Can't Pay Your Medical Bills? Re-posting My Most Viewed Post

This is my most viewed post for a reason: Americans can't pay their medical bills. 

President Obama's Affordable Care Act, which took several years to implement, has already helped many people get access to health care and to affordable insurance. It will help more people in the future. That's great, because it means that you get medical care and you don't get skinned on the price of care. You just present your insurance card and you are guaranteed to not be held up in a big way for cash on the spot. But wait, yes, you still might be expected to fork over a co-pay. Oh. That's why this post is still relevant. Because many of us do not have the cash to pay our medical bills. Or, if we pay the up-front charge, we can't pay some other bill waiting at home, and we certainly can't pay the remainder of the provider's charges, often multiple bills that show up in the mail later.

Sure, Medicaid is an option. But what if you have medical bills from doctors who don't take Medicaid, or from times when you weren't on Medicaid, or from bills that Medicaid won't pay? And what about people whose income technically indicates that they can afford to pay for health insurance, but whose personal financial situation of being deeply in credit card or other debt means they actually don't have any money to pay their bills? Aha. There's the catch. 

Despite medical insurance of various stripes finally being available to us all, plenty of us still cannot pay the actual medical bills that eventually trickle or pour into our mailboxes. If we can't pay promptly, the phone calls start. Each provider or bill collector wants us to pay in full, and forget about paying anyone else or even having enough money to eat that month. Your immediate goal is to stop the provider from putting you into collection or initiating a lawsuit against you. Your financial goal is to pay the very minimum amount you can wrestle out of the provider and to only agree to a payment schedule you have a chance of meeting.

Here’s the basic scenario: 

1. Ask the provider to write off your portion of the bill after your insurance company has paid its share. Sometimes they will, if they’ve gotten enough from your insurer. Sometimes they will even if they’ve gotten nothing.

2. Negotiate the bill lower. Whether you have insurance or not, your goal is to pay between 5 and 50 percent of what you owe, max. Start your offer at 5 percent and let them negotiate you up. The main argument if you have insurance is they’ve already been paid a reasonable amount. The main argument if you don't have insurance that covered the procedure is they have billed you the utter maximum, and you want the bill to be cut to the remaining portion an insured person would be billed. Ideally, far lower.

3. Ask for a payment plan. By now they know you seriously care about the bill you owe, since you've talked to them repeatedly and maybe even called them on your own, trying to do something about paying it. They also know you can't pay it now. If they haven’t offered already, ask to make interest-free payments, stretched over a very long time. A year or more. These payments should give you space to recover first. Perhaps you can arrange to pay them a token fee now, or perhaps not. Then in six months, when you have regained your health, you’ll start making small monthly payments. Don't agree to a schedule that starts right now if you have no hope of meeting it. Try for delayed payments. Six months or a year later, if you still don’t have the money, try the scenario from the top, asking them to forgo payment entirely. Some dentists have payment plans that involve credit card companies and steep interest if you don't pay on time. Try to avoid this formal payment system, as it could drive you deeper in debt if you are short on cash.

4. Ask to be granted charity status. If you know you can never pay a medical bill---for instance, a hospital stay in the tens of thousands of dollars---present a written request on your own or ask to fill out their paperwork for being granted charity status. This is better than having a bill written off, which might produce tax consequences as supposedly "earned" income. When you know you can never pay, charity status is the way to go. You'll have to document why you are a plausible charity case, but most people who are in this situation have plenty of paperwork proving it already, and little shame or embarrassment about admitting that they're out of money. If one medical supplier grants you charity status, include a copy of that supplier's grant letter in your application for charity status to the next supplier. There are zero tax consequences to being granted charity status.

5. Speak to the doctor directly. Or write the doctor directly. If you like writing letters or aren’t afraid to ask your doctor in person, that’s a very effective method of asking for your bill to be drastically reduced or even entirely forgiven. The boss can do what the workers can’t.

6. Asking the doctor to cut the fee applies even to the co-pay. You'll probably never get a refund, so call in advance and ask in advance not to be charged the co-pay or the usual price of a procedure or visit about which you have advance notice. You can also write in advance, or have a negotiator (it could be a family member) call or write on your behalf. If you feel too ill to be up to these tasks, ask someone you know to help you. Usually an office manager will ask the doctor and get back to you with an answer. If it isn't the answer you like, and you have other options such as a different medical provider, pursue them.

7. If bill collectors do start calling, you have rights. The Federal Trade Commission has a great Consumer Information page that details the major rules under the Fair Debt Collection Practices Act. Best of all, you have the right to tell bill collectors to stop calling you. Check out the FTC page so you'll be aware of what debt collection practices are not allowed. Your state may have specific collection laws as well. Hopefully, they'll be in your favor. Most important, don't yield to the pressure that bill collectors exert. You know your financial and medical situation best, so don't agree to what they demand just to try to get them to stop calling. Use the method the law provides.

8. If you do get a notice that you're being sued over a medical bill, don't ignore it. Then you'll lose your chance to fight. You likely don't have the money to hire a lawyer, but you can call your local bar association to get the name of an attorney who will work for you pro bono--free. They do exist and it's not a big deal to find one. You qualify based on your lack of income or other circumstances. The important thing is to get legal representation, so a judge doesn't just take the medical provider's word for what you owe. After all, many medical bills are inflated, or duplications, or just plain wrong. If you miss your date in court, you automatically lose your case. By the way, even at this stage you can try to get charity status from the very same company that is suing you. You can ask your lawyer to send the medical provider a letter.

9. What if you've tried everything, and you still owe some monstrous bill from a hospital that insists you are rich and should pay? Ask for the surgical report on your procedure, which you have a right to by law, and/or whatever records or notes there are for anything, such as a hospital stay, an in-office procedure, anything. Have an unbiased medical professional review it for errors. Medical providers make mistakes all the time. If your records show that a mistake was made, or that something, perhaps an unexpected stay in ICU or some behavior that your medical consultant flags as not according to usual standards, suggests that you were not given correct care, then, with that proof in hand, it's time to call or write and suggest that you should not be liable for the bill because they made a mistake.


The mere whiff of a suggestion that there's a possibility that you might have a malpractice case (is that vague enough? because you are not going to call up and say "I'll sue you") will make the medical provider sit up and start thinking. You will get action. It is quite likely that the response will be a letter saying, no, no mistakes were made, but according to their records, you don't owe them any money.


Yes, this really happens. Medical providers are so afraid of being sued that the mere hint that you might possibly have a case against them may be enough to get them to "lose" your bill permanently.

Or, depending on what the records have revealed, you might be better off finding a contingency lawyer and suing. A mistake that worsens your health or puts your life at risk is an actionable event.

10. Sometimes the issue may be that a medical bill is incorrect, either for a large amount of money or for a smaller sum. As Jay Lake has discovered, some medical billing issues go around and around because the low-level employees of the medical providers and the low-level employees of the health insurance companies keep denying that they have any responsibility to resolve an error. They simply keep passing the buck. They'd rather you just paid what you do NOT owe than fix the error. Bill collectors often say the same thing: "Why don't you just pay it?" When that happens, it's time to tell your story to the local action line, time to file a complaint at the state level, and definitely time to contact your local legislative representatives and get some help. Nobody should pressure you to pay a bill you don't even owe. A pro bono lawyer should be able to cut through the nonsense in this situation, as well. 


The reality is that with or without insurance, any health blip can become a financial disaster. Although the new health care law will change many of these situations, here are some tools you can and should stockpile before the catastrophe:

1. Supplemental insurance. If you know you won’t have money to pay the remaining owed portion if you get seriously ill, buy insurance to pay that part. You’ve seen those TV ads for supplemental insurance; this is what they’re all about. When 80 percent coverage isn’t enough, there is a way to be insured to cover the other 20 percent. If you’ve got serious ongoing health problems such as heart disease or cancer, that additional coverage could be crucial. Those cheapie “we’ll pay you cash every day you’re in the hospital” policies may also help you out a little, but they’re unlikely to cover the enormous multiple expenses that can be incurred in just a one-day visit to the Emergency Room or the ICU.
2. Catastrophic health coverage. This is one of the cheap options of the ACA. Do not imagine that paying the federal fine for not having health insurance is cheaper than having insurance. The entire point of insurance is to cover you for catastrophes. Catastrophes happen to us all. You’ll have to pony up the first $5,000 or $10,000 before its benefits kick in, and, yes, you have to pay monthly premiums. It's insurance. It'll save you from having to pay $100,000 for a surprise stint in ICU.
3. State-funded health insurance plan based on your income or diagnosis. Some states have completely free coverage for certain diseases, such as HIV/AIDS, or breast cancer. Some states have coverage for people below a certain income. These vary by state, and some states aren’t generous. (A good reason to consider where you live based on state politics and resources.) Some states have expanded Medicaid under the ACA. Make sure you apply through the ACA portal, or you might get the runaround from old line Medicaid employees who are still existing on a parallel plane and apparently know nothing about ACA.
4. Social Security, either Disability or Supplemental. Either one will qualify you for a health insurance program (Medicare or Medicaid), but they aren’t easy to get. Disability is almost always an automatic rejection. There are companies and lawyers who will help you. Use them, as it takes years otherwise. The Social Security Administration posted a goal a while back of giving a first reply within 270 days. That’s a goal, not a track record.
5. Medical Billing Advocate. There aren’t a lot of these people around, but they’re pros at making sure you aren’t being overbilled by hospitals, labs, and doctors. They can bargain with your medical creditors to settle your medical bills for far lower than the invoiced amount.
6. Social Worker. There is a persistent myth that social workers actually exist who can help you and who want to help. Maybe when you’re trying to get public assistance, there actually will be a sympathetic social worker who wants to keep you from becoming homeless. Maybe not. Maybe there will be a hospital social worker who makes an effort to help you. Maybe not. At least while you’re waiting to see this probably overworked and burnt-out professional, you’re not at home stewing over bills you can’t pay, and you’re in a heated or air conditioned building, too, something that you might not have at home anymore.
7. Statute of Limitations. Perhaps you haven’t been able to access any of the prior listed methods of paying your medical bills. Each state has a statute of limitations on past due bills, and sometimes that’s only three years. Collectors are supposed to stop calling once you speak to them and ask them in writing to stop, but examples abound of collectors not acting in a legal manner. Put a stop to it. Three years of being called by bill collectors is probably enough purgatory for anyone. Tell any bill collector you no longer are legally liable to pay, and they must drop the case and stop calling. If they overstep their legal authority—which is a constant problem with bill collectors—report them promptly to the state agency that regulates them.

Of course the real answer to the problem of medical bills you can’t pay is to change our health care system at the core. We're on our way, but we aren't there yet.

The Ugly Truth about Medicaid

Do you own a home? Are you unable to pay all your future medical bills and need to go on Medicaid and have Medicaid pay them? Please do not allow the people who staff the social services agencies of your state to treat you like dirt. Medicaid is not a gift. It is a loan--if you own anything of value.

A federal law passed in 1993 requires the states to recover any money paid to people on Medicaid. This happens after they die. If you die utterly broke and without family, no problem. But if you are a fairly typical elderly person who owns a home and then has to go into a nursing home, and then runs out of cash and has to go on Medicaid to keep paying the nursing home, the state will come after your home after you die. This could seriously affect your family's future, even forcing the sale of your home. And it should seriously alter your own view of whether to apply for Medicaid at all, or instead possibly sell your house to pay for a better level of care, or mortgage your house and stay in it with home help, or purchase long-term care insurance, or some other scenario. It should also give you more backbone when dealing with the officious and uncooperative state employees of Medicaid, who routinely lose your paperwork, treat you like a deadbeat, and worse.

Highlights of the 1993 Estate Recovery Mandate: 

States must pursue recovering costs for medical assistance consisting of:

• Nursing home or other long-term institutional services;
• Home- and community-based services;
• Hospital and prescription drug services provided while the recipient was receiving nursing facility or home- and community-based services; and
• At State option, any other items covered by the Medicaid State Plan.

At a minimum, states must recover from assets that pass through probate (which is governed by state law). At a maximum, states may recover any assets of the deceased recipient.

The key element is in the last bullet point: "any other items." This law applies to anyone 55 years of age or older, whether they needed nursing home care or not.  

Medicaid is a loan? Yes, a loan, not a gift. I was stunned to learn this. A friend told me how his state came after him once his mother died, wanting her house. He did not have to give the state the house only because he had been on the title for decades, long before her final years. But the state still did get the value of her possessions. Every chair, every table, every glass and dish and piece of junk jewelry went to the state. Not to mention any antiques or valuable possessions such as furniture, silver, china, crystal, or big-screen TVs. Losing the physical possessions of a dead relative, usually a parent, might not matter to some people, but it could be a bitter pill to others. Imagine having to barter with the state to buy back that antique table in the hall that Mom always said you could have. And you might not be able to pick and choose. You might have to pay the entire debt yourself or let the state take everything. It varies from state to state.

Avoiding the Estate Recovery law that gives Medicaid the legal right to your home is not easy, and it involves serious risk. Medicaid has stern penalties for "fraud of conveyance," that is, an attempt to claim the asset is jointly owned or owned by someone else when actually the title has been changed in anticipation of needing to access Medicaid benefits. There is a time period that the state can go back and basically negate a newly joint or transferred ownership. It used to be five years, but in some states it's now eight years. It could go even higher as people tend to live longer. It also has a specific monetary component. 

This law has teeth. If Medicaid determines that you have tried to hide or shield assets to qualify, it penalizes you. Medicaid disqualifies a person from obtaining Medicaid benefits for a penalty period that can be as much as five years. If you transferred title to a home worth $200,000 within the look-back period (five years, or whatever applies in your state), Medicaid won't pay your medical bills until you have paid that $200,000 to medical providers yourself. The penalty provision will force many families to sell the family home immediately to provide funds for care needed right now. They can't wait out the Medicaid penalty period. That's why the penalty was designed as it is.

There are exceptions, but they're very limited. The spouse of the person on Medicaid is excepted, as would be minor children, although the likelihood of a person 55 or older having minor children is not high. A disabled adult child of the person on Medicaid can be excepted. Certain siblings, based on their period of residence in the home, can be excepted. But not a nephew, niece, or grandchild. Or parent.

The current national average cost for nursing home care is $57,000 per year--and CNN claims the median is $84,000. Depending on where you live, you could be paying well over $100,000 a year for nursing home care. And then, once every dime of yours has been extracted by the nursing home, you get put on Medicaid. Your care or your loved one's care could cost much more. The average nursing home stay is 835 days, or two years and four months, or about $130,000 taking the low figure, or $192,000 taking the higher one. The median home value in the U.S. currently is between $170,000 and $270,000. The value of a home is just barely enough to cover the cost of an extended nursing home stay. Meanwhile, some people report outrageous nursing home charges of over $600,000 for less than a three-year stay. Very few people can pay this out of pocket. In some areas of the country, that would be more than the full value of a home and any estate. In others, it might be a quarter of the home's value. But what family member can come up with $130,000 in cash to repay Medicaid and keep the house? Usually, this means the house must be sold to satisfy Medicaid's claim on it.

How much is a family home worth? How much good quality home care can one of those dicey and expensive reverse mortgages give you? Is retaining the dignity of independent living worth the time of some family member having to oversee the quality of care on a near daily basis? Would selling the house and going into a fancy assisted living place be a better option? But there's no way of knowing how long you will live, is there? Or how intensive the medical care you'll need might be. Assisted living is only for people in good health. Get sick and you get bounced into a nursing home.


What can you do right now? First, have that long-postponed end-of-life talk. If it's absolutely too late to buy long-term care insurance, then at least make a plan. If your plan is to sell the big marital home with all those empty bedrooms and move into an apartment by yourself, think ahead. The plan has to assume that you will lose functionality and will need help. Are there steps? An elevator? Do you want nurses to visit you? A home health companion to take care of you? Is there a family member you might invite to be a companion, to share expenses so you can afford to pay for nursing care in your home? What about that college graduate grandchild who can't find a job?

If you're trying to figure this out for someone else, find out if your loved one is set on staying in the family home until she or he dies and then openly discuss what money there is to pay for home care. In theory there are state and county social services available, but in reality your elderly relative could be on such a list for many years and never make it to the top of the list and actually receive free care. There may be cash benefits available in your state to help people age in place, but they must be applied for, and someone has to take on that responsibility. Decide if the family wants or needs to keep the family home, and how that will be accomplished. There are trusts. There are non-arm's-length sales for $1 to relatives. It's possible to mortgage a house no matter how old you are as long as you qualify by income. Reverse mortgages can be a solution, but they cost around 20% (yes, that's correct) of the value of the home. Although there is more than one type of reverse mortgage, most people seem to get stuck with the kind that pays only a set one-time fee. This is not a great idea for today's homeowner since home values are still low after the recession, and the homeowner will not be able to get more cash out as the house inevitably grows in value. Perhaps changing the house title or transferring any assets so they can continue to benefit the family is worth the risk that someone might need Medicaid and be unable to qualify for it. Perhaps not. Assets might be very small compared to the skyrocketing cost of a nursing home. Most families do not have $130,000 and up to cover that.

And what happens if you are on Medicaid not because you are old, but because you have cancer and no health insurance, and then you don't die? Well, eventually, you will die. Maybe in five years or in thirty-five years. Medicaid is required by law to tell you it can come get your assets once you die. If you are fighting the big C, you're probably not worrying too much about what Medicaid can collect after you die. Until you recover, and realize that Medicaid has a lien on your future.

A lien on your future? What does this mean? You could be trapped in your house, unable to sell it for a profit because Medicaid will take its money first, leaving you without enough cash from the sale to establish yourself somewhere else. When you're young and healthy, not making a profit from selling your largest asset might not be important, but if you are older or your health is in doubt, it becomes a serious issue. The ACA law has allowed many more people to access Medicaid today, but as far as I have heard, Medicaid still has the mandate to reclaim any money advanced. 

The states have implemented the Estate Recovery law in a wacky, inconsistent manner. Your state might not routinely seize assets. Or it might seize a high percentage. You should find out which. This is end-of-life planning, too. Most of all, keep in mind that Medicaid is not a gift. It is a loan.

[Updated December 14, 2015.]
 

Why You Should Not Put Your Bills on Autopay

Companies are constantly pressuring us to stop receiving mailed bills and to stop mailing our payments. They tout the convenience of bank or credit card autopay arrangements. Of course they do, since it is very convenient for these companies to not have the expense of mailing bills and to get your payments as quickly as possible. But autopay is not convenient for me, and here's why:

1. Sometimes, I lose a credit card. It happened to me last year. Because I have no automatic bill paying arrangements on that account, it was a simple matter to call the company and get a replacement card and number. I didn't have to remember what bills might be on autopay, and I didn't and don't run the risk that a request for payment will be denied. If you have five or ten autopays on a credit card, imagine the fuss and bother that a new number could create.

2. Sometimes a credit card company has a major data leak, and sends all its cardholders new cards with new numbers. Surprise. The same problem: it's up to you to notify every one of your autopays of the changed account number or else risk damaging your credit by a refused payment.

3. Sometimes a creditor screws up and double bills me. If the company does not have access to my bank account or credit card, all it can do is send me a second bill. At that point I can call and tell them they've made a mistake. If the company has access to my bank or credit card, it can take my money twice, and then I have to go to a lot more trouble to get my money back. The potential is always there with an autopay arrangement. It's wise to take the measure of a company before considering allowing autopay. I have an account currently with an especially inept company and no way would I ever allow that company access to my money via autopay.

4. Sometimes I decide to cancel a service. If I do so as of a certain date, but the autopay is for a different date, someone at the company has to put in an order to cancel the autopay. An entire billing cycle might go by before the cancellation is sustained. Why put up with that?

5. Sometimes a company decides it wants my money really, really fast. If I allow it to have an autopay arrangement, the company will charge me as early in the billing cycle as possible. That may be convenient for the company, but why should I pay a bill early? It might not be convenient for me for the funds to leave my bank account so quickly. Most people live paycheck to paycheck. We don't want to pay our bills on someone else's schedule.

6. Sometimes I might have a dispute with a company, and wish to withhold payment. That's not going to happen with autopay, is it? Not without effort on my part in addition to whatever effort the dispute itself takes up.  

Autopay arrangements have some advantages, such as when you live in a place where your mail routinely gets stolen, or you can't buy postage stamps, or the mail is never picked up. I am not sure you should live in such a place. Except in rare instances, the U.S. Postal Service works just fine to deliver your bills to you and your payments to your creditors.

If you are concerned that you have a relationship with an untrustworthy company that pretends your mailed check was delayed, and thus unfairly and illegally charges you interest on your purchases, find a better company immediately. Or you can always make an online payment without creating an autopay situation. It only takes a few days--or minutes--to set up online payments. You choose the amount and the date you pay month by month. You are not obligated to continue to make your payments online. You can make some payments by mail and others online, thus remaining fully in charge of your financial life.

If you see autopay as an easy way to deal with regular bills such as health coverage, car loans, or insurance, then at least keep an easily accessible list of exactly what bills are paid via autopay, the day of the month the withdrawal occurs, and the contact information. Otherwise, you could find yourself in a pickle. When I lost that credit card, I was 800 miles from home and I wasn't going to be home for several more days. It was very convenient not to worry about messed up autopays.

Why You Should Not Commit Mortgage Fraud

Committing mortgage fraud is breaking the law. Don't break the law. That seems like a no-brainer, but here's why you should not do it. If you start an important legal transaction by cheating, you run the very real risk of a) getting caught, and b) getting involved with people who will cheat you. Con artists work their cons by first getting their marks to engage in something they know to be illegal or unethical. Then, the con artist goes in for the kill. The shamefaced mark, left with empty pockets, is unlikely to report being taken. Why not? Because the mark did something wrong to begin with. Do you want to be the victim of a con artist mortgage broker? No? Then don't start your effort to obtain a mortgage by lying on your mortgage application.

A lot of people think, "I intend to pay this mortgage on time, so what's the harm in pretending I have more cash than I do?" The harm is they can't afford the mortgage. Making the payments will negatively skew their manner of living. They'll be house rich and cash poor. They'll suffer the whole time they live in that house, because too much of their income goes to the mortgage and not enough is left over for an occasional pizza. Improved quality of life is usually why people seek to own a house. You have not improved the quality of your life if you have no cash left over each month after you pay your mortgage.

Some people think, "My parents are lending me the down payment, but I need them to sign a letter saying it's a gift. I intend to pay them back, of course." Those people should not try to buy a house, because they will sour their family relationships over asking other people to commit fraud. Then the high cost of home ownership will surprise the naive new owners, who will be unable to pay the parents back. Instant family trouble. Don't do this to yourself. 

Lenders do not make up qualifying ratios and required down payment amounts out of thin air. Whom do you think has the most expertise about home buying? Not the buyers. The lenders do. Lenders see people buy houses all the time, whereas during an entire lifetime, most people only buy one or two or maybe a couple more houses. Lenders have the experience to know that putting every dollar you have into a loan, and not leaving enough for day-to-day living, is a mistake. People who want to assign a huge percent of their income just to their mortgage soon find it difficult to make their monthly payments. That's the origin of the ratios. And lenders also know that unless people have a substantial stake in the success of a venture they are likely to walk away from it in tough times. That's the origin of the down payment. If you can't come up with 20% of what a house costs, you probably should not be trying to own a house. If your parents give you the money, that's okay, although you still could be at risk. But if you try to pull some secret loan deal and pretend the down payment was a gift, that's the first step to losing the house. Or losing your family.

People ought not try to subvert rules that exist fundamentally to protect them--not the bank--from getting in over their heads. But they do it all the time. They think they know better. They think they're smarter than the banks. Mortgage fraud, from little white lies to outright subterfuge about the origin of money in your bank or for your down payment, will come back to bite you. Don't commit mortgage fraud.

Never Assume Anybody Knows What They're Doing

This should be the happy coda to my long mortgage refinance story, but it's not. Why? As they say, denying all responsibility, "Mistakes were made."

Mistake #1. Despite receiving the hazard insurance on our home when funds were disbursed after the closing, our insurance company went ahead and billed our new mortgage servicer all over again.

Mistake #2. Despite it being uncommon not to prepay out of already accrued escrow such things as home insurance during a refi closing, and despite having its own copy of the closing papers, our new mortgage servicer paid the double bill without questioning it, thus completely depleting our escrow.

Mistake #3. I sent a large check, separately from the regularly monthly mortgage payment, specifically designating it to be applied to principal only. Instead, the new mortgage servicer decided to apply it to our next month's regular mortgage payment.

Mistake #4? We gave up waiting for the invoice for the mortgage payment due July 1, so we sent the payment anyway. What are the chances that the mortgage company decides to credit it to the wrong month's payment? Or the now negative escrow? Or who knows what?

Mistake #5. When our insurance company received the excess payment, instead of questioning it, they applied it to our car insurance bill, which wasn't due for another month, and was for a different amount. Then they sent us a refund check for the difference, without any explanation.

Mistake #6. Well, that's still to come.

A lot of people are working for companies so large that they can't even begin to challenge an incorrect communication such as the double billing from the insurer. Despite demanding that I recite my name, address, telephone number, and e-mail address over and over during every phone call, these companies never bother to pick up the phone or shoot me an e-mail and ask, "Hey, what's up with this? Seems a little odd." I'll say it's odd.

These employees are not being paid to get things right. They're paid to get the money, or pay the money out, but never to think about what the transaction means. It would be sad if it weren't so frustrating for all concerned. The only redress the insurance company offered was to send us the car payment as a refund, which of course we would then have to turn around and pay anyway next week. The jury's out on whether the mortgage company will credit our extra payment to principal, or try to weasel out of doing that based on stupidly paying the double insurance bill. And eventually, we'll have to cough up roughly the amount of our car payment to rebalance the escrow. What a mess. 

This is yet another reason that some people are willing to stay with their old, overpriced mortgage, rather than fall into the hands of an incompetent company. Or in this case, two incompetent companies.

What can we learn from this experience? Not much. Keep on top of your bills. Pay attention when they don't show up on time. When random checks arrive, find out why. And be ready to spend a lot of time on the phone straightening things out. You are the only one who can. You're also the only one who cares.

***Hilarious update.***

Out of the blue, five years after the Refi That Took Forever, we received a substantial check (over $1,000) as our part of a class action suit that someone had filed against our mortgage company. I guess others were shrewd enough to see through the mortgage company's double-talk and realized that we all were being overcharged.

Tax Time Promises to Keep

Do you end up filing your income taxes on the last possible day, sometimes even at the last possible hour each year? If so, it's time to clean up your act. Why put yourself through the stress of last-minute filing when you can make a plan now, follow through with it, and be happily spending or saving your refund next year when April 15th rolls around?

Start by asking yourself what goes wrong or delays you. Are your tax papers scattered around your home? Have you moved? Have you held several jobs and found it hard to obtain all your W-2s? Do your living circumstances change frequently? Has your marital status changed? Does a family member refuse or forget to give you important information or documents? Is a daycare provider or religious institution lax in giving you a written yearly accounting? All these can affect getting organized in advance.

Or is your problem finding the time in January, February, or March to go to a tax preparer? Although there are long waiting times in certain volunteer tax preparation spots, others take appointments. A little digging can put you in contact with whatever agency runs each site and you can learn where your most efficient tax prep venue will be.

Accountants of course will take appointments. Get recommendations and look for an accountant in the summer, once they've filed their on-time returns and taken a vacation, and aren't yet working heavily on the automatically extended returns due in October. Then agree on an appointment date for next year and mutually generate a list of items you will bring with you when you do meet with the accountant.

If you do your taxes yourself, get into the habit of paying attention to announcements of new tax rules, so you'll be prepared for them come next January. Download any new forms and instructions and read up on changes. File change of address forms if need be. Get disability letters and divorce decree information about dependency and the Earned Income Credit organized. Determine if your projected income for the year qualifies you for free filing by a commercial tax preparer, and if the complexity of your return next year will require a professional.

If the reason you edge up to the tax deadline each year is that you're very busy, make an appointment with yourself. Block out the time in advance. In fact, make two appointments. The first is for locating all your documents, buying tax software, or downloading tax forms and instructions from irs.gov and from your state tax department website. You also should determine how much time you need to do the basic work of filling in the blanks, calculating the dollar figures, and checking your accuracy and completeness. The second appointment with yourself is to do the actual tax returns.

What about all those papers that must be organized before you can even start your tax return? Start organizing them now, when they haven't yet grown to be a huge stack. As I've described in a prior post, Record-Keeping Tips, any organization method that works for you is the right method, as long as you use it consistently.

Although many of the tax documents you'll need for your tax return will be received next January or February, you can prepare for them now. You can create a folder or large envelope in advance for all employment documents such as W-2s and 1099s, or for retirement documents such as 1009-Rs or 1099-SAs. Then, when the annual statements arrive, you'll know exactly where to put them.

Do the same thing for any other kinds of receipts you'll need, such as real estate bills and proof of payment, personal property and local fire and ambulance taxes, medical bill copays, and more. Remember that if you plan to claim mileage for medical, charitable, or self-employment travel, you need to keep a notebook in your car and enter the details of each trip on the day the trip happens.

Of course, you might just hate taxes and always want to put them off until the last minute. Even though taxes don't take any less time to do in April than they do in March, some people procrastinate out of sheer cussedness. It's our way of shaking our fists at the governments that tax us. But if that attitude leads to a pressured April next year, ask yourself if a little advance planning and organizing will make your next tax day more pleasant.

The Easy Way for a Hoarder to Empty a Room

 How to empty (NOT SORT) a room:

This is what you do before a mover comes to move the heavy furniture.

Get thin cotton or plastic gloves, markers, packing tape and regular tape, packing paper, bubble wrap, and labels. Obtain a large supply of cartons, all in one or at most two sizes. Set up each carton as you need it. 

1. Fill a carton by placing everything from one area inside it, working from top to bottom until all furniture is empty. Use packing paper or bubble wrap as necessary to cushion items but do NOT attempt to group like items. Keep everything together that was together in the room. Wear the gloves so you do not get distracted by the texture of the items to be packed.

2. Label each carton with the name of the room and the piece of furniture:, e.g., "Mom's room, top dresser drawer," or "Top of bureau, right side." This creates a record of where the items were visually.

3. Repeat for the closet. If the hanging clothes will not fit in a carton, put them in large plastic bags and tape on a label identifying the origin closet, e.g., "Mom's closet left side" or "Mom's closet middle."

4. Remove and carefully wrap all photos, paintings, and wall decorations. Put into cartons and label the cartons describing which wall or surface the items came from.

5. Do NOT attempt to "sort" or "go through" or "organize" any items.

6. Do NOT attempt to throw anything out, separate anything out for donation, or hold anything aside for any reason. Pack everything.

7. Even if an item is trash, pack it and label where it was found, e.g. "Mom's room, east windowsill."

8. Do not leave anything in the room. Empty all drawers, closets, walls, and surfaces.

9. Check behind and under the bed and other furniture for stray items.

10. Remove and pack bedding.

11. Move all cartons to a previously determined storage area.

You're done!

This method will work best if you can still see furniture. If you can't, modify the labels to reflect exactly where in the room the contents of each carton came from, e.g., "Mom's room, top of pile of papers on her bed, near foot."

The idea behind this technique is to empty a room without engaging any sorting or organizing, thus without overwhelming yourself. The labels should describe exactly where in the room a carton's contents come from, so that you can visualize the room and know which carton has which items. 

Visual memory is very strong. It is NOT necessary to GO THROUGH, SORT, or ORGANIZE items if all you want to do is remove them from one place and put them somewhere else. Do not destroy your visual memory of how the items were placed before they were moved. Embrace it and use it to keep your items organized the same way now that they are inside cartons. There will be some other day when sorting happens. Today your goal is to empty a room.