet has completed its sale of the note, and final proceeds have been distributed to investors. Proceeds from the sale were $1,815,227, net of costs and fees associated with the foreclosure. The cash-on-cash return on this investment, after taking into account interest and fees paid to investors, was positive at 107.7%.

Final numbers. I invested $1,113 in May 2018 and got paid $87.52 of interest and $1,113 of principal for a total of $1,265.27 as of October 2019. (This was an automated reinvestment which included whatever cash was in my account, thus the odd numbers.) This works out to a 7.86% total return over 17 months, which is roughly a 5.5% annualized return. My overall annualized return across my entire portfolio is 7.3%. These numbers are net of all PeerStreet fees.

My commentary. This loan is an example of Peerstreet negotiating a settlement, in this case getting my principal back and even a a small positive return. This loan was initially concerning because the lender made a single payment and then stopped. While you have collateral, if the loan goes into default, it takes a very, very long time to seize and sell that collateral. This is why you need to diversify your notes and never invest money you need anytime soon.

I can only assume that Peerstreet negotiated with the lender here because they just didn’t want it to drag out any further. They might have gotten more money if they foreclosed, but they would also have had to finish the foreclosure, prep it for sale, market it, and then wait for a sale of the property. The lender still took advantage of the situation, as they basically didn’t have to pay any interest for 17 months and then they ended up paying less interest than they initially promised. The borrower also likely had a bad mark on their credit report, which should hurt their ability to get future loans.

I’ve read many reviews of real estate crowdfunding sites done by new investors who haven’t had the chance to experience how it all works out. Some are overly positive because they haven’t had any late payments yet, while others are too negative because they have some really late loans and assume the worst. With Peerstreet, both of my loans that went “bad” took over a year to sort out, but in the end they had positive returns. Of course, that is not always the case and I have lost some principal on a single note from another now-defunct real estate site.

Bottom line. Out of the $50,000+ I’ve now invested into 51 loans at PeerStreet over 3+ years, 48 were paid back in full in a timely manner, while three have reached various stages of the foreclosure process. This is one example where we went pretty deep into the foreclosure process, but PeerStreet negotiated directly with the borrower to settle the debt and thus avoided another several months of waiting and selling the property. The annualized return for this loan was 5.5%, while my overall annualized return across my entire portfolio is 7.3%.

If you are interested, you can sign up and browse investments at PeerStreet for free before depositing any funds or making any investments. You must qualify as an accredited investor (either via income or net worth) to invest. If you already invest with them, they now sync with Mint.com.

Filed Under: Investing, Real Estate, Reviews //

Top 10 College Rankings by Return on Investment (ROI)

Posted on November 17, 2019 // 10 Comments

When I was applying to college, my parents went to the drugstore, bought a copy of US News & World Report magazine, and said that I could only apply to a school ranked in the Top 5 for my major (Engineering). That was the only out-of-state or private school that they would consider contributing any of their hard-earned money toward. That was their idea of “value” and “return on investment”.

These days, I am much more skeptical of college rankings. I feel that they are often reverse-engineered. If someone comes up with an intelligent algorithm, runs it, and the names of Harvard, Yale, MIT, and Stanford are not at the very top, what do you think happens? US News & World Report would dump it in the trash, in my opinion. Rankings are tweaked until the “name brand” schools end up on top.

That’s why it always grabs my interest when one of these rankings does NOT have a usual suspect on top. A Georgetown University study took some new federal data and ranked 4,500 colleges and universities by their return on investment. They took into account the actual cost of attendance, future earnings, and potential investment returns.

What school came out #1? Albany College of Pharmacy and Health Sciences. You can easily search for any specific school using their tool.

This WaPo article further discusses the results. Here are the top 10 schools based on ROI:

  1. Albany College of Pharmacy and Health Sciences
  2. St. Louis College of Pharmacy
  3. Massachusetts College of Pharmacy and Health Sciences
  4. Massachusetts Institute of Technology
  5. Stanford University
  6. Maine Maritime Academy
  7. Babson College
  8. Harvard University
  9. Georgetown University
  10. United States Merchant Marine Academy

Here’s some more food for thought. For the Albany College of Pharmacy and Health Sciences, the 25th-75th percentile range of SAT scores is 1040-1240 and the acceptance rate is 69%. The average annual cost for a family that earns less than $30k a year is $21,108, while a family earning $110k+ pays $32,700. The median income of former students (who received federal financial aid and were thus in the data) 10 years after entering school is $124,770. Obviously, this is affected by the fact that most students are studying a health science, but it is significantly more accessible to those who didn’t get a perfect SAT score, excel in certain sports, or have alumni connections.

For Harvard University, the 25th-75th percentile range of SAT scores is 1430-1600 and the acceptance rate is 5%. The average annual cost for a family that earns less than $30k a year is zero, while a family earning $110k+ pays $42,123 per year. The median income of former students (who received federal financial aid and were thus in the data) 10 years after entering school is $89,700.

I agree that college isn’t all about your future income, but given the huge impact of student loan debt, it should be one of the factors considered. The outliers noted are the schools focused on pharmacy/health-related fields and maritime academies. If my child had a serious interest in a medical profession and couldn’t get into an elite university, I would certainly take this information into consideration. I hadn’t even heard of these schools before now. Perhaps there are other pockets of “value” a bit further down in the rankings.

Filed Under: College & Education //

Morningstar Top 529 College Savings Plan Rankings 2019

Posted on November 12, 2019 // 3 Comments

Investment research firm Morningstar has released their annual 529 College Savings Plans analyst ratings for 2019. While the full ratings and plan analysis for every individual plan are restricted to paid premium members, the vast majority are mediocre and can be ignored. You choices are pretty much (1) your in-state plan for the tax benefits or (2) the best overall plan if you don’t have good in-state perks.

Here are the Gold-rated plans for 2019 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

The top 3 were Gold last year as well. California Scholarshare is a new addition, upgraded from Silver. The Vanguard 529 Plan from Nevada was removed, downgraded to Silver. The reason stated was because their expenses were low, but not as low as the rest of the Gold-rated plans above.

Here are the consistently top-rated plans from 2011-2019. This means they were rated either Gold or Silver (or equivalent) for every year the rankings were done from 2011 through 2018. These were also the same as last year. No particular order.

  • T. Rowe Price College Savings Plan, Alaska
  • Maryland College Investment Plan
  • Vanguard 529 College Savings Plan, Nevada
  • CollegeAdvantage 529 Savings Plan, Ohio
  • CollegeAmerica Plan, Virginia (Advisor-sold)
  • My529, formerly the Utah Educational Savings Plan

The “Five P” criteria.

  • People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
  • Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
  • Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
  • Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term?
  • Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.

State-specific tax benefits. Remember to first consider your state-specific tax benefits via the tools from Morningstar, SavingForCollege, or Vanguard. Morningstar estimates that an upfront tax break of at least 5% can make it worth investing in your in-state plan even if it is not a top plan (assuming that is required to get the tax benefit).

If you don’t have anything compelling available, anyone can open a 529 plan from any state. I would pick from the ones listed above. Also, if you have money in an in-state plan now but your situation changes, you can roll over your funds into another 529 from any state. (Watch out for tax-benefit recapture if you got a tax break initially.)

My picks. Overall, the plans are getting better and most Gold/Silver picks are solid. If your state doesn’t offer a significant tax break, I have recommended these two plans to my friends and family:

  • Nevada 529 Plan has low costs, solid automated glide paths, a variety of Vanguard investment options, and long-term commitment to consistently lowering costs as their assets grow. (It is not the rock-bottom cheapest, but this is often because other plans don’t offer much international exposure, which usually costs more.) This is only plan that Vanguard puts their name on, and you can manage it within your Vanguard.com account. This is the keep-it-simple option.
  • Utah 529 plan has low costs, investments from Vanguard and DFA, and has highly-customizable glide paths. Over the last few years, the Utah plan has also shown a consistent effort towards passing on future cost savings to clients. This is the option for folks that enjoy DIY asset allocation. Since I like to DIY, the vast majority of my family’s college savings is in this plan.

I feel that a consistent history of consumer-first practices is important. Sure, you can move your funds if needed, but wouldn’t you rather watch your current plan just keep getting better every year?

Filed Under: College & Education, Investing //

Buy $100 Netflix Gift Card, Get $10 Amazon Credit (Expired)

Posted on November 12, 2019 // 2 Comments

Update: I would check the link in case it comes back in stock, but it shows as expired now. Sorry, thought it would last longer!

Amazon has a Netflix gift card promotion where if you buy a $100 in Netflix gift cards, you will receive $10 Amazon promo credit. Enter the promotional code NETFLIX at checkout. One offer per customer. While supplies last.

You can also stack this with the 5% back at Amazon from Discover card this quarter (or the Amazon Prime credit card).

Besides gifting, if you subscribe to Netflix anyway, you could apply these gift cards to your own account to almost get a free month of streaming for yourself. Treat yo’ self!

Filed Under: Deals & Offers //

Target Veterans Day: 10% Off Coupon For Military Until 11/11

Posted on November 7, 2019 // Leave a Comment

Back for 2019. Target is offering a 10% off discount coupon for active duty military, veterans and their spouse and/or dependent children. Offer is valid for a single use at Target and Target.com through Nov 11th. A nice gesture of appreciation towards our military and their families. Exclusions apply.

*Excludes alcohol, Baby Born, Barbie Dreamhouse, Bose, clinic & pharmacy, dairy milk, Disney Frozen Castle, DSLR cameras & lenses, Elf on the Shelf, Elvie, Fitbit, gift cards, Google, Harry’s & Flamingo, HP, Infant Optics, JBL, LEGO, Levi’s Red Label, LG OLED TV, limited-time designer partnerships, L.O.L., mobile contracts, Nerf Ultra, Nintendo hardware and Switch games, Nintendo Labo kits, Polder, Peg Perego, Philips Avent, prepaid cards, PS4 hardware, Samsung TVs, Sonos, Target Optical, Vera Bradley, and Xbox One hardware.

Filed Under: Deals & Offers //

Sam’s Club 1-Day Sale, Saturday 11/9 : Gift Cards 30% Off Face Value

Posted on November 7, 2019 // Leave a Comment

Back for 2019. Sam’s Club is having a one-day sale on Saturday, November 9th. There are the usual discounts on huge TVs and the latest Apple products, but what caught my eye was that all of the “Extreme Value” gift cards that are usually $40 for $50 face value or $80 for $100 face value will be discounted to $35 for a $50 face value or $70 for $100 face value gift cards. These are mostly food gift cards that vary by geography, but I see 186 gift cards options online. Some examples include:

  • Chili’s
  • Steak ‘n Shake
  • Build-a-Bear Workshop
  • California Pizza Kitchen
  • Jamba Juice
  • Krispy Kreme
  • Papa John’s Pizza
  • Smashburger
  • The Old Spaghetti Factory
  • Coldstone Creamery
  • Bonefish Grill

In my mind, this 30% off gift cards sale is an easy way for those that hate shopping to put a serious dent in their holiday gift list. Surveys keep showing that givers think they are impersonal, but recipients actually like getting gift cards!

If you don’t have a Sam’s Club membership, the Groupon Sam’s Club membership deal is still live.

Filed Under: Deals & Offers //

Open Enrollment Checklist: HSA, HCFSA, DCFSA, Disability Insurance, Life Insurance

Posted on November 6, 2019 // 7 Comments

maxben

We just finished our open enrollment paperwork, and like many other workers we faced a long and confusing list of instructions. They tried to distract me from the increased health insurance premiums by adding a bunch of optional “perks” like universal life insurance and paid identity theft protection. Christine Benz has a thoughtful Checklist for Open Enrollment Season. Here are my own thoughts as I went through the options:

Health Savings Accounts (HSA). Doesn’t “triple tax-free” sound good? HSA contributions are tax-deductible (pre-tax money), they grow tax-free once there, and your withdrawals are tax-free when spent on qualified healthcare expenses. However, you have to be enrolled in a qualified high-deductible health plan (HDHP) to be eligible, which means your higher out-of-pocket costs might not offset the cheaper premium plus upfront tax savings. Depending on your estimated healthcare costs, tax rate, and how much your employer pays, you may be better off with a traditional HMO or PPO plan. A bit of math will be needed.

In order to maximize the HSA’s long-term advantages, you will also want to treat the HSA as an investment account. This means you’ll you need to cover the higher annual out-of-pocket costs yourself and still have money left over to fund the HSA.

Healthcare Flexible Spendings Accounts (HC FSA). I’ve said it before, but these can be a bureaucratic mess. The benefit is “use-it-or-lose it”, but for me it has been “use-it-and-lose-my-mind”. Third-party benefits administrators have given me several bad experiences with submitting my receipts and ensuring they are approved. If it takes me an hour to submit/check/argue/re-submit/check a $50 medical expense, then in my opinion the tax savings of $10 was not worth it at all. But if I don’t follow through, I lose the entire $50. Asymmetric risk in a bad way.

There are also some finer details if you want to have both an HSA and an FSA (look up limited-purpose or post-deductible FSAs).

Dependent Care Flexible Spendings Accounts (DC FSA). These are better. You can have both an HC FSA and a DC FSA as they cover separate things. If you have eligible childcare costs (or adult dependent care), it is quite possible you reach the $5,000 annual maximum. I usually wait until I’ve already paid out $5,000 in preschool tuition, and then I just submit a single receipt for a potential $1,000 tax savings (assuming 20% tax rate on $5,000). Now that’s a good per-hour rate.

Employer-sponsored disability insurance. The best thing about group disability insurance through your employer is that it’s easier to qualify and the cost may be subsidized by your employer. However, if you switch or lose your jobs, you might lose your group disability insurance at the same time. This won’t happen with your own portable plan. Specialized workers can purchase riders that will pay out as long as you can no longer perform your specific occupation (as opposed to any lower-paying job). However, it’s so easy to put this off that getting some employer-sponsored disability insurance can be a good first step.

Life insurance. A common offering is a year of your salary in life insurance. Beyond that, you should always compare with an individual term life insurance plan. That way, if you have a special medical condition that makes your private premium somehow crazy expensive, then you can always fall back on the group plan. For most healthy folks, finding your own portable term life policy will be cheaper and it won’t go away if you lose your job. If you get a 20-year level term policy, your premium also stays fixed for those 20 years. No surprise increases.

Other benefits. The menu seems to expand every year. 401k investment advice. Commuter benefits. Student loan repayment assistance programs. Accidental death and dismemberment (ADD) insurance. Critical illness insurance. Long-term care insurance. Identity theft insurance If it’s free, I’ll take it but in general I decline the ones that require a premium.

Filed Under: Career, Insurance //
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