$81.90 – Community and Charity 10% Monthly Blog Income Give Back # 31 – April 2014 Edition

The 10% give back giveaway fun rolls on for the month of April.

In case you missed the first 30 editions of the 10% Blog Income Give Back, after doing some thinking at the beginning of October 2011 about what direction I want this blog to grow and evolve towards in the future, I decided that any income made from this blog would have more significance to me at a personal life values level if I knew that a portion were being given back to the following places:

• 1) The readers – Obviously, without you here to read my articles and interact with my ideas, there would be no blog in the first place (let alone blog income). As such, it is only fitting that you receive a portion of any blog income.
• 2) Charitable organizations – If you’ve read my blog before, you know that I’m a big believer in donating a portion of my money to charity. Each year, I donate between 5-10% of my income to the National Multiple Sclerosis Society as part of the Bike for MS fundraiser that I do. Beyond the good that is done by donating your money, getting used to contributing to charity is also a good practice to emulate the actions of affluent individuals (T. Harv Eker discusses this in his book, Secrets of the Millionaire Mind, which I would definitely recommend reading if you have a few hours).

Because of these considerations, I’ve decided that each month going forward, I’m going to give away 10% of my net (after-tax) blogging income/profit to My Personal Finance Journey readers (5%) and to charity (5%). Listed below is a summary of the results we’ve achieved together thus far through this give back effort:

• After each calendar month passes, I’ll tally up my net blog income and determine what Dollar value correlates to 10%.
• So far, I’ve been very happy with the success of the October 2011 – March 2014 give backs. Listed below is a summary of what we’ve accomplished so far with the give back effort.
  • Current total given to charity = $2,529
  • Current total given to blog readers = $1,225

So, that’s the overall flow of things and a brief recap of what’s happened so far with the give back initiative. Now, let’s get in to the specific details for this month’s (April 2014) giveaway.

 

Details of April 2014 10% Blog Income Giveaway

 

How to Enter the Giveaway – Deadline to Enter is 11:59 PM, April 30th, 2014

Like previous months, I’ve decided to use the RaffleCopter giveaway management tool to handle sign-up facilitation for this giveaway, so simply go through the steps listed in the widget below to enter the running for the prize and accumulate entry points.

There is no limit to the amount of points you can earn. If you refer 10 subscribers – your name will have accumulated 170 entry points! Or, if you link to the giveaway more than once, you can accumulate those 10 entry points multiple times. You can also share other My Personal Finance Journey articles via social media sites once per day. In the event of a tie, I will be using a random number generator to select the grand prize and runner-up (2nd place) prize winners.

Important instructions: After you complete an entry method, make sure to click and fill out the “I Did This” or “Enter” button in the widget so that I have a record of your points.

a Rafflecopter giveaway

Remember, the deadline for entries will end at 11:59 PM, April 30th, 2014 (~2.5 weeks from today – the start of the give back). Good luck to you all! Please contact me if you have any questions. After the deadline for entries passes, the grand prize and runner-up prize winners (one with the most points and second most points accumulated, respectively) will be contacted via email to receive their prizes.

***Photo courtesy of https://www.flickr.com/photos/tejvan/4420933678/in/

Reader Profile – Anneli & Carlos From The Frugal Weds

Today, in the ongoing Reader Profile Series, we’re getting to know MPFJ.com readers and commenters, Anneli and Carlos, from the site, The Frugal Weds. Let’s all give them a big round of applause for sharing their life with us and listen to their story. Enjoy!

Also, if you’re interested in sharing your own financial story/journey with us in a reader profile of your own, just shoot me a quick email, and we can get the ball rolling!  

 

1. Please Tell Everyone a Little Bit About Yourself (Background, Education, Family Situation, etc).

We are 30’s-something newlyweds living in Los Angeles.  We met while through friends as undergrads at UCLA (Go Bruins!)

Like most college students, we both had to take out student loans.  While we should have saved more during our college years and early 20’s, we went chugging along, enjoying our lives, and saved minimally.  All that changed when we started discussing marriage.  We buckled down and put our savings in high-gear. We paid off our engagement and wedding all in cash – not putting a penny on our credit cards! We were inspired by this and now, we are bent on eliminating our student loans and living a debt-free life!  We are also very much driven by adventures – we are absolute foodies and restless travelers! Since food and travel were two of our biggest expenses, we have created ways to reduce our expenses: we cook amazing food at home and we’re travel hackers!  We take advantage of cash-back offers and miles & points in order to stretch our budget even more.  Through our blog, we share all the ways we are still enjoying our life, while making sure we are focused on financial independence! We’re moving towards being debt-free in the next 12-24 months and retired by the time we’re in our 40’s 🙂

 

2. Describe Your Current Financial Situation (Who Works in Your Family, How Your Income Is, Your Expenses, etc).

We both hold down our 9-5’s – Anneli in Recruiting/Talent Consulting and Carlos in Commercial Insurance in the Entertainment Industry.  Together, we make over 6-figures and are able to save more than 20-25% of our income for retirement.  We toyed with the idea of home-ownership, but most of the housing in the LA area is overpriced.  Since we want to travel the world once we’re retired, we are holding off on owning our house for now.  Perhaps once we’re retired, we can pay for a house all in cash!! (Fingers-crossed!) We are fanatical budgeters and keep track of all our expenses, investments with an eagle eye!

 

3. What Are the Current Financial Challenges You Are Facing (Saving, Paying Off Debt, Student Loans, Merging Finances After Being Married, etc)?

We are all about paying off our student loans! We’re 1/2 debt-free – we paid off Carlos’ student loans last year.  Now it’s all about attacking Anneli’s loans.  Once that’s done, we are debt-free!!  We are also thinking about starting a family relatively soon – so saving for a baby is front and center in our budget. It’s awesome that we’re pretty much on the same page with most things financially.  It’s easy to outline our goals and figure out how we can make things happen!

 

4. What Are Your Plans for the Future (Retire Early, Build Your Career, etc)?

We are excited to continue our savings and investment strategies in order to retire early and travel the world!

 

5. What’s Your Best Piece(s) of Financial Advice and/or Your General Philosophy on Personal Finances?

Always be future-oriented!

What you do today – how you spend of save your money will dictate what kind of retirement you will have in the future!  Be creative – instead of finding ways NOT to do something – ask HOW can you make it happen instead.  Additionally, find a partner in the truest sense of the world – if we’re on the same page with our goals, that’s the most important thing!! As a couple, we are a team and it’s a beautiful thing 🙂

Identifying And Eliminating The Grey Charges In Your Life

The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.

One of the sneakiest financial developments of the past decade has been the proliferation of grey charges added to consumer’s accounts, often without the consumer realizing it.

There are so many companies taking advantage of grey charges that nearly everyone is affected in some way. In many cases, the consumer has been charged these charges for months before they realize it.

Fortunately, you can fight back against grey charges and eliminate them from your life if you identify them and take steps to protect yourself against them.

 

Identifying Grey Charges

Grey charges are repeated charges made to your bank account or credit card without you authorizing each purchase.

Companies that request the right to deduct money directly from a consumer’s bank account for goods or services fall into this category. Other companies enroll you in a service plan that allows them to charge your debit or credit card on a regular basis without you authorizing each charge. In most of these cases, you cannot access the service or product without first giving the company authorization for automatic charges to your accounts. Some companies use every trick that they can to get onto your credit card statement because they’re banking on the fact that you’re not paying attention during the sign-up process.

Grey charges can be found in magazine subscriptions, online game subscriptions, book or movie club memberships, automatic renewals, and free services that switched to premium paid services without your knowledge. The most notorious source of grey charges is the free trials that require your credit card for the trial. Securing your credit card information in the beginning ensures that the companies can charge a consistent stream of subscription fees at your expense. The trial is what gets you in the door and allows them to charge your credit card bill every month.

 

Eliminating Grey Charges

It is important to try and reverse or cancel the charges as soon as possible to prevent more money from being siphoned out of your account. Having the charges eliminated can be time consuming and it is very easy to get frustrated with the situation. In fact, getting rid of these charges can be extremely difficult if you are dealing with an unscrupulous company. After all, the company that placed these charges on your account want to keep the charges going for as long as possible so that they can make as much money as they can.

In some cases, the company will throw up unnecessary roadblocks to prevent you from canceling the charges quickly. These roadblocks may include having to travel to a physical location to cancel the service in person, having to send in paperwork or documentation to the company, having to provide a reason for the cancellation or discuss the cancellation with multiple representatives of the company.

The easiest way to avoid these charges is to simply not do business with companies that engage in this practice. Grey charges often happen because consumers aren’t paying attention when making a purchase, so you can combat these charges by being mindful and monitoring your purchases on your credit card and bank account statements on a monthly basis. You should also read the fine print before going through with the transaction and ask questions about anything that you do not understand. If the rep cannot answer the questions or there is no one available to ask, you may want to reconsider your purchase.

 

My Personal Experience

A few years ago, I decided that I was going to join a local gym to get into better shape. This gym would only grant you a membership if you signed up for the membership plan that deducted the membership amount from your bank account automatically. I had no problem with this while I was going to the gym regularly, but the problems began when I decided to cancel my membership while planning to move across town to a new neighborhood.

There seemed to be no way to cancel my membership. When calling the company to cancel, I was told that I had to speak with a customer service representative in person. Traveling to the location to cancel in person brought a long interview where I was encouraged to make use of their other facilities (too far away to be convenient where I was moving) or put the membership into hiatus (allowing them to continue charging my account a lesser fee for no service at all).

Even after reiterating multiple times to multiple people that I wanted to cancel my membership, I still found that I was being charged the full membership fee months later. I ended up closing the bank account to prevent any more charges from being deducted from the account without my authorization. In response, the company began sending me letters letting me know that they were continuing to charge me and that I now owed them money that I needed to remit immediately, instead of just cancelling my membership. I had to threaten legal action to get the harassment to stop.

 

My Decision

While not all companies are bad in this way, I have to admit that this one bad experience has ruined it for everyone else. I have never again signed up for an account with any company that required them to make automatic transactions from my bank account for goods or services. I would love to join another gym, but instead I walk around my neighborhood and exercise at home. There are some products that I would love to try, but having clearer skin isn’t worth the headache I might face trying to cancel the service plan.

This is the decision that I have made, but it may not be the right decision for you. Before signing an agreement with any company that wants you to allow them to make automatic charges to your accounts, review your options carefully. You can also go online and perform a search to see if there have been many complaints by people trying to cancel the service or stop the automatic charges from occurring. You may find that the product or service is not worth the trouble after all.

How about you all? Have you had difficulty with grey charges in your life? How did you get the charges to stop? 

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/restlessglobetrotter/3378489363/

How To Calculate and Pay Your Estimated Taxes

The following post is by MPFJ staff writer, Grayson Bell. Grayson, who runs the finance blog Debt Roundup, is a fan of personal finance, brewing beer, and working on cars.

This year I got a surprise when I finished up my taxes.

I owe quite a bit to the federal government. Why do I owe money? The answer for my situation is simple. I earned income on the side.

Anytime you earn income on the side of your regular job, you are required to pay taxes on it. The government wants their cut of everything that you make, so even if you get paid in cash, you are still supposed to report it. While I knew that I was going to make extra money last year, I didn’t realize how much. I could have avoided having to pay this year (plus any potential penalties) if I would have just properly estimated my taxes.

 

What Are Estimated Taxes?

Estimated taxes are payments that you make to the government to cover your tax liability on income not subject to withholding. A common form of this income would be earned through self-employment. Even though I am employed full-time, any extra income that I make on the side from freelancing and running a small business is considered self-employment income. Other applicable income includes interest, dividends, alimony, proceeds for the sale of assets, rent, and prizes/awards.

Anyone who believes they will owe more than $1,000 when taxes are due should be prepared to pay estimated taxes. If you had a tax liability for the previous year, then you might have to pay estimated taxes.

 

How to Calculate Estimated Taxes

It can be difficult to calculate how much you will need to pay for estimated taxes, but the IRS does have a calculation worksheet. They include it on their 1040-ES form. This form provides great detail into when you will have to pay and also helps you calculate how much you will owe. There are a few ways to calculate your estimated tax liability.

100% of previous year – If you owed more than $1,000 when you filed your return, then the safest way to deal with estimated taxes is to go with 100% of your previous years taxes. This would be to simply take what you owe to the federal government on your previous return and that would be what you need to pay. If your previous year’s adjusted gross income was more than $150,000, then you will need to go with 110%.

100% of current year – This number can be hard to know. You can use the IRS worksheet or software like TurboTax to help you calculate this number. If you are going to make the same salary, but can estimate how much you will make on the side this year, then this method can work. You use this calculation to ensure you don’t owe again on the next return. You do have the ability to change your calculation during the year, especially if your income fluctuates.

 

Avoiding a Penalty

If you don’t estimate your taxes properly, then you could owe a penalty. I had to pay one this year because I didn’t meet the criteria to have the penalty waived. This is an underpayment penalty. The penalty is currently an annual 4% of the amount you underpaid each period. This penalty can be avoided if your tax payments for the year exceed the lower of these two withholding scenarios:

• 90% of the current tax year minus credits
• 100% of the previous years tax (ie. You pay 100% of what you did in your last tax return or 110% if you make over $150,000)

You could also owe a penalty if you don’t pay your estimated taxes on time. If you are past their specified due dates, then you could be eligible for a penalty.

 

How to Pay Estimated Taxes

If you have your estimated taxes calculated, then it is important to understand how to pay them. The 1040-ES form comes with four payment vouchers. This allows you to split up your estimated tax liability into four payments. These can be equal or you can change the amounts depending on your calculated income. The IRS has strict payment deadlines. Here are the due dates for this current year.

1st Payment – Due on April 15th
2nd Payment – Due on June 16th
3rd Payment – Due on September 15th
4th Payment – Due on January 15th of the next year

If you want more in depth information about due dates and how you deal with them, then read more from the IRS estimated taxes section.

The IRS provides you with three ways to pay your estimated taxes. They are:

• Online – You can pay your estimated taxes online with a bank draft (e-check) or using a credit/debit card. The IRS has a site called the Electronic Federal Tax Payment System (EFTPS), which allows you to make your tax payments. Please note that will are charged a fee to use your credit and debit card. It is free to use the bank transfer option.
• Over the Phone – If you need to make your tax payment and you can’t get online, then you can call the EFTPS customer service line. If you want to pay by a bank transfer, then call 1-800-555-4477. If you want to pay with a credit or debit card, then you have to call one of the IRS’s payment providers. They are listed here.
• With Check and Voucher – This is going to be your slowest method. The four vouchers on the 1040-ES form will be used and you will need to mail your payment in to the nearest IRS office. There is a section on the 1040-ES form that tells you which office you need to mail your check to. The IRS does consider the postmarked date as when it was paid, not the date they receive it.

If you don’t want to deal with paying the tax on your own, then you can have your employer withhold more on your regular paychecks. This only works if you are receiving paychecks. You would need to resubmit an adjusted W-4 to your employer requesting that they withhold more than they normally do. You will still need to make sure they are withholding enough so you don’t owe when you complete your return.

 

Do it Yourself or Hire an Accountant?

The debate continues on whether you should deal with taxes yourself or hire an accountant.

I have used TurboTax for years and it makes my taxes easy. It even helped me calculate the estimated tax payments for this year. That being said, I believe next year will be time to hire an accountant. We are selling our home and buying another, along with me cashing in some stock options, and making more side income. This year’s taxes are going to be complicated and I want to make sure it is done right.

(A side note from Jacob: I was quite surprised how affordable an accountant can be. Some of the premium plans for online tax prep platforms can charge you around $90, whereas, some accountants cost less than $300 to prepare your taxes.)

If you don’t feel comfortable calculating your estimated taxes, then seek professional help. There is no need to get it wrong and have to pay a penalty just because you didn’t understand the calculations. If you are tax savvy and you can use the TurboTax or H&R Block software, then feel free. It will cost less than a tax accountant and give you a little more insight into how estimated taxes are done. Either way, feel comfortable with the option you choose and make sure you properly calculate and pay your estimated taxes.

How about you all? Do you have to pay estimated taxes for your income that is not taxed when it is paid? How do you pay your estimated taxes – online, via check, or on the phone?

Do you use an accountant to file your taxes?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/moneyblognewz/5610981299/sizes/l

Managing Money is Like Learning to Ride a Bike

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Do you remember when you were a kid and you were so excited to ride a 2-wheeler?

You were going to hop on and show your dad how talented you were, immediately riding away without his help. This is not how the story actually went though did it? Instead of riding like a veteran, you ran your bike into bushes, stacks of tires, buckets, and perhaps even parked cars in the street.

Beyond this, you may have even fell down when there were absolutely no obstacles. Your visions of perfection were quickly tarnished, and you grew increasingly frustrated at what you thought would be easy.

Some of you may have thrown your bike down and quit (perhaps more than once), storming inside in frustration (and probably crying to your mom). You thought you would never learn to ride that stupid bike, but you eventually did, didn’t you?

 

The Infamous Budget

Around tax time, many of us begin to wonder where all of our money has gone each year. Those tax documents claim that we have earned $50,000, $70,000, maybe even $100,000, but what do we have to show for it?

A piddly-nothing savings account with $550 in it. What happened? How could we earn so much and keep so little? This is the point where we decide that we are going to grow up and ride that 2-wheeler. In other words, we are going to start tracking our money and make a budget.

Before the new month begins, we write all of our necessary expenses down on a piece of paper and vow to spend no more than that amount during the next month. Let’s say this totals to $2,500.

 

We Scrape Our Knee and Break Our Arm

The month begins and we are excited. If we can get through the month following our budget, then we will have an extra $800 that can go into savings. Finally, a beefy savings account!

Everything seems to be going well for the first couple of days, but then we notice that our car is making a strange sound so we take it to the mechanic. Luckily, it isn’t anything too serious, but the repair still costs $80, which was not in our initial budget.

The month continues on and is dragging because we did not budget for any fun. After 20 days, you just can’t take it anymore and you head out with your friends for a night on the town. It wasn’t anything too extravagant: just a dinner, a few clothing purchases, and some drinks at the local bar.

The end of the month finally shows up and you total up you expenses. You just can’t wait to see that $800 go into the savings account, but…you don’t have $800 left. In fact, you don’t even have $500 left. Your grocery expenses were larger than expected, you forgot to include your phone and utility bills in the budget, and you also had the above expenses which weren’t initially accounted for either. After all these expenses, you only have $200 left over. You thought you were going to ride that 2-wheeler without a problem (after all, you are an adult and should naturally be good at this budgeting stuff), but it turns out that not only did you fall on the pavement and skin your knee, but you broke your arm as well!

“This whole budgeting idea is stupid, who needs it? I busted my butt for an entire month and have only held onto $200. I’m done with this.”- you say to yourself.

But, you have to remember that keeping track of your money is the only way to grow wealthy. If you want to live well in the long run, you have to be willing to scrape your knees with your budget once in a while. It will not be easy, but you will get better. Soon, you will be able to put $500 into your saving account, then another $750, and then you might be able to cut some expenses and earn a little more for a monthly net income of $1,000! If you hold yourself accountable, you will soon be riding in the Tour de France of budgeting and will be well on your way to budgeting your way to wealth!

How about you all? What strategies do you employ for dealing with discouraging set-backs in your personal finances?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/sahdblunders/8644936719/sizes/l/

Obamacare Is Causing a Rise In Cash-Only Doctors

The following is a post by MPFJ staff writer, Kevin Mercadante, who is a professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.

Obamacare is causing a rise in cash-only doctors, a trend that has been at work for several years but seems to be accelerating. We’re not seeing a wholesale shift of medical practices going from primarily insurance-based payments to cash, but the number making the conversion is increasing steadily, at least from very low levels.

There are a number of reasons why both a doctor or patient would want to go the cash-only route. Though it isn’t for everyone, there are circumstances where it makes a lot of sense.

 

Why a doctor would go cash-only

As much as anything, the healthcare industry is seeing massive shifts as a result of healthcare reform. What will be seen under Obamacare is more of a top-down system, which will invite a far higher level of rules and regulations. Many medical practices have already been struggling under the weight of increasing administrative responsibilities from healthcare insurance companies. But Obamacare is giving government a greater say in the process, which is increasing that burden substantially.

It’s not just that the increase in rules and regulations is merely irritating. Every healthcare practice experiences direct costs as a result of compliance. This will raise overhead in the form of increased staffing in order to meet compliance requirements. That will have the domino effect of also increasing indirect employee costs, higher insurance expenses, greater benefits, and even rental space for a larger staff.

A medical practice can sidestep these expenses by opting out of healthcare reform – and the insurance benefits it will provide – and going the cash-only route. It’s a form of cutting out the middleman – the insurance companies – in the healthcare industry.

Cash-only doctors are also able to treat patients the way they see fit. Participation in healthcare networks and their insurance company sponsors can create a series of enforced protocols, that a cash-only doctor does not have to adhere to. This gives the doctor much more flexibility in treating patients.

There’ll also be more flexibility in treating patients who are either struggling financially, or going without health insurance altogether. Doctors can charge lower fees with a cash-only basis, even adjusting those fees to the patient’s ability to pay.

Cash-only arrangements generally come in two forms: fee for service and subscription. Fee for service means that you can walk into a doctor’s office, receive treatment, pay in cash, and be on your way. With a subscription service, you pay a monthly fee to the practice, which can often get you unlimited visits.

 

Are there benefits to you as a patient?

There may be even more reasons why you as a patient would want to consider cash-only doctors. There are also downsides, and we’ll get to those in a minute. But first consider the following benefits:

People who don’t have health insurance.

Cash-only doctors will have an obvious advantage for people who don’t have any health insurance at all. Even though the healthcare reform law requires everyone to have health insurance, or face penalties, it’s still very likely that there will be millions of people without coverage anyway. Cash-only doctors will be a definite option for such people.

Cost. At some practices it may be possible to have doctor visits that will cost less than the co-payment you’ll need to pay under your health insurance plan. You may also get an increased level of service from a primary care physician, rather than getting shuttled off to a battery of specialists that are mostly matter of doctors practicing defensive medicine (that is, protecting themselves from lawsuits).

A return to the days of the family doctor. Under the current healthcare arrangement, doctors are typically limited to spending no more than a few minutes with each patient. The cost and burden of participating in a health insurance network require the doctor to see dozens of patients each day. Cash-only doctors won’t have that requirement, and will be in a position to spend as much time with you as is needed. Some cash-only doctors have even returned to making house calls.

Eliminating hassles with insurance companies. I don’t know about you, but any time I or anyone in my family receives any kind of medical treatment, it sets off a chain reaction of interactions with insurance companies to get the claim reimbursement for services rendered. Cash-only doctors will eliminate that interaction. It’s a cash and carry arrangement, and that’s the simplest form of business transaction.

“Concierge care”. This is essentially a subscription type service, and you pay a monthly fee for unlimited visits. It may also include a wider range of treatment options.

Competition to mainstream healthcare. We don’t usually think about the big picture when it comes to health care – we’re primarily interested in being treated. But cash-only doctors represent a potentially viable alternative to mainstream healthcare, and that may put downward pressure on fees and prices even with medical practices that work with insurance companies.

NOTE: The term “cash-only”, also extends to debit and credit cards, and presumably private installment payments. It’s use refers to the absence of funding from insurance companies.

 

The downsides of cash-only doctors

For all of its virtues, the concept of cash-only doctors is not without its limits. Most obvious of course, is that cash-only is only viable at the primary care level. If you are operating without health insurance, and relying on cash-only doctors to treat you, it’s just a question of time before you will have a major medical expense that you will have to pay out-of-pocket. Because of cost, it’s unlikely that the providers of such services will accept a cash-only option.

If you are young and healthy, and rarely use health care of any sort, the cash-only concept will work well for the occasional doctor visit. But if it includes participating in a monthly subscription service, it may end up costing you more than you ever get out of it in benefits.

And since cash-only doctors are not part of insurance arrangements, it is unlikely that they are in any wide healthcare networks that would provide a large number of choices as to providers for expanded medical services. Again, this can be a complication when healthcare needs rise beyond the primary care level. Sooner or later, you’ll brush up against the need to use the services of insurance-only providers, and you’ll have to be prepared for that outcome – even while using a cash-only primary doctor.

You can find cash-only doctors in your area simply by doing a web search that includes cash-only doctors along with your ZIP Code. And of course, never overlook the value of word-of-mouth referrals from other people.

How about you all? Have you ever used – or considered using – the services of a cash-only doctor? 

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/eroc/7175277081/sizes/n/

Why We Invest In Infrastructure as a Society, Community and Individuals – Part 1

The following post is by MPFJ staff writer, Sally. Sally is the blogger behind TinyApartmentDesign.com, a blog about design, living well, and simple, tiny spaces. Enjoy! 

Without really meaning to, I’ve spent my entire career working on different aspects of commercial and public infrastructure.

It’s ranged from the payments industry to transit/transportation and construction. I never connected the dots, but each of my jobs has been in industries that tackle big issues, albeit my role has been miniscule in the process.

Infrastructure is about putting the tools and systems in place to allow societies and individuals to meet certain needs. This can range from systems that allow you to use the same method of payment across the country, to creating public spaces that can be used for recreation, education and community events. It’s about having a network of roads, gas stations and more recently, electric charging stations to allow you to drive across country without it taking several weeks in a covered wagon. It made me think about what types of infrastructure do we develop as individuals? And is the infrastructure system we have in place a key to our success?

 

Infrastructure that Keeps You Healthy

If you can view your own life through the lens of infrastructure, it may help you save time and heartache by simply viewing your daily activities through this filter. You can ask yourself if you have created a system to keep your body healthy in a routine, simplified way. Do you have healthy foods on hand at home? Do you keep some snacks with you in your backpack, in the car, or at the office so you can avoid sugary snacks? Is it easy to reload these foods? Is your grocery store nearby or on the way home? Do you have a standard list of items you need to replace weekly?

Exercise is another part of your health infrastructure. Do you play a sport that can be practiced daily? Yoga, surfing, Pilates, tennis and swimming are just a few sports that you can take up as daily play. But you’ll need to make sure they fit your lifestyle. If the nearest yoga studio is 50 minutes away, and you don’t like to practice alone, then yoga may not fit into your current infrastructure. On the other hand, if you find a sport or class that you can commit to playing daily, especially in the mornings, then that may quickly become embedded in your infrastructure. From there, you can further establish this part of your lifestyle by packing your workout clothes the night before, and placing the gym bag where you will see it when you wake up. If the infrastructure makes sense, it will be used more frequently, and it will lead to more positive elements being added to this infrastructure: such as having all of the ingredients for a green smoothie ready to go in the mornings, or keeping a mix of upbeat music for your workout on hand in your car or as a playlist on your phone.

All of these must work together properly when it comes to infrastructure. If something wasn’t properly planned, it will be discarded and abandoned. We learned this quickly in construction. If you built a ticket machine for a light rail station on the opposite end of where all passengers entered the station, it would be abandoned for the machine nearby, where people were nearby to ask questions, or learn from as they bought their tickets.

In the next part of this two-part post, I’ll examine infrastructure as it relates to managing your finances and fitting them into your overall life infrastructure.

How about you all? Do you view your life as a system that can be organized and ordered? Or are you living in total and utter chaos?

Share your experiences by commenting below! 

***Photo courtesy of http://www.sxc.hu/photo/66986

Get Rich With Index Funds

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Have you ever heard of the term, “Index Fund?”

Don’t feel bad if you haven’t, but if you fail to learn about this term today, you may be leaving tens of thousands of dollars on the table.

I assume that many of you are familiar with the term, “Mutual Fund”. You might not know exactly what it means, but you know that it is a type of investment that you can purchase within your 401(k), and this is absolutely correct. An Index Fund is actually not all that different in principle, but I definitely prefer one over the other. Here’s why:

 

The Difference Between a Mutual Fund and an Index Fund

Mutual funds and index funds are both investments that can be purchased to increase your current savings and are often used to beef up your retirement account for the many years that you have before that last day on the job. While both of these funds essentially serve the same purpose, they are actually quite a lot different.

Mutual Fund –  

A mutual fund is a managed account that often invests in a certain segment of the market.

For instance, there is most likely a fast food restaurant mutual fund that invests in McDonald’s, Burger King, Wendy’s, Arby’s, and many other fast food chains. The reason it is called a mutual fund is because it is mutually funded by many investors, allowing it to be affordable for each person. So, instead of having to buy one of each of these company shares for $50 a piece (which could easily total up to $1,000 with 20 company investments), you can purchase a small portion of each share (since all of the other investors do the same thing, which then totals enough money to buy whole shares) for a total of $50, instead of that $1,000.

Mutual funds are a great way to diversify your money when you don’t necessarily have a lot to invest. Also, many people believe that mutual funds are superior to individual investments because of the expertise of the fund manager and his/her team. Since they are constantly evaluating the market and its movements, investors believe that they can buy or sell stocks before the majority of stockholders even know there might be a problem or opportunity. If this is the case, then mutual funds are a great way to beat the market (meaning, earn a higher percent than the average stock market investor).

Index Funds – 

An index fund is similar to a mutual fund because it also is made up of a large number of company stocks and easily invested in because of the many investors involved to fund the overall account. However, instead of the fund matching a particular segment of the market, the stocks are purchased in order to imitate a particular Index (like the Dow, Nasdaq, or S&P500). In other words, index funds are set up to earn you the same amount that the average investor would, but with a very hands-off approach.

The Research-

Many people swear by their mutual funds and believe that their investments are earning them more than the overall market (meaning, they are beating the market). However, many studies reveal that this is often not the case. While the gross earnings may be higher than the market, there are many fees that need to be considered as well. The largest of these fees are the management fees (totaling 1% or more of your total fund value each year), and then there are some other front-end and back-end fees that are charged when entering or exiting your money.

On the other hand, since index funds are incredibly simple and do not require a large management team, the fees are very small (often less than 0.1%) and do not hardly affect your investment at all.

By investing simply and keeping my investments in index funds last year, I earned almost 30% on my money. That is massive! And, because I am not employing a team of people to try to beat the market, I am able to keep the majority of these earnings as well.

If you are looking to invest for your retirement, I would advise that you look into a few index funds. You’ll earn more and be able to worry less. It is a simple, easy, and effective way to invest.

How about you all? How do you have your money invested? Do you use mutual funds, index funds, or something else all together?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/epsos/8450504146/sizes/l/

Should You Pay Off Your Mortgage Early?

The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.

Have you ever thought about paying off that mortgage faster than the typical 30 year term?

Is it a smart thing to do? What are the pros and cons of doing so? These are all great questions and should be considered carefully. Let’s dive into each of the positives and negatives of doing so, and then you can make a confident decision of what you want to do.

 

The Interest Expense 

When buying a house, most people put a little bit of money down, but then take out a 30-year loan for the majority of the remaining payment. If your loan percent is 4.5% or so on a $250,000 house, then you can plan on paying an additional $180,000 in interest. That’s right, you will pay a total of $430,000 on your $250,000 home.

This sounds like a great reason to pay the house off early, but many home-owners think that they can earn more than 4.5% by investing their money instead of paying off their loan quickly. So, they decide to keep the loan for its 30 year life, but invest a few hundred bucks in the market each month to build their retirement fund.

While this does make sense, many people don’t actually invest the money that they said they would. Instead, it goes toward a new boat or new car, which depreciates in value and often costs them much more in the long run than if they would have put the money toward their home mortgage. By putting extra money toward the home loan, you are guaranteeing yourself a 4.5% return, which isn’t amazing, but it’s something.

 

Mortgage Tax Deduction

Many people are advised to keep their mortgage because of its tax incentives. Because you are paying interest on your loan, the government will reduce the taxes that you owe each year.

It sounds all well and good, but this is how it really works. You pay in 4.5% on your home loan each year and because of this, the government will not tax you on this payment, which essentially pays you back 1% or so. In other words, you pay in $5,000 in interest each year to avoid $1,250 in taxes paid in. By doing the math, you are essentially still losing $3,750 on this deal. Do not buy a house and pay the interest just to avoid tax payments. It makes absolutely no sense.

 

Cash Flow

One of the best ways to get wealthy today is to increase your cash flow.

With more cash each month, you have more opportunity for investing and can then increase your overall wealth much faster than your neighbor down the street (who is making payments on everything you see in his yard). To do this effectively though, you basically need to reduce your cash flow to nothing for a few years while paying off your mortgage debts. Many choose to keep their mortgage and stock up their reduced cash flow (after they pay their mortgage) each month. In the end, the difference may be negligible, but I believe that there is much more power in that large cash flow only a few years later when your mortgage payments are gone. Just think of how much cash you would have each month if you no longer had to pay your mortgage!

 

My Biased Opinion

I’m sure you already know my opinion of whether you should pay off your mortgage or not. Over the last couple of years, I have reduced my consumer debts from $45,000 down to zero, have saved up $15,000 for emergencies, invest over 15% of my income, and am now working to eliminate all of my mortgage debt ($54,000) by the end of this year.

If I can accomplish this, I will owe absolutely nothing to anyone which means I can freely give as much as I want and invest as much as I want – all before the age of 30. With absolutely no payments, do you think I could become wealthy in the next 40 years of my life? Absolutely! And, if you begin working toward debt freedom, I believe that you can soon be wealthy as well.

How about you all? Do you think it’s best to pay off your mortgage as soon as possible, or only pay the minimum required and save the money for later needs?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/68751915@N05/6808984167/sizes/l/

Health Care Showdown – Head-to-Head Comparison of an ObamaCare Plan vs. My Employer Plan

The following post is by MPFJ staff writer Travis.  Travis is a customer blogger for Care One Debt Relief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family.

A man has his current health care plan dropped by his provider. 

When he explores what options are now available to him, he finds for similar coverage the premium is much higher, as is the deductible.  Another person claims to have been uninsured for years due to the cost, but now they are able to afford quality health care.

These two types of stories have been reported over and over again in the media over recent months as the The Affordable Health Care Act, more commonly called ObamaCare, continues to be a hotly debated topic.

I currently have health care through my employer, who offers choices for medical, dental, and vision care.  I do pay out of pocket each month for that health care, but my employer picks up a large portion of the tab as part of my benefits package.

As the ObamaCare debate has raged on, I have often wondered what I could get for health care through my state’s government exchange site.  This is where I would turn should my employer decide to drop health care from my benefits package, or if I would have a career change and become self-employed.  I thought it would be a fun exercise to go through the motions of exploring my options, and then comparing to what I currently have through my employer.

 

My Current Plan

First, let’s take a look at some of the high points of my current health care plan

 

Medical:

Annual Deductible (individual/family):                $1181/$3543

Routine/Preventative Services:                               No Charge

Other Office Visits and Outpatient Surgery:       No Charge

Urgent Care and Walk In Clinics:                            15% Out of Pocket, No Deductible

Inpatient Hospital and Surgery:                              20% Out of Pocket, After Deductible

Emergency Room:                                                         20% Out of Pocket, After Deductible + $150 copay

Prescription Drugs / Generic:                                  20% Out of Pocket, of discounted cost / $24 maximum

Prescription Drugs / Brand Name:                        20% Out of Pocket, of discounted cost / $90 maximum

 

Dental:

Annual Deductible:                                                       None

Maximum Annual Benefit (per person):              $500

Routine Exams, Xrays, Cleanings:                         No Charge

Minor Restorative Care (fillings):                           20% Out of Pocket, of negotiated fee

Major Restorative Care (root canals, etc):        Not Covered

 

Vision:

Annual Eye Exam:                                                        No Charge

Frames (once per year):                                             $120 allowance, 20% off remaining balance

Lenses (standard):                                                        No Charge

Contact Lenses:                                                             $120 allowance, 15% off remaining balance

 

MNSure Plan

Then, I visited MNSure, the Affordable Health Care / Obamacare website for the State of Minnesota. 

I plugged in some rudimentary information about my family and it listed 16 different medical plan options.  The options were labeled as Platinum, Gold, Silver, or Bronze, with the coverage, options, and price decreasing respectively.  There were NO platinum options available in my area, which I thought was very strange given that I live in Rochester, MN, the home of one of the best medical facilities in the world:  The Mayo Clinic.

For the sake of comparison, I chose the Medical Applause Gold has plan, which was the top rated Gold plan offered.

Here’s the highlights of that plan:

 

Medical:

Annual Deductible (individual/family):                     $1300/$3900

Routine/Preventative Services:                                    No Charge

Other Office Visits and Outpatient Surgery:             30% Out of Pocket / co-insurance after deductible

Urgent Care and Walk In Clinics:                                  30% Out of Pocket /co-insurance after deductible

Inpatient Hospital and Surgery:                                    30% Out of Pocket /co-insurance after deductible

Emergency Room:                                                               30% Out of Pocket /co-insurance after deductible

Prescription Drugs / Generic:                                         30% Out of Pocket /co-insurance after deductible

Prescription Drugs / Brand Name:                               30% Out of Pocket /co-insurance after deductible

This plan was medical only, and did not cover any dental care.  I had to look separately for a Dental Plan.  I selected a plan that was fairly close to the coverage I have through my employer.  Ironically, it’s the plan that I had for years through my employer (Delta Dental) but is no longer offered.

 

Dental:

Annual Deductible:                                                             $50

Maximum Annual Benefit (per person):                     Data Not Available

Routine Exams, Xrays, Cleanings:                                 No Charge

Minor Restorative Care (fillings):                                 80% coinsurance

Major Restorative Care (root canals, etc):                50% coinsurance

Maximum Out of Pocket Individual:                           $700

 

Vision:

I could find NO information about Vision Care on the MNSure Website.  None. Zero.  Zilch.

 

Cost / Premiums of Plans:

Then I gathered the cost of the programs.  I noticed while doing my taxes that an amount was listed on my W2 stating the amount my employer kicked in for my health care.  I took that amount and divided it by 12 (months) to get my employer’s monthly contribution to my health care.  Then I added to it my payroll deduction for health care to get the final monthly cost of my employer based health care.

Employer Based Healthcare Monthly Cost:         $1746.61

MNSure Based Healthcare Monthly Cost:           $1316.30

 

Plan Comparison:

Medical:

It’s fairly obvious that the medical coverage through my employer is leaps and bounds better. While both plans offer preventative care at no charge, my current healthcare plan provides immediate coverage on the most common types of health care needs such as urgent care, ER visits, and prescription drugs.  All of these are subject to the deductible for the MNSure plan.  Even once the deductible is met, my current plan provides better coverage.

Dental:

Both plans provide bi-yearly cleanings and exams at no charge.  My current plan provides better coverage on minor procedures such as fillings, but the Delta Care provides better coverage on major procedures.  Plus Delta Care has a maximum out of pocket limit.  This is one of those times when it’s really hard to judge which one is better.  For day to day life, my current plan is better, but if a major dental situation arose, we would have a large bill to deal with.

Vision:

I couldn’t even find information about vision care on the MNSure website.  So, my current plan wins by default.

Cost:

My care through my employer is quite a bit higher per month.  I don’t actually see this as an out of pocket expense because my employer foots the bill for most of the cost, but we need to compare total cost for an apple to apple comparison.  Is an extra $450 a month worth having vision care and the better medical care?

If I were footing the bill all by myself, I would say “No.”   That’s over $5000 a year annually, and our out of pocket expenses for health care wouldn’t come anywhere near that if we had to purchase healthcare completely on our own, and had the option between these two plans.

 

Final Thoughts:

I learned several very important things by doing this exercise.

• The healthcare I have through my employer is really good.
• The true cost healthcare is crazy expensive!
• I would likely make much different choices if I had to foot the full bill for my healthcare.
• The government sponsored websites may not give all the options you need (where’s the vision care??)

While I gained some really great insight into my current healthcare, as well as the options available through the government exchange, I didn’t really gain any insight as to whether ObamaCare has really been a detriment to people who had previously been purchasing healthcare on their own.

How about you, readers?  Do you purchase your own healthcare? What has your experience been when choosing your healthcare after the implementation of the Affordable Healthcare Act?

Image courtesy of photostock / FreeDigitalPhotos.net