Mar
20
In the last of my free personal finance software reviews, I checked out Wesabe. After testing Mint and Yodlee, I was expecting Wesabe to have more features. Instead, it’s the most stripped down of the three, at least as far as the personal finance features go. Wesabe is actually a combination of basic personal finance software and social networking. I can do without the social networking, but I can see where it might be helpful for some people.
How Wesabe Works
When you join Wesabe, you can choose whether or not add your accounts. You can join simply for the social networking if you want to. I uploaded the same two accounts, a credit card and a bank account, to test the personal finance features. Rather than store your log-in information on their server, you install an uploader that stores the passwords on your computer. My credit card was simple to upload, but my bank was more complicated. Fortunately, they have a video that walked me through the steps. Once you do it the first time, it remembers for the future.
Once your data is imported, you have to manually tag the transactions. If you tag one store, it will add that tag to all other transactions for that store, but I imagine there will be a lot of tagging for the first few months. For popular stores like Trader Joe’s and Whole Foods, it suggested tags, but other stores didn’t have default tags I could choose. The transaction list shows the store, the amount, and a running balance (the latter two parts that are blurred out.) Once tags are added, it shows you tips related to that tag.
Once I had my posts tagged, I could view a spending summary.
I could also view spending by category. It compares my spending with averages based on other members’ spending for the same tag. According to the comments I read, there is a problem with multiple tags for the same transaction being added together in your total spending. So if you tag “food” and “restaurant” for the same $10 purchase, your total spending summary would be $10 over.
Finally, you can also create goals. I chose a sample goal based on the few tags I’d created. Once you link it to tags, it shows your totals for the associated tags. You can also join groups for support working toward your goals.
The Positives of Wesabe
Like Mint, Wesabe was very easy to use. If I couldn’t figure something out, they offered a video that showed me how to do it. It was very Web 2.0, so the graphics were friendly and readable.
This was the only one that lets you track cash transactions.
It also offers the most privacy. Your log-ins are never entered anywhere on their site. When providing member spending averages, it doesn’t show specific details about you ever.
The Negatives of Wesabe
Like the rest, Wesabe had some negatives that will keep me from using it”
- Inability to enter manual transactions
- Very thin money management tools
- Need to manually tag transactions for new purchases. The others did that automatically.
Final Thoughts
I can see Wesabe being very helpful for recent graduates and people new to money management. I think it’s also helpful for people who enjoy social networking and want to discuss personal finance in these areas. Personally, I wasn’t interested in the tips and I don’t want to join a lot of groups for support reaching my goals. I just want a personal finance tool.
Based on all my experiences with all three sites, Yodlee is the most likely contender, but it’s also likely that we’ll go with Quicken 2008. We know how it works and unless it has major bugs, the other three simply don’t have all the features we want.
Mar
19
In my continued quest to find free personal finance software, I checked out Yodlee. It’s actually the software behind Mint and the online software packages at several banks. Like Mint, it’s completely secure. In fact, you travel through several identity confirmation screens before you enter your password. The only odd thing about it was how hard it was to find the Yodlee MoneyCenter registration page. Rather than going to their primary site, I had to Google it.
How Yodlee Works
After checking out Mint yesterday, I was surprised by how much more robust Yodlee is. It isn’t as pretty to look at it, but it has much greater functionality. My guess is that they keep it sparse so their corporate customers can customize it with their own logos. As with Mint, it was very easy to import data for my accounts. In addition to banks and credit cards, it can read pull from loans, investment accounts, even Gmail and PayPal.
It offers several different views of your spending habits, including spending compared to income and expenses categories. I haven’t customized it yet, so my biggest expense is checks. That isn’t terribly helpful at first, but you can edit the categories to indicate which one each check belongs to. It not only shows the pie chart, but also dollars and percents of total spending for each category.
I could also view specific transactions. It labels transactions when it downloads them, but I could re-label them if it had chosen the wrong title. In addition to built-in categories, you can create and rename the categories.
The Positives of Yodlee
As with Mint, Yodlee was simple and seamless to set up. It pulled in the data effortlessly. Of course, I was using a bank account and credit card from their primary list, which probably helps.
It offered a very detailed overview page where I could set up my own alerts in a variety of categories and view my Net Worth. It didn’t offer me any advice about saving money, but those aren’t tools I need at the moment.
It does offer the most important element I need: the ability to manually enter transactions. It took a bit of looking around to find the small “manual transactions” button, but at least it’s doable. I could imagine the entry screen becoming tedious if you have a lot of transactions to enter, though.
The Negatives of Yodlee
It had fewer negatives than Mint, at least for my needs, but it wasn’t perfect.
- Difficult to add a cash account. In the current version, it tells you can add manual accounts, but then won’t let you. Finally, I visited their forum where I learned that you can track cash by going to “Portfolio Manager” and selecting “Add manual accounts for offline assets.” They’re working on a simpler method for the next update.
- No help search box. The help screens are only FAQs, there isn’t a way to search for the answer I need quickly. I had to join the forums to find the info I needed.
- Tiny font. I didn’t see a way to easily adjust the font size. I’m not old, but staring at this tiny front would make my eyes swim after a while.
Final Thoughts
I was impressed with Yodlee. I like that it can track all of my accounts seamlessly and provide me with very detailed information about my overall financial picture. It’s not as intuitive as Mint, but I’m okay with that. As with Mint, there were a couple things missing that I’d really like to have, but maybe I could figure them out with a little more time. I think this one is a definite possibility for us.
Mar
18
We’ve been using Quicken 2005 for several years, but recently it alerted us that it will no longer download our banking transactions after May 1. That means we either have to upgrade to Quicken 2008 or switch to one of the free personal finance software packages. I decided to check out Mint, Yodlee, and Wesabe to see how they compare against Quicken. Today I’ll cover Mint.
How Mint Works
Knowing that Mint is free, I expected some limitations, but I was surprised by how simple and robust it actually is. It took me less than five minutes to sign up and import both a credit card and a bank account.
It automatically pulled in data for the last 60-90 days (whatever was available from the financial institution). I could view an overall spending pie chart.
I could also view specific transactions. It labels transactions when it downloads them, but I could re-label them if it had chosen the wrong title. (For example, it labeled one of our credit card payments as a mortgage payment.)
The Positives of Mint
The simplicity of set-up was the part I liked the most. Quicken 2005 can be a bit wonky about pulling in data, but Mint made it seamless.
I really liked the alerts and budget tools on the Overview page. It informed me that my paycheck had cleared and that I’d overspent on food for the month (based on past spending.)
Mint’s strongest point is its recommendations for ways to save. For example, it recommended that we switch from Time Warner to Comcast cable to save $212 a year. The only problem is that Comcast was purchased by TW in our area, so we don’t have the option of switching (and actually, the buy-out lowered our bill significantly.) It also recommended a Citi card rather than our current card, which I will consider.
Finally, I liked knowing whether we were keeping up with US averages for credit card interest rates and other spending areas.
The Negatives of Mint
Mint was not without its negatives. Since it’s free, it wasn’t launched with all the features you might want. Some of the missing features seemed like pretty obvious necessaries to me, though.
- There’s no way to manually enter future transactions and track cash spending. Right now, you can only track account information that it can download.
- It can’t currently track loans.
- Finally, you can’t import your Quicken data. The fact that we already have several years of data in Quicken might be enough to prevent us from switching unless we can find software that will import the data.
Final Thoughts
I think Mint is great for people who really need to know where their money is going and spend only by credit, check, or debit card. It’s not good for people with investments, loans, or a long history of transactions. I expect the software will be more robust with time, and I might consider switching then. Because it’s free personal finance software, it would also be excellent for recent grads just starting out on their financial roads.
Until it allows us to manually enter transactions, including future transactions, and later associate them with downloaded transactions, we won’t be switching. That’s one feature of Quicken that’s a must have for us.
Mar
11
For the last several months, I’ve been hearing about this theory that the risk of losing money can be more motivating than the prospect of winning money. Last week, NPR reported on a website based on the theory. It was developed by two Yale professors and is called StickK. I’ll explain how it works.
The Stick Theory of Goal Motivation
Many people use positive reinforcement to reach their goals, but more recent studies have shown that the risk of losing something tangible is actually more motivating than the possibility of earning a reward. The theory says that if you put your own money on the table, you’ll work a lot harder to keep it than you would if you could earn new money for doing the same thing. It seems counter-intuitive - if you succeed and win $10 new dollars, you’re better off than you would be if you succeeded and simply didn’t lose the $10 you bet. But that’s not how humans think - the possibility of winning isn’t real. The possibility of losing something we already have is.
How StickK Works
StickK is simple and the service itself is free. The site was designed after one of the professors tested the theory with weight loss, but you could work towards any goal. Here’s what you do:
- Register and create a contract with yourself, the site, and your referee (a friend or relative)
- Set the goal, which can be anything you choose
- Self-report your success from week to week
- The referee verifies that your report is accurate every week.
Like many goal sites, other members are there to cheer you on, but here’s what makes this site different: the financial pledge. Although the pledge is optional, it’s the true motivator on the site. Here’s how it works:
- Pay the whole amount you choose to wager up front
- That amount is divided by the number of weeks you’ve set to reach your goal
- If you succeed one week, that portion stays in your account. If you fail, you lose that portion, but you don’t have to make it up the next week. For example, if you bet $200 that you’d lose 20 pounds in 20 weeks, that would be $10 per week. Losing extra weight the next week won’t earn back the money you lost, though.
- At the end of the designated period, you keep whatever is left in your account if you succeed and the rest goes to your charity.
Extra Motivation with Anti-Charities
As an additional motivation, you could designate a cause you hate to receive your money if you fail. For example, if you’re opposed to guns, you could designate your money to go to the NRA. If you support gun rights, you could designate the money to go to a gun control group. That might be the extra motivation you need to succeed.
Will This Work for Financial Goals?
I think it depends. If you’re trying to pay off debt, I don’t know if betting some of your hard-earning cash would be the right goal motivation tool. On the other hand, it might be a great way to get rid of a bad financial habit. For example, let’s say you buy a new CD or DVD every week. You could pledge the total cost of those CDs and DVDs for three months. Each week that you avoid buying any new CDs or DVDs, you would keep the cost. If you fail, not only would be out the cost of the actual CD, but that week’s wager, which effectively makes the CD twice as expensive. Whatever you have left at the end of the three months you could use to pay off credit cards or to shore up your savings.
If you’re like me and hate the very idea of losing money, then StickK is a great goal motivation tool. I probably wouldn’t be all the upset if the money went to a charity I liked, though, so I would choose an anti-charity. I think that would be enough to make sure I met my goal every week.
Feb
25
Money Market Accounts, Money Markey Mutual Funds, and Certificates of Deposit
Filed Under Money Management, Personal Finance, Saving Money | 2 Comments
Many people confuse money market accounts, money market mutual funds, and certificates of deposit. Although all three are considered the safe investments, they are not the same thing. Carefully consider all three before choosing the one that is right for you. In this post, I define each.
Money Market Account
A money market account, also called an MMA or a money market deposit account, is a savings account. These accounts are offered by banks and credit unions, but they are also used as holding accounts by brokerages until you use the funds to buy securities. Money market accounts offer these features:
- Slightly higher interest rate than savings or checking accounts
- FDIC-insured to $100,000 (or similar private insurance)
- Higher minimum balance than traditional checking or savings accounts (unless the account is part of a brokerage account)
- Limited withdrawals (usually a maximum of six/month)
- Limited check-writing privileges (usually a maximum of three/month)
In addition, if your account isn’t held at a bank or credit union, you may only be able to make deposits by mail, wire transfer, or electronic transfer.
Money market accounts are a safe place to keep savings, but also offer limited access. This might be good if you’re prone to nibbling away at your savings.
Money Market Fund
Money market funds, also called money market mutual funds, are fixed income investments sold in shares valued at $1. They are not savings vehicles. Money market funds invest in the cash market. In general, it means they buy very short-term debt securities, which banks, large corporations, and governments use to meet short-term cash needs. Short-term means maturities of less than thirteen months.
The amount of cash needed to invest in the cash market directly is so large that individuals can’t do it. Instead, money market funds pool the investments of thousands of people in order to buy these securities. They generally share the same features:
- Average maturity of less than 90 days (required by the SEC)
- Not FDIC protected
- Low return
- Low risk
When considering money market funds, you should also consider the expense ratio. As with any other mutual fund, the fund company charges expenses against the yield. An average is .28%. You should also review a prospectus before investing the money to make sure they choose investments you feel comfortable with. Each fund will hold a variety of short-term securities with different maturities, but the average maturity will be less than 90 days.
You can choose to invest in both taxable and tax-free money market funds.
Certificates of Deposit
Certificates of deposit are another very safe savings vehicle. They are also called time deposits, and are offered by banks, credit unions, and some brokerages. Maturity date range from three months to ten years. Each CD specifies an interest rate when you buy it. You can buy a CD in any amount, but most banks require a minimum. Banks also offer “Jumbo CDs” for deposits over $100,000. In general, higher deposits and longer terms receive higher interest rates. Most CDs share these features:
- FDIC-insured up to $100,000 (or similar private insurance)
- Steep penalty for withdrawal prior to maturity
- Fixed interest rate during the term
- Limited window to withdraw funds after maturity. If you don’t withdraw them, they roll into a new CD at the prevailing rate.
When considering a CD, first make sure that the bank insures its CDs. Next consider both the annual percentage rate and the annual percentage yield. The APR is the stated interest you will earn without compounding. The APY is the total interest you’ll earn with compounding. For example, a CD that pays interest once a year will have the same APR and APY, but a CD that pays interest quarterly will have a higher APY. The APY is the most important number to consider when comparing CDs.
CDs are good savings vehicles when interest rates are high and you expect them to fall. They’re also good if you can afford to have your money locked up for a fixed period of time. You can’t add to a CD, however, so they’re not good for incremental savings. They’re definitely not a place to keep emergency funds. They may be appropriate for college savings if your child will start college soon or is currently in school. Just make sure you choose maturity dates that will give you access to the money when the tuition bill arrives.
Choosing the Right Vehicle for You
When choosing between the three, consider three things:
- How soon you need the money
- Whether you’re willing to accept any risk
- The amount you hope to earn in interest
All three have benefits and drawbacks. Only you can decide whether a money market account, money market mutual fund, or CD is best for you.
Feb
22
Five Good Ways to Spend a Tax Refund, and Five Bad Ways
Filed Under Debt, Money Management, Personal Finance, Saving Money, Taxes | 2 Comments
Many people treat a tax refund as “found money” or “free money.” What they don’t realize is that it’s their money, and always was. The money was an overpayment of taxes owed, which the government was happy to receive as an interest-free short-term loan.
Once you start thinking of your tax refund as a portion of your income, and not as free money, you’ll rethink the way you spend your tax refund. Rather than wonder, “Why is my refund so low,” you’ll think, “Yay, my refund is low!”
Five Good Ways to Spend a Tax Refund
Here are my top five ways to spend a tax refund:
- Don’t receive one! The best way to spend your refund is to never receive one in the first place. No, I’m not suggesting you donate your refund to the government. I’m suggesting that you adjust your tax withholding http://www.soundmoneymatters.com/tax-withholding/ to ensure that you only withhold what you owe. This year my husband and are receiving less than $200 from our federal and state tax refunds because we managed to pay almost exactly what we owe. (It was an accident this year, but we intend to do it again.)
- Pay down debt. If you owe any debt, use your refund to pay it down. That’s where our tiny tax refund is going.
- Boost your emergency fund. If you don’t have any high-rate debt, then use the money to boost your emergency fund. Even adding a little bit to an interest-bearing savings account can help you out in a pinch.
- Invest it. The average family receives a $2000 refund. If you’re one of them, that’s a pretty sizable investment. If you were to deposit $2,000 in a Roth IRA at age 35 and average an 8% return, you would net $20,125 by age 65 without adding another cent.
- Spend a little and save the rest. If you’ve been frugal all year long, reward yourself with a nice bottle of wine or a nice night out, then save the rest. Don’t overdo it, but spending $50-$100 is a good way to treat yourself every now and then.
Five Bad Ways to Spend a Refund
I have to admit that I’ve been tempted to waste tax refunds in the past. Especially when I didn’t have any debt - I just spent it whenever I felt like it. Now I know better. Here are five bad ways to spend a refund:
- Blow it on a vacation. Many people use their refunds as vacation funds. There’s nothing wrong with taking a vacation if you can afford it, but it shouldn’t depend on whether or not you receive a tax refund. Instead, adjust your withholding to the correct amount and save the additional money you receive in your paycheck. Simply divide the amount of your previous year’s refund by twelve and deposit that amount into a savings account every month. Even if you only earn $20 in interest, that’s $20 more than you could have spent on vacation if you’d simply used your refund.
- Blow it on clothes. We all need clothes. No one needs a $2000 pair of shoes. Buy new clothes if you need them, but don’t go on a shopping spree just because you got a refund.
- Blow it on a big screen TV or another large, unnecessary purchase. If you wouldn’t buy it without the refund, then don’t buy it because of the refund. Instead, save up for it. If you still want it after months of saving, then go ahead and buy it.
- Fritter it away. Even if you don’t set out to waste it, not having a plan for the money could be just as bad. If you think, “It’s only $10. I got that refund, so it’s fine,” those purchases will add up quickly. You could wind up spending more than the refund.
- Stick it under your mattress. My friend’s father didn’t trust banks (he was from WWII Germany). When he died, his family found over $30,000 in cash tucked away in boxes and stuffed under the mattress. Imagine how much more money he would have had it if he’d put it in safe investments or a savings account.
Now that I’ve shared my tax refund strategies, how do you plan to spend a refund? Have you ever wasted it? Do you have any good ideas for spending it? Tell me in the comments.
Feb
16
Creating a Cash Flow Budget
Filed Under Budget, Expenses, Marriage and Money, Money Management, Personal Finance | 1 Comment
This month, the Money Blog Network’s group project is budgets. I’m not in the MBN, but I’ve decided to post a blog about my method for creating a cash flow budget. It’s far more effective for my husband and me than a traditional category-based budget. MBN lists several other budget posts on their site, if you want to test a few different budgeting, and anti-budgeting, methods.
The Monthly Budget by Category
My husband and I use Quicken to track our daily spending. About once a year, my husband and I run out a Quicken budget, just to see how our actually monthly category spending has changed. Then we copy it into Excel so we can play with the numbers: how much more we would have if we paid off this loan or reduced that expense.
This is an example of what that would look like. If I were studying this, I would see that I could cut the dining budget and might consider reducing utilities expenses if possible.
The monthly budget is a helpful way to get an idea of how and where we spend money on average, but it isn’t necessarily useful for planning our monthly cash flow. The budget averages out our expenses rather than showing the blips as they actually occur. For example, auto-insurance isn’t paid monthly, but it appears that way in a budget. We have to plan for the blips, not the even keel budget. Instead of a line-item budget, we use a cash flow statement to plan our monthly bills and spending.
The Cash Flow Budget
The cash flow budget is a much better picture of our expected income and expenses for the month. These are actual bills we must pay, rather than categories that may vary every month. For example, if it’s an auto insurance month, then we know to reduce our spending in other areas to make up the difference. It also helps us plan our debt repayment because we know how much we’ll have leftover at the end of the month.
This is a sample of a cash flow budget for February. You’ll note that the numbers above don’t match the numbers here. There are two reasons: 1. I made many of the numbers up, and 2. Most of our recurring charges (utilities, cell phone, gym, etc.) are on one of the credit cards, so we don’t pay them as a separate monthly bill through our checking account.
Expected bills with variable due dates (like a bi-monthly utility) go at the bottom because we know they’re coming at some point, but not when.
At the beginning of the month, we look at our Quicken account balances for variable bills like credit cards and ballpark the payment amounts in our cash flow chart. We adjust with exact figures as the month proceeds and the bills come in. At the end of the month, we take the end number and add it to our debt payments for the next month. Once our debts are gone (except some student loans), that end number will go towards other goals like savings or investments.
In addition, it helps us see where the bills fall in relation to our income. For example, if we plan to make a big credit card payment, but know that the deposit that covers it doesn’t occur until two days later, we can reduce the payment. Then we can schedule another payment after the deposit.
Creating a Cash Flow Budget
If you want to create a cash flow budget, follow these simple steps:
- Get out your checkbook register.
- Create an excel chart with payment dates and amounts for all expenses for the last six months. Rather than the generic terms I use above, use the names of the payments, like Amex, Discover, and Sallie Mae.
- Use three columns for each month like in the above chart. We go across the sheet for each new month rather than down so several months fit on the screen at once. Although you’ll have to tweak it as time progresses, this gives you a good overview of when your various bills are due.
- Just before each month, review the expected expenses for that month and make adjustments for changes in your finances. Also review the previous month and carryover any remaining balance to the next month.
- At the end of the sixth month, copy the last month over to new columns and update the dates and amounts for month seven.
Once you get used to this system, you’ll probably find that you feel more comfortable with your finances because you always have a snapshot view of them. It doesn’t require special software and no one else has access to your data. If you don’t have Excel, you can use an OpenOffice or GoogleDocs spreadsheet, instead. This is very different from the system I used when I was single, but I much prefer it. Give it a try, you might like it!
Feb
15
Pay Off Debt or Save for a House
Filed Under Debt, Money Management, Personal Finance | 1 Comment
One of the search terms used to reach this blog was “pay off debt or save for house,” which got me to thinking. If you don’t have someone to help you with the down payment, is it better to pay off debt or save for a house?I think it depends on the type of debt, the amount of debt you have, your income, and your target home price.
Type of Debt: If you have credit card debt or other high rate debts, you must pay those off before you can do anything else. Lenders frown highly on those debts when considering how large of a loan to give you. Not to mention that you’re just throwing away money by continuing to pay that interest. The most you can expect to earn on a savings account - which is where short-term house savings should be - is around 4%. That number could continue to drop if the Fed rate is cut further. If you save your money instead of paying off a credit card at 15%, you’re losing more than 10%.
On the other hand, if you have low-rate student loans (below 6%), then you should save for a house instead of pushing to pay them off. Student loans are considered good debt, so lenders look upon them more favorably. In addition, much of the time you can earn a better return on investments. And finally, those loans can be deferred or put into forbearance if times get tough. I plan to pay off our credit cards and two student loans before we attempt to get a loan, but we won’t wait to pay off our entire student loan balance because we have two graduate degrees between us and a lot of student debt.
Debt Total: Of course there is an exception to this policy. If you have a large amount of debt, say more than 30% of your income goes to debt repayment of any kind, then you need to start paying down debt. These days, most lenders will not issue a loan that will bring you above the 43% debt-to-income ratio unless you have a very high income potential (e.g. you’re a surgeon with medical school loans). So, even if your loans are low-rate, pay down the principal until your debt payments and expected housing payments are less than 43% of your income. With the new underwriting standards, more lenders are pushing for DTIRs of 36% or lower if you want the best rate. The higher your DTIR, the larger the down payment you’ll be asked to put down.
Income: Another exception occurs when your income is higher than the amount you need to pay down debt and save for a house. In this case, you can either spend a few months shoveling all the money you can into your debt, or you can split your goals and pay towards each. I would choose the former, but the latter would also provide you with a nice emergency fund while you save for a house.
Target House Price: Again, this goes to your debt-to-income ratio. In Los Angeles, home prices have now fallen to December 2004 levels, but that was near our peak, so they still have further to fall. If you live in a state like California where home prices are outrageous, then you need to work harder to pay down your debt so your debt-to-income ratio is manageable. It’s ideal to be below 33% DTIR total, with 28% max going towards housing. That may be nearly impossible for first-time buyers in California and other high-value states, but it’s a goal to work towards.
There’s no one right answer to the question, but once you consider your situation in light of the following factors, I think the best answer will be pretty clear.
Feb
4
Small Expenses Do Add Up
Filed Under Expenses, Money Management | Leave a Comment
One of my financial resolutions for the year was to track my spending for one month. I chose January in order to start the year off with a bang. Recording my purchases wasn’t really that challenging. It helps that I’m something of a miser, and therefore don’t really spend much money to begin with.
For my records, I only tracked money I personally spent. I didn’t track the bills my husband paid or his spending. He probably does more day-to-day spending than I do and does much more business travel than I do.
I normally carry a small notebook with me, so I designated two pages for tracking spending. I recorded the date, store, general purchase category, amount, and whether it was cash or charge. I didn’t break my numbers down further, so there might be non-food expenses in the grocery expenses if I bought them at the grocery store (items like cleaning products.)
Books: .94 (plus $25 gift card)
Groceries: 393.90
Dining Out: 23.59
Post Office: 5.69
Fuel: 55.68
Charity: 4.90
Clothing: 90.32
Travel: 11.32
Home Office: 70.08
Laundry: 10
Household: 34.29
Total spending: $700.71
Of that, $580.76 was charged. I’d say that $104.11 was discretionary spending, the rest were necessities.
The stores I visited were Borders, Ralph’s, Trader Joe’s, Whole Foods, El Torito, Exxon, Staples, Amazon, Target, USPS, a disabled homeless man outside the post office, Shell, Shoe Warehouse, Rite Aid, CVS, airport restaurant.
Over the course of the month I was comforted by the fact that I don’t have much wasteful spending, but I also spent more than I thought I did. If I were looking for places to cut my budget, it would have to be in the $104 of discretionary spending. Over the course of the year, that would amount to over $1200, which is not a small number. I could also try to trim away at food expenses, although $100 a week to eat good, healthy food isn’t excessive. It works out to about $2.77 person/meal. I’ve already cut back my driving as much as possible.
In all, I’m fairly happy with my spending levels. Recording my spending didn’t really alter my habits because I don’t overspend to begin with, but I see how it could make some people reconsider purchases. If you haven’t tried it, I recommend it for one month just to get a better idea of where and how you really spend.
Jan
11
Check Medical Bills to Save Money
Filed Under Health Costs, Money Management, Saving Money | Leave a Comment
As I mentioned yesterday, I was overcharged when I visited the eye doctor in November. Fortunately, I listened carefully when the doctor explained his pricing and then double-checked the receipt when I got home. Something similar happened just last week after my husband visited the emergency room for stitches in his finger. Those two errors could have cost us $304, but I’m super-vigilant when it comes to making sure my medical bills are properly charged.
Examples of Mistakes in Medical Bills
With the eye doctor, it was a simple error on his assistant’s part. While preparing the bill, she looked up my contacts on a chart and put them down as $195. I was stunned, but I didn’t say anything because this was a new kind of contacts and my doctor had said they were expensive. My doctor matches the pricing of 1-800-Contacts, so I checked the website when I got home. It said they were $75, which is still high, but they really are that good. They’re ProClear’s if anyone’s wondering. I called the office and the assistant double-checked. She’d accidentally charged me for the toric lenses, and promptly credited my card for the error.
Just before Christmas, my husband got a bad cut and went to the emergency room for stitches. Last week we received a statement from our insurance company detailing the charges. It said our share was $284, which is odd, since our co-pay is $100 max. I reviewed the statement further and noticed that the hospital charged the wrong insurance. He’s covered by his employer and mine, but my plan is better for things like this, so we prefer to use that one. We’re not sure why they charged the other insurance because he doesn’t even carry the card with him, but we assume they looked him up in the computer and submitted the bill to the first one they found. Needless to say, he called the hospital to have the correct insurance bills and avoid paying $184 more than we actually owe. Given that they gave him the wrong kind of stitches, which left a scar, and it cost us another $100 to get them removed, it’s the least they can do.
How to Avoid Overpaying Your Medical Bills
Chances are, you’ve encountered several similar instances in your dealings with insurance, doctors, and medical bills. If you’re not careful, you could wind up paying much more than you actually owe. Here’s how you can avoid overpaying:
If a receipt is offered, take it. That way you can compare it to the insurance statements later.
Check your insurance statements. I don’t know if all insurance companies do this, but Blue Cross sends you a statement of your charges, the amount they paid, and how much you owe. If you have a receipt, compare it to the statement. If you see any charges that don’t make sense, especially tests your doctor didn’t order for you, call the insurer or your doctor’s office to get it straightened out. Also compare it to your coverage, because sometimes they do bill the wrong insurance.
Fight any improper charges. If you’ve had a long hospital stay, you’ll see all sorts of odd charges. In this case, you may want to contact a Medical Bill Advocate to make sure the hospital doesn’t sneak in any improper charges. Medical Billing Advocates of America reports this example: “It’s hard to learn how much that $12 “mucus recovery system” was really worth. We saw this on a bill once, and later learned it was a box of tissues that retails for about $2–and it’s not a billable item anyway!” And that’s the cheapest example on their site.
Keep calling until it’s resolved. With the eye doctor, it only took one call to get the contacts error corrected, but it took several calls to get my insurance coverage sorted out. I’m sure I was annoying them by calling every week to check on the progress, but in this case, it was enough to motivate them to resolve it.
Take advantage of secondary insurance. If you have coverage under more than one plan, most doctors will bill both of them. I know someone who avoided paying anything for health care because even the co-pay was covered when both her insurance plans were billed.
If you’re not careful, you could end up spending way too much on health care and health expenses. It takes just a few minutes to double check your medical bills to make sure you’re not overcharged.
