I’ve Paid For This Twice Already…

Frugal living and debt reduction tips for a better financial future. This is one family’s story.

Archive for the ‘down economy’ Category

Staying Afloat Financially in Times of Crisis

Thursday, June 6th, 2013

While it is easy to keep a budget and save when things go according to plan, injury and illness quickly wreak havoc on even the most well-maintained finances. Medical bills balloon out of control easily. And, if injury or illness is severe enough, time off work may be necessary. If you cannot work to maintain a paycheck as you recover, medical bills and day to day living expenses may grow to an unmanageable amount rapidly.

Emergency Fund

Though it is never easy, maintaining sound financial footing in times of crisis is possible. You will need to create an adequate savings throughout your life to safeguard against unexpected expenses. While it hurts to draw funds from your retirement savings on unanticipated expenses, having an emergency account to pull from in times of crisis helps avoid incurring heavy debts.

Social Security

You pay into social security with the intention of getting paid upon retirement. However, if you become injured or mentally ill, you may be able to claim your social security benefits early. Approval for SSDI and SSI claims vary on a case by case basis, but generally you need to prove the existence of an impairment, either physical or mental, that prevents you from working.

Life Insurance

Like Social Security, some life insurance policies will pay out in the case of traumatic injury. Check and update your life insurance policy to ensure that you are covered in case the unthinkable occurs.

Workers Compensation

If you experience injury on the job, you might be entitled to Worker’s Compensation. Worker’s comp insurance provides wage replacement in the event that an on the job injury prevents you from continuing to work.

Secondary & Supplemental Insurance

Primary healthcare insurance will cover a large portion of your medical bills, however secondary insurance companies like Aflac also provide insurance money to pay for cost of living expenses like food, rent, and utilities in the event that you are temporarily out of work due to injury. If you participate in high risk hobbies like skiing or motorcycle riding, carrying supplemental insurance can keep you afloat should you incur a severe break or knee injury.

Negotiate Bills

While medical bills easily grow out of control, most hospitals have payment programs and grants to help those who cannot pay out of pocket beyond their insurance coverage. Before condemning yourself to a lifetime of medical debt, call the hospital bursar to see if arrangements may be made to pay over time or if costs may be reduced.

Do negotiate your bill ahead of surgery if possible, or at least promptly once an invoice arrives. Late fees can easily double and triple your medical cost if bills are not resolved in a timely fashion.

Once your invoice arrives, be sure to check it for accuracy. You may be able to reduce your out of pocket costs by making certain your are not overcharged for procedures and that your medical coverages has been appropriately applied.

If the unthinkable happens and you become unexpectedly injured or ill, take care to exercise all of your financial options. Quick response and research of your financial options give you the opportunity to keep your financial situation up right even during trying times. The sooner you address your financial challenges the less likely you are to incur penalties or find yourself under water.

Take proactive steps to insure that you keep your finances in check. If you find yourself struggling to understand terms or procedures, enlist the help of a professional to help you stay on course.

Our Recession Experience Thus Far – Some Up, Some Down

Monday, April 20th, 2009

I’m not an economist, so I have no idea if what is going on with the US economy officially qualifies as a recession.  But the word is thrown around in the news endlessly, so I might as well use it.

We’ve observed two different phenomena in our financial lives regarding prices since the recession, or whatever it is, began.  One is the steep drop of prices of some things, and the other is the exact opposite – a steep increase in prices.   Depends on if there is competition afoot, I think.

For example, we’ve been pricing new windows for our combination playroom/office for the past two years, ever since we moved into our house.  We knew moving in we would have to replace these 5 windows (they are the original single pane wood windows that were installed when the house was built over 40 years ago, and are not in any way, shape or form energy efficient).  We’ve had several estimates done over the past two years, and the latest one, done by the company that is repairing our rotting porch beam, was the lowest yet.  And not by a little, by a lot.  Further investigation showed that this wasn’t a fluke – re-estimates now by the same companies who estimated two years ago are also lower than what was estimated then.   To get business in this competitive environment, the companies are dropping their prices. 

On the other hand, our local zoo just opened for the season this past weekend, and when we went for our first visit of the year, I found that not only is the admission price significantly higher, the cost for season passes is also much higher.  Our season pass runs for 12 months from purchase, and since we purchased ours in June originally, we don’t have to renew it just yet.  But when we do, we’ll be paying over 30% more than we paid for the pass last year.  And we will renew it, for we visit the zoo almost weekly (if not more often) all summer and fall, but I must admit I was a little shocked at the huge percentage increase in cost over a single year.

What’s more expensive where you are?  What’s decreased in price as the economy weakens?  My spouse isn’t getting a raise this year (excellent performance review aside, his employer has a 12 month salary freeze in effect right now) so we’ll be making do with what we already have.  Hopefully not too many more increases in our future!

Does The Economy Make You Want To Pay Off Debt Or Build Up Savings?

Friday, January 9th, 2009

Editor’s note:  I set this post to publish yesterday and made the classic “New Year” mistake of setting the date to 2008!  When I looked this morning at my blog, I was confused as to why yesterday’s post wasn’t showing… okay, I found it.  Heh.

When I started this blog, our #1 priority was to pay off our non-mortgage debt.  We had quite a lot of it, and the minimum payments alone were a significant amount of our monthly budget.  We saved a $1000 emergency fund to keep us from having to resort to credit card usage, and then systematically started debt-killing.  First the credit card, then one student loan, then the car loan.  Now, we’re left with a $10000+ student loan, and a minimum payment of $145 versus the over $800 minimums we were tied to just 18 months ago.

As the economy changes, and as our debt shrinks, I began to wonder if staying the course and focusing 100% on debt reduction was the wisest path.  A $1000 emergency fund, at the time we saved it, seemed like a huge amount of money.  It still does seem like a huge amount of money, as far as spending that much on one thing, but at the same time, the past few years, we’ve had several emergencies that were over $1000 out of pocket.  We’ve been able to cover the difference with budgeted money or snowflakes we hadn’t spent on debt yet, but it showed me $1000 probably wasn’t enough for an emergency fund for us.  And then my car tried to die for good (although for now we’ve stayed the inevitable), and I realized we were going to get ourselves into even more debt trying to pay off the debt we already have if we didn’t become more prepared for life happening.

Even without a specific issue looming, the economy seems more uncertain every day.  Jobs that might have seemed stable are not quite so stable.  Growth industries stagnate.   It makes me want to hoard money and hide.  Not that that is a good plan or anything, but the uncertainty around me makes me want to hoard and wait and try as much as possible to be prepared for anything.

Are you still aggressively paying off debt?  Are you increasing your emergency fund?  A bit of both, as our current course is?

Is The Economy Affecting Your Mentality?

Monday, October 27th, 2008

Every day it seems there is some headline telling me that the economic world is coming to an end.  I am no economist, so I honestly have no idea what the signs are for a true economic crisis.  But I do know that I feel unsettled and nervous about what is going on.  Although some prices seem to keep rising (like items at the grocery store) others seem to now be falling (like gasoline) and I’m not really sure what that means.  Milk seems at least a nickel more expensive every week I shop, while gasoline was over $4.00 a gallon only a few months ago here and now is coming ever closer to dipping to the $2.00 a gallon price point.

So I’m not sure what to think.  The stock market fluctuates wildly,  the words “recession” and “depression” are everywhere, and although our specific and personal economic position continues to improve due to paying down debt, I’m increasingly unsettled about what the state of the nation might do to our position.  We haven’t been personally affected by the credit crunch, just rising prices, and our exposure to the stock market is limited to our retirement funds which I try to ignore right now as much as possible.   But I know there is a distinct possibility we’ll feel real effects of a recession or depression or whatever this is.  I’m just not sure when or how.

I’ve started to have a noticeable reaction to the economic news.  The long and the short of it is that I’ve gone back to my packrat mentality and have started stockpiling items in case they get much more expensive in the near future.   I’m doing it smarter now than in the past, for I’ve put more time and effort into educating myself about what a good price is, how to match coupons and sales and get good deals, and the cyclical nature of sales at the grocery store.  So I’ve been able to stockpile items at rock-bottom prices and I don’t feel like I’ve gone crazy spending money to save money.  But I am stockpiling, and that in itself is starting to make me a little edgy.  Why is it so important to me to have two more boxes of Raisin Bran in the cupboard just in case?  Why do I get all excited when I can get toothpaste free?

This is apparently my reaction to the idea of a recession.  I hoard stuff so that if prices skyrocket, I am already covered.  But my extreme personality has taken that to an extreme as well.  I think it is time for me to start living off what I have and stop stockpiling so much stuff.  I think I might need to stockpile some money instead.

Are you reacting to the idea of a recession?  Has your financial behavior changed?

Living In A Down Economy – Determining Your Bare Bones Budget

Friday, August 22nd, 2008

Here in the US, things aren’t necessarily looking so hot.  I don’t know if recession is the word, or if the powers that be actually acknowledge that things, economy wise, aren’t doing so great, but in my little corner of the world, it is basically a given.  Ask a friend, ask a neighbor, and most likely they’ll say that things cost more and their dollar doesn’t go as far as it used to.  I haven’t collected quantitative evidence but it sure feels like the economy is in a downturn from here.

How things are now are giving me flashbacks to another economic downturn that directly affected my family – the so-called “dot com bust”.  Around that time, the company my spouse then worked for went through a huge downturn and ended up laying off almost all of its employees.  My spouse was one of them.  It didn’t come without warning, his losing his job, but we were naive and didn’t read the signs.  We were completely unprepared for my spouse to be out of work, and that period of time put us in an economic tailspin of our own that took a long time to recover from.  So now, I’m starting to become mentally and financially prepared for the worst, so to speak.  There aren’t any signs of my spouse losing his job – in fact he’s in a much better position now with more seniority and job security than he’s ever been in – but you never know what might happen.

So I’ve started to seriously consider what our bare bones budget is, what we absolutely have to pay for, what we want to keep but isn’t essential for survival, and what we would like to keep but can go if need be.  I’m doing this to determine the very lowest bottom line that we can get by on if we had to.  This isn’t an exercise on how to reduce our fixed expenses (although that is a future step to consider) but just to understand what those fixed expenses and necessary variable expenses add up to.  It is easy to say “sell your car” or “sell your house”, but when disaster in the form of a job loss or other large financial change occurs, it isn’t always possible to lower those fixed expenses immediately.   Especially in a down economy.  Understanding what your current bottom line bare bones budget is is the start to preparing to avoid a financial disaster.

I split up our expenses into three categories – essential, needed, and wanted.  Essential are things we can’t go without, such as shelter and food.  Of course, we could do things to reduce those expenses, but that’s for another post.  Needed are things like our newly purchased disability insurance.  We need these things, but if it is choice between that and eating, eating wins.  And then come the wants.  For example, my kids are starting a session of tumbling in September.  They can live without it, but I want them to have the experience.  But if our situation drastically changed, they wouldn’t be tumbling.  Here is what I came up with for my essentials list (per month) :

  • Housing:  $950
  • Groceries:  $300
  • Gasoline:  $100
  • Utilities:  $200 (gas, water, and electric)
  • Diapers:  $30
  • Medicine:  $30
  • Car insurance:  $80
  • Phone:  $10
  • Minimum debt payments:  $610.40

Kind of depressing that the second biggest thing is minimum debt payments, but, we are working hard to correct that.  But that’s where it stands now.  So I came up with our bare bones budget as $2310.40.  Which seemed higher than I expected, given our actual monthly budget (before extra debt payments) is only slightly above $3000, but I guess we don’t budget a lot for extras after all.  There are many other things I consider important that I didn’t list here – this is the very bare bones that for the short term, we could get by on.  And of course, there are always the inevitable emergencies.  This is the short term, first line of defense preparedness concept.

After our non-mortgage debt is paid off, that drops down to $1700 a month, which I like better.  :)

So now, I know where we stand.  If we can’t bring in at least $2310 – we need to have some kind of fallback plan.  Which leads us to the emergency fund…