Health Insurance Changes and my Employers Open Enrollment

I have worked at my place of employment for almost a decade and have participated in their health insurance plan since I qualified for open enrollment. Over the years I have noticed the decline in coverage matched by an increase in costs. Years ago my employer switched to a High Deductible Health insurance plan to keep employee and employer costs low and allow the opportunity to use a Health Savings Account (HSA) in order to cover the high deductible. Earlier this year I decided to Maximize my 100% employer price matched HSA contributions to the company allowed maximum of $24 dollars per week. After participating in my companies Open Enrollment and being informed of a change in insurance provider as well as an increase in deductible in order to keep my cost of health insurance the same. In order to compensate for this increase the weekly HSA contribution maximum still 100% price matched has been increased to $29 per week.

Having not much else of a choice for affordable insurance and being that I am a healthy individual I have no problem with a high deductible insurance plan. I think high deductible health insurance plans are a possible fix for future health insurance cost problems. I actually come out ahead because of my health insurance. The increase in deductible of course will change how much money I have in my pocket next year so I referred back to my write up on Payroll Adjustments for a link to a great tool to find out how payroll adjustments will affect my take home pay. Investing in mutual funds in my HSA as well as the immediate doubling of my money from my employers 100% matching of contributions allows my HSA to grow quickly and any funds that do not get used to pay towards my deductible will continue to grow over time.

Why I chose a Roth IRA over a Traditional IRA

The way I see the difference between a Roth IRA and a Traditional IRA is tax free vs. tax deferred. I had to choose if I wanted a tax break now or later or as I see it from now on. I decided against getting a tax deduction on current contributions into a Traditional IRA and saw the long term benefits of a Roth IRA which will provide me with tax free growth inside of my IRA as well as tax savings in the future when I start to withdraw my money in retirement. I would much rather pay known taxes now than to guess what the taxes I would be paying in 30 or more years on my IRA withdraws. I am currently 27 years old and am working on maximizing my IRA this year, if possible, and if not this year 2010 will be the first year I maximize my IRA contributions and I will continue to maximize my contributions for as long as I can. Maximizing any type of IRA contributions over the long term can accrue a vast amount of savings. But the golden opportunity that I see with a Roth IRA is not the amount of savings I can accrue but the tax free growth I can turn my savings into using dividend reinvestment over time.

I am not a financial adviser, this just what I am doing but thus far I am quite happy with my choice. Although in the future I may change my mind. Another idea I have been toying with is the possibility of also opening a Traditional IRA and splitting my maximized yearly IRA contributions between the two. The current tax break of a traditional IRA is nice and if my future tax rate decreases the traditional IRA is the way to go. However, if my future tax rate is the same as it is now or more the Roth is, in my opinion, the best option. I am not willing to gamble on the idea of my taxes being lower in the future because I don't live off of all that much now. I don't see my future retirement income causing a tax bracket reduction by today's standard so I think it is safer to assume that will apply in the future as well, although for all I know maybe all tax rates will be higher for everyone in the future. The Roth IRA is my hedge against unknown increased tax situations in the future. Perhaps using both he traditional and Roth IRA types for my contributions could cover me halfway for whichever situation the future holds, higher taxes or lower taxes. If I choose to implement the dual type of IRA idea I of course will report it.

For my current Roth IRA choice and if I choose to also open a Traditional I use Sharebuilder.com and have been very happy with them for a few years now.

Unexpected Christmas Bonus

I was notified that I will be getting an unexpected Christmas bonus of $500 on my next paycheck. Problem with bonuses is I would like to know how much of the bonus I am going to have after taxes. Just as I have found and use a payroll adjustments tool CalcXML Payroll Adjustments. I have also found a Bonus calculator to answer my question: How much will my company bonus net after taxes? The answer is at CalcXML with their Net Bonus Calculator. With this tool I was able to see how much of my bonus I am actually going to get and can plan to use it accordingly.

Investing in Mutual Funds in Health Savings Account

Having a high deductible health insurance plan and a health savings account has proven to be very beneficial to me thus far. I am a healthy individual and the greatest thing is that my health savings account (HSA), which my employer 100% price matches, is growing into a decent nest egg that will stay with me for my lifetime. Recently I have decided to take up the option to invest a portion of my HSA funds into a few mutual funds available to me. Out of about 15 available funds I carefully researched all of them and chose what I felt were 4 winners that were no load, having a great morningstar.com rating, and a prospectus that I found worthy of my money. I chose a minimal amount to maintain in my health savings account that was $1000 higher than the absolute minimum in order to make sure I can meet my high deductible should a medical emergency happen and also in order to help earn enough interest from the savings account to pay the $3 monthly fee. As my HSA savings account grows past my minimum balance the extra money will automatically be transferred into an investment account and then invested into the mutual funds by the percentages I set. Hopefully I will earn a great return in the long run by making the decision to invest the bulk of unused money into mutual funds from my HSA. With a large HSA nest egg in the future I will be able to use the funds to help me as I get older and my health begins to fade. As long as I have a high deductible health insurance plan I can contribute to an HSA. If I build up enough of a nest egg through the use of mutual funds and compound interest even if I can no longer contribute because I switched back to a traditional health insurance plan my HSA should continue to grow. In the future I will still be able to use the HSA funds tax free for medical expenses. It's best compared to an IRA but instead of retirement an HSA is for medical expenses. Although if I really needed to I could pull the money out to use it for non medical expenses or emergencies but I would be subject to taxes and other fees. I will later report how my mutual fund choices are working out and also update in the future my thoughts good or bad on having an HSA.

Failure is Always an Option, That is Why Success is so Good.

2009 is coming to an end and it's time to set some real goals for next year. Here is my list my personal finance accomplishments this year (2009) followed by my list of goals I plan to accomplish next year (2010). I have spent 2009 learning to save, paying off debt, and appreciating wealth. I made a lot of changes including the decision that I don't want to be poor living paycheck to paycheck, I want to own the things I have and not pretend like I do, as so many indebted Americans do. In my quest to attain wealth I did the following in 2009.

1. I increased my pretax 401k contributions from 1% to 5% taking advantage of my employers price matching of up to 4% of my contribution on July 1, 2009 at one of my company's two open enrollment periods.

2. I maximized my Health Savings Account pretax contributions taking full advantage of my company's 100% price match on January 1, 2009.

3. Over the course of the year I began to setup automatic savings plans for my Roth IRA, my Investment Account and multiple Online savings accounts. I started with one account at a time and increased how much I put more into savings and investments little by little.

4. I paid off my highest interest credit card as well as another credit card account, and implemented the practice of paying off any balance in full every billing cycle. I still have one last credit card with a balance that I am working on.

5. I made the decision to go back to school and have almost completed my first semester back in six years (Fall 2009). I am also shooting to get my moneys worth out of school as an adult. I have a few weeks left of school and am looking to finish this semester with great success. I am expecting a 4.0 GPA for this semester and I have high hopes to continue my success until I attain my Bachelors. Sacrificing free time and my personal life in order to study more is helping me to spend less because I can no longer go out and spend money regularly.

6. Although it hasn't been fulfilled, I did converse with my boss about a raise, and even though I did not and will not attain this in 2009, I have had very promising discussions with my employer the possibility of it in the future, sad to say it may not be near future, but through my discussions I received acknowledgment of my constant hard work and excellence at my job which at least was very rewarding even without a raise.

Below are my goals for the year 2010.

1. On January 1 my first Open Enrollment for my retirement plan at work I am going to increase my pretax 401k contribution from 5% to 10% of my pretax income taking more advantage of paying myself fist by saving more money before taxes.

2. Based on my 2009 automatic Roth IRA contributions I set up in the middle of the 2009, in 2010, I will Maximize my Roth IRA automatically with my automatic savings plan at Sharebuilder.com.

3. If possible, with any extra money and extra income I plan to maximize my 2009 Roth IRA contributions before the April 15th deadline.

4. I plan to further pursue a pay increase with my employer, especially if the economy starts to turn around. With our current economy my company is currently in a slump and that has a large effect on the freeze of pay increases.

5. At the second Open Enrollment for my retirement plan at work, July 1 2010, I plan to maximize my pretax 401k contributions to my company's max of 15% finally reaching my goal of truly paying myself first.

6. Finally I plan to come up with new ways to reduce my spending and still maintaining a lifestyle I can enjoy. I will continue to practice and develop good habits for saving, investing, and growing wealth.

Through the above goals I plan to increase my net worth, improve my savings and investments, make the most of my retirement accounts, and eliminate my leftover debt.

Personal Finance Tools and Informative Sites

Here is a simple list of Tools, Blogs, and Websites that I use and or have found that could be of great value to everyone.

Free personal finance tools that I use:

Mint.com - Manage Your Money
DueMinder.com - Tools to Eliminate All Debt

Other free personal finance tools I have found:

Buxfer.com - Easy Online Money Management
JustThrive.com - Watch Your Money Grow
Yodlee.com - Monetizing Online Banking
Quicken Online - Free Money Management
Money Strands - Money Management

An affordable tool:

PearBudget.com - Really Simple Budgeting, $3 a month

Personal finance blogs and websites I visit regularly for ideas, advice, thoughts, and even news and current happenings in the world surrounding personal finance:

Free Money Finance Blog
The Motley Fool
Morning Star
Get Rich Slowly Blog
The Simple Dollar Blog
Dividend Growth Investor Blog
Savings Toolbox

For personal finance books I am reading or have read see my Personal Finance Library to the bottom right.

My Simple Way to Get Out of Credit Card Debt

The way I chose to get out of credit card debt may not be a secret but it seems too many people aren't familiar with it. The way I chose to reduce and eventually get out of credit card debt is simply to stop producing it. I forced myself to take control of my spending. With discipline and practice it proved to be easier than originally thought overall. In the beginning it was tough but I stopped spending money on things I thought I needed but didn't really need. I had to stop being a wasteful spender and begin spending within my means. Very popular phrases everyone seems to know: "live below your means" and "spend less than you earn" if only everyone actually practiced what they already know. I had to make sure that my monthly spending on bills, living expenses, and paying off debt never exceeded the amount of money I earned each month. My first step to debt reduction was to stop producing more debt. Using Mint.com I was able to identify my spending trends and dig down and find not the big expenses that I thought was producing my debt, but the smaller $5 here and there expenses that were adding up to a majority of my credit card spending every month. Next, I created and followed a proper plan for paying off debt efficiently. Learning to live and accept what you have is very important to reducing debt and saving wealth. In the past it was too easy for me to fall into the past time of "keeping up with the Jones" and excessive spending on credit in order to "look" more than I am actually worth. Controlling our internal consumerism might be difficult but it is a lesson that I believe will pay off over and over. The best thing yet I have learned in my personal finance is that I want to be able to retire at a proper age and I want to attain personal wealth allowing me to live comfortably along the way, however, pretending that I already have reached those goals and spending excessively wasting money on possessions and things I don't need will never get me there. After paying off all of my high interest debt I plan to stay out of debt and invest in my future while practicing proper money management.