Health Insurance...The Waiting Game

Beany asked me what I'm doing about health insurance right now.

It's hard to answer this question without getting angry or political. So here is my short response:

Since last October I've signed up for and dropped out of a crap employee benefits program as well as personal coverage. Both featured large premiums and unrealistic deductions.

The price of personal insurance is not worth the meager coverage, and I enjoy my job too much to seek one with better benefits. So now I'm playing the waiting game.

I'm willing to do this because health care in the U.S. is about to get a whole lot cheaper. It makes good television to see regressive politicians dragging their feet, whining, and making ridiculous claims against reform, but it's fairly inevitable. They might as well be making a case against desegregation or woman's suffrage. The rest of the world finished this debate halfway through last century.

I do not recommend forgoing insurance if you need and can afford the care. But if you are money-poor, relatively healthy, and careful, I think an interest-bearing emergency fund (perhaps an HSA) is a more sensible place to put your money for the time-being. In the meantime, visit clinics (such as planned parenthood) for annual check ups.

Carousing and Consequences

Last night I went drinking with co-workers. Didn't spent much money in the process, but Darling spent quite a bit this morning attempting to curb my hangover. He bought cereal, a green smoothie, lemonade, bread, and ice cream in the hopes I would keep something down. The real financial hit was still feeling too queasy to work today.

Not frugal.

At least we've saved the money to pay this month's pr-rated co-op payment.

Tresure Map

I LOVE Millionaire Mommy Next Door's latest post. I think it's hilarious that a Realtor would insist you should by a house, at a higher price that you are willing to pay, because "you can't paint when you rent." Reminds me of the many overweight, unhealthy carnivores who have told me they couldn't be a vegetarian because "they need lots of protein." Ignorant much?

A while ago I took Millionaire Mommy's advice and created a Treasure Map. Because I rarely buy magazines, and the ones I do are expensive sustainability-related trade mags related to Darling's degree, I didn't feel good about cutting up the ones we have. So I've relied on ones found at the laundromat next door. After a few months (and only about three publications) later, I finally have something that looks like a completed project.

Since I don't have a digital camera, I thought I'd break it down for you:

According to the just-about-completed product, my rich life involves quite a bit of travel. There are images of mountainous tundra, deserts, tropical beaches, and fields of flowers. There is a map with a pin in Madrid, and a painting of Venice. I want to see all these things, visit these places. A large image of a yurt dominates.

Wildlife is also central to my map. There are pictures of wolves, foxes, bees, and buffalo.

Conversely, quite a few pictures represent a comfortable homestead. There are four images of pantries, pictures of preserves and a set holiday table, a candle, books, two beds, curtains, drapes, a lap dog, a toy truck, chickens and worms. These images are mostly old-fashioned and quaint: the beds are made with quilts, the pantries are filled with canned food and antique bread boxes, the curtains are hand-painted.

There are 6 words/phrases: Community, Nature, Experience, At Ease, Grow, and Revolutionary.

Strangely enough, there isn't a single image of money or wealth. There are no people, cities, or houses. There is nothing modern or technological at all.

Where does my treasure lie, then? According to this map, I am seeking a life that is at the same time simple and comfortable, yet unrestrained by distance and geography. Money is not a dominating factor in this life: I don't need a cruise ship or four-wheel vehicle to get where I'm going. Give me a back-pack full of books and the occasional barn to crash in, and I'll be satisfied.

While flipping through one of the magazines, I found a quote by a man named Patrick Dunne, who was discussing his love of old-fashioned dinnerware:

I believe in time. I believe in history. I believe in memory. I believe in the memory that ritual evokes. And I believe we live in a society that has become amnesiac, and that this constitutes the most profound form of anarchy. I believe that loving old things is a criticism of the modern world. I believe that loving the rituals of the table is also a criticism of the modern world. I believe in pausing to be a part of what you are doing when you are eating, rather than being this unconscious lump that just goes on disposing of things and being disposable.

Why Minimum Payments Might Not Cover Interest

Lizzie mentioned that it doesn't make sense for a minimum payment not to cover the interest, pointing out that the total amount would become larger. I ought to explain that Darling and I have a rather sporadic payment style with this loan which keeps things from looking normal. It also reflects how good companies are at ensuring you pay the most interest possible over the longest period of time.

If I paid the $125 "monthly installment" - which is what the company calls our minimum payment - every month without variation, about $55 would be knocked off the principle every month. Most of the time I try and send at least $150. When you send more than the monthly payment to a loan company credits your account and reduces the next "monthly installment."

So if I pay $150, they only bill me for $100 the next month. If I send $250, they don't bill me the next month at all. At one point I was so ahead with payments (sending about $200 every month for a while), they didn't want me to pay for another six months. Strangely enough, this was the point that my loan was sold from one company to another without my permission or knowledge. Apparently my over-payments were too rapidly reducing the worth of the original company's investment.

Even though the loan company stops billing, interest is compounding. So if I went that six months without sending a payment, about $420 in interest would have accrued! And when I did finally send a payment, it would be applied to the interest rather than the principle. So if I had six months credit with the loan company and chose not to pay until I received another bill, and then only paid the minimum, it would take another six months before I wold pay off the interest and start chipping away at the principle! So for that year, my loan would in fact have grown rather than diminished.

Loan companies do not benefit from borrowers who speedily pay off their debt. Student loan companies are particularly vulnerable. Someone who pays their credit balance every month will always be a customer, always a potential future asset. Eventually that person will hit a snag, charge an emergency, and pay at least a little interest over time. Someone who pays their college debt is done forever. That's why interest rates are relatively low, it's so easy to get deferments and lower minimum payments, and why credit-industry-driven media insists that student loans are good debt.

An Imaginary Windfall

When I asked about the cost of living at the co-op, the response was something like this, "Rent is 645 a month, but you'll both have to pay $245 a month for food, utilities, and so on. Every individual pays $245."

So what I heard is that we would owe a monthly $645 for rent, and two $245 payments for bills, food, insurance, etc.

I just found out that rent is not $645. Rent is $400. Every time I asked about rent, people responded with the total rate for a single person, then amended their response to suit a couple. So all this time I was overestimating our monthly payment by nearly $250 a month!

Even though we haven't saved or earned that $245 yet, just knowing we won't need it to cover living expenses feels like such a windfall. I find myself thinking, "what will we do with that much money every month?

I wonder if it's worth re-convincing myself that we're barely getting by, and directly depositing that cash directly into a savings account for a few months, and dealing with it when it's a real "windfall."

Facing Interest Head On

Do you ever stop and look at much interest you pay on your debt? It's heartbreaking!

Because of over-payments I'd made in the past, my latest student loan bill was for only $50. As usual, I sent as much as I could: $80. Despite paying 60% above the minimum, only $2.32 was applied to the principle balance!

Every Friday this month I've arranged to have $20 debited from my account to feed the student loan interest monster. Then when I make our real payment in a few weeks we will be able to make a dent in the total.

I'm using money "rounded off" from my bakery paycheck. Basically, I get $220 a week, but budget for $200 to make the numbers rounder. That $20 is out of sight and out of mind..

July 2009 Priority List

It's been ages since I've posted an old-school priority list, and almost as long since Darling and I have even sat down to write one up. July's as good a time as ever to get back on track:

1. Bills, $105/Saved
2. July Co-op Payment, $323/Saved
3. Moving Truck Rental, $100
4. Calculator, $60
5. August Co-op Payment, $910
6. Two Optometrist Appointments, $300
7. Fall History Class, $150
8. Fall Physics Class, $150
9. Family Loan Payment, $100
10. Student Loan Payment, $100
11. Violin, $80
12. Savings for Dentist, $40
13. Discretionary Spending, $100
14. Scanner Printer, $60
15. Savings, $150
16. IRA, $20