The Unpleasant Truth About Gutter Covers

This is not about any particular brand of gutter guard. This is about the concept of the gutter guard--which is a screen placed under your last bit of roofing tile and over your outer gutter edge so leaves and other debris can't fall in, get stuck, and cause nasty floods and backups.

I've had the nasty floods and backups in my gutters. I live surrounded by hundreds of tall trees. Vast numbers of leaves get stuck in my gutters. I usually have to pay someone to come clear out the gutters twice a year. It's a two-story house and I am not young, so DIY is not an option. In good economic times, it's hard to find anyone willing to clean out gutters, even though it's a simple enough job. In bad weather, even if I find someone to clean out the gutters, the leaves may be frozen into place and impossible to remove. So I have to make an appointment far in advance with the one person I have found who will clean out gutters, and then I have to hope that the weather will be decent on that particular day.

My luck was bad one year. The leaves were still jamming up the gutters when we had a torrential downpour. Because the gutters were jammed, water leaked through my skylights. This was not a fun experience. So I paid to have gutter guards installed. The cost was approximately what it costs to have the gutters cleaned four times, which means that I'll even on the cost in two years.

Meanwhile, there's something else to consider. The gutter guards do a fine job keeping leaves out of the gutters. But the guards themselves are screens that are basically suspended in air. Bridges are suspended in air and they freeze before roads do--we've all seen those signs. When snow or freezing rain falls, these gutter covers become jammed with ice. Snow melts off the warm roof and freezes when it hits the guards. Or freezing rain stays frozen on the guards even though it melts on the roof. Houses leak a lot of heat, but they don't leak much into the gutters, so the screens stay full of ice even as the snow melts off the roof.

Water then drips vigorously along the house line, all around the house. Why have gutters at all if they're going to become inoperable? Gutter guards of any ilk that create icy conditions such as I've described lead to flooded basements. The water that should be caught in the gutters and safely transported far from the foundation by downspouts and their extenders instead rolls across the iced-up gutter covers and drips down directly next to the edge of the house.

Brilliant, huh? These covers are absolutely useless in snow and ice. They actively create a hazard by creating icy buildup right outside your doors, too. And guess what? They also do not eliminate the possibility of the dreaded ice dams usually caused by jammed, flooded, iced-up gutters. These frozen gutter covers can dam up, too, and block water that should descend into the gutters or at the very least across the covers.

I honestly do not know which is worse: skylight leaks because the gutters are jammed with leaves or basement leaks because the gutter covers render the gutters useless. I remember living in a house with no gutters. I didn't have either problem because the house was built on a concrete slab and had no basement. (It also had slab heat that took 24 hours to warm the house, but that's another rant.)

Beware any sort of gutter covering that can fill with water and freeze up and block water from entering your gutters. That would be pretty much any gutter covering, I think. I need to put the guy who cleans out gutters on retainer. 

A Simple Solution to That Gurgling Drain

Recently, I noticed that every time I flushed a toilet or ran water at a bathroom sink, I'd hear a loud gurgling noise in the bathtub. Of course I checked the net for what it could be. The most common answer was that our roof sewer vents were clogged up somehow. Roof sewer vents are open pipes through which air enters the system. They allow dangerous gases to escape the system so the house doesn't blow up. 

The next most common answer was even more dire: a secret clog in our pipes, and the net warned that using a drain cleaner would only disguise the problem. However, the problem being on the roof was the most cited answer, so I attempted to find a solution.

I called a handyman company, but it declined to go up on the roof and look at the vent. I called my usual plumber, but they said they don't do that sort of thing. The only company anyone recommended was a big plumbing company that does everything--a company I know charges a fortune and which from experience I believe does not offer intelligent solutions, only expensive ones. 

Changing out the roof sewer vents would compromise the roof itself and the risk would be a leaky roof. That could result in catastrophic damages during heavy rain or after snow or ice.

So...I waited for better weather to call them. Also for more money to magically appear in my bank account via a tax refund, because I couldn't see this company putting someone on the roof and replacing a sewer vent for less than many hundreds of dollars. Call a plumber and two show up, so whatever hourly fee is quoted is automatically doubled. A roof repair could be complex. This is how plumbers get rich.

A couple of days ago, I ran some water in a bathtub that is only used when guests come to stay. Now the sounds are gone. Surprise!

Conclusion: The internet was completely wrong about the origin and meaning of the sounds. Every site I visited said the same thing, a clog of some sort. Turns out the origin of the sounds was a lack of water in the p-trap under the seldom-used bathtub. Now that there is water in the trap, the sounds are gone. I dodged an expensive bullet.

I hope this information helps someone else. 

Mistakes We Don't Make at the Supermarket

"On average, a family of four spends up to $1,300 a month on the food they consume at home. To make matters worse, most are spending more than they need to because of mistakes they are making when shopping at the supermarket."

The actual article title is "Biggest Supermarket Shopping Mistakes." This kind of story from Kiplinger's plays on our fear that we aren't as smart as we hope, that we don't know how to do our lives correctly. A vast number of so-called "helpful" articles start with the premise that we, the readers, are constantly making mistakes.

What about those mistakes at the supermarket? Apparently, we shop every week without noticing what's on sale that week and stocking up on it. We also don't compare prices, and we don't plan our meals around the perishable items on sale that week.

Uh. No. We do the due diligence. We read the store circulars and we cut out or print out the coupons for products we already use, and yes, we do know what time of the year to buy Bing cherries and sweet corn at the best prices, too. If we're really supermarket mavens, we also know that just about everything in a grocery store goes on sale every six weeks. All we have to do to never buy at full price is stock up enough during a sale to tide us over to the next sale. Works like a charm, plus this way we never run out of toilet paper.

Of late, companies have been pushing different sizes and packages of some staples, paper towels being the best example. Hardly a week does by when some version of Bounty towels isn't on sale. Mega sizes, double sizes, regular sizes, different numbers of rolls per pack, and more. We stock up and then we stock up some more, and the company's hope is that we use the paper towels more rapidly because we have so many in reserve. This is a pretty good guess about how people behave. It's the number one reason to put cash earmarked for savings into a savings account rather than keeping it in the regular checking account or as bills on top of the dresser. The less we feel we have, the more careful we are.

But paper towels are minor. Where the typical American grocery shopper makes mistakes is in buying processed foods that are full of chemical additives, including the number one evil chemical, partially hydrogenated oil.

Partial hydrogenation keeps oil that's sitting around a factory in big drums for months on end from going rancid. It also keeps cookies soft for weeks on end on the grocery store shelf. But food items move swiftly in a grocery. The hydrogenated oils are in a vast quantity of food products merely for the convenience of the food processor. You don't need to give cheese puffs a nearly immortal shelf life. Those items are put in the store fresh nearly every day of the week, and frankly, most people who buy them consume them almost immediately. The oil is there anyway, and you can look up why it's so bad for people right on Wikipedia.

I love looking at what's in other people's shopping carts, and most of what I see are processed foods, not fresh foods. Only around major holidays do people fill their carts with fresh foods, plus the normal building blocks such as flour, sugar, and chocolate chips. This surely has to do with lack of time to prepare meals from scratch, but everybody ought to read ingredient labels and walk away from those that run long and contain many unpronounceable chemicals. It's supposed to be food we're eating, not man-made chemicals. That's our number one mistake at the grocery store. 

Be Happy About Your Tax Refund

Every spring, personal finance professionals switch from chiding us about filing our taxes on time to chiding us about getting refunds. To get a tax refund is proof that we overwithhold, they say. It's proof that we can't manage our finances properly. Worse, receiving a tax refund is proof that we taxpayers are childish, incapable of saving unless Big Brother holds our money for us and only gives it back once a year, without paying any interest.

I don't think so. Federal law has allowed the IRS to behave over the years in a terrifying manner. It has seized people's property, shut down their businesses, hauled them into court, and even sent them to prison over unpaid taxes. What people fear most about the IRS is owing money. They may specifically fear an audit, but more generally, the fear is that they'll come up short on April 15 and not have any ready cash to pay what they owe. Then they'll owe interest and penalties, both of which mount up very quickly. Once a taxpayer gets into tax debt, it often takes years to clear the account.

A letter from the IRS is scarier than a cease-and-desist letter from a lawyer threatening a lawsuit. Those at least are clear about what the perceived offense is and how to stop further action. The IRS often sends letters people don't even understand, demanding money according to tax schedules the taxpayers never used, about taxes filed years in the past. The IRS also has a well-deserved reputation for bullying taxpayers over very small dollar amounts, in order to terrify the rest of us. It works.

How do taxpayers protect themselves from the threat the IRS represents? We overwithhold. It's a simple yet winning strategy. Maybe when banks were paying 5% interest on savings accounts, we might have been tempted to underwithhold and just pay up on tax day. But that strategy doesn't help us sleep at night, and banks these days don't pay interest worth talking about.

Laughably, several of the articles I've read that sanctimoniously say we're fools to get refunds also say that we should have put that refund money, month by month, into the stock market and made a killing. Right. We also could have lost it all. This is not brilliant advice, and it's not even a sane comparison. Comparing a speculative, uninsured stock investment to the dependability of receiving a tax refund from our stable federal government is nuts.   

There's also the little matter that Congress changes tax rules every year, but drags its heels and often does it on the last day of December. How are taxpayers to plan in January for not-yet-enacted new tax rules? We can't.

Overwithholding gives the government free use of our money, the critics say. But we the people are the government, so we're saving ourselves the interest the government would have to pay to borrow the money we're lending it for free. Our patriotic gesture, in fact. Meanwhile, we're also arranging for forced savings that can result in a large chunk of cash that we'd never see in one place otherwise. Could we obtain that chunk of cash by mere savings? Not easily, because there are so many daily demands on our money.

By overwithholding, we create a happy tax time scenario: We're getting a refund! Hurray!

The financial critics should lay off.

Can You Afford It?

A lot of us make more than enough money to take care of life's essentials. It's when we consider other possible purchases that we tend to screw up. We don't seem to know what we can afford and what we can't. That is when we turn to credit to fund our extravagances, and we get into trouble.

Have you ever noticed that most books on personal finance do not discuss what we can and can't afford? Most personal finance TV segments don't discuss limits on spending, either. Suze Orman was the rare exception, with her "Can I Afford It?" segment on her now-gone television show. But even Suze only lately came up with a formula to help children--not adults, but children--determine how much of their savings to spend on something they're lusting after. Suze says spend no more than 10% of savings on any item you want but don't need. It's a great concept, but hard to put into practice as an adult because we'd have to look at it in reverse to determine where to draw the line.

During the Cold War, a very long time ago, magazines sometimes ran cute little features comparing how many hours a U.S. citizen had to work in order to afford to buy a suit or a dress, versus how many more hours a Soviet Union (Russian) citizen had to work. Of course the U.S. always came out better in these comparisons, because we had and still have superior access to a wide range of consumer goods, many of them at cheap prices. People in the U.S. were paid well back then, too. The situation has changed. We now are paid badly compared to the inflation since the Cold War, but the price of clothing has dramatically reduced, to the point where people feel they can buy items and never wear them, or wear them only once and then ignore them. Determining what is too much in this scenario is complicated because you'd have to add up every dime you spent on clothing and then compare it to your income. Few people do that.

Let's consider something simple, a Coach bag. Coach makes leather handbags, purses, and other accessories. These are good quality items in solid leather that usually will wear well for decades. Thus a Coach bag, which can easily run $300, can be viewed as an "investment" whose cost will amortize over the long time it can be used. If you're the kind of person who is willing to carry the same bag for decades, buying one that costs 6 times your usual $50-on-sale bag might make a kind of daft sense. Except that most people who become fixated on a designer handbag don't use it exclusively, or that long, because they will be captivated by some newer design or designer. An Hermes Birkin bag can run you $10,000. That's 33 times what the Coach bag costs. If you bought a house that was 33 times the price of a house you could afford, and your bank approved you to buy a $500,000 house, you'd be spending $16.5 million dollars on a house. That's how out of whack buying a Birkin bag is for anyone who is not rich. But what about the Coach bag? How do you discover whether you can afford it, or whether you ought to buy a less expensive brand at a discount store or on sale somewhere?

First you look for descriptions that suggest what percentage of income can or should be spent on clothing. A shopping site that seems to push expensive clothing says 5% of your net pay, your take-home pay, is the limit. Let's assume for giggles that you only bought one clothing item, that Birkin bag, all year. Your net pay after taxes would have to be $200,000 a year. Yikes. What about the Coach bag at only $300? There it begins to get complicated again. Three hundred dollars is 5% of a $6,000 a year income, but $6,000 a year is below the poverty level. The 5% figure doesn't help us here because it's not a reasonable purchase with such a low income.

A personal blog that isn't trying to flog expensive clothing cites the Bureau of Labor Statistics information that the average family spent $1,700 on clothes in 2010, on after-tax income of $60k. That's 2.8%. Assuming there are four people in the family, that's only $425 a year per person. On the face of it, then, a $60k take-home income does not justify spending nearly 71% of your annual personal clothing budget on one Coach handbag. What happens if you go ahead and do it, and then you need new running shoes, a couple of t-shirts, and a pair of sweatpants? Even buying them all at discount stores, you'll be over budget in the wink of an eye. If there are only two people in the family, each person has $850 to spend all year, and the Coach bag represents 35% of it. Still too expensive.

Typically, women are pressured by our society to spend more on clothing than men do, which often pushes the percentage higher. On a $60k net income, that's $3,000 a year, and the Coach bag is 10%. We're back to Suze Orman's standard number.

It's so tempting. That Coach bag would look good on the custom-built shelf in our walk-in closet--except that with a take-home pay of $60k, we don't have a walk-in closet or a custom-built shelf for designer handbags. Too many of us want to pretend we can afford the appurtenances of the wealthy, when we can't.

New Year's Resolution: Save More Money

You think don't have enough money, yet I want you to save more? Yes. Here's how. We all have a tendency to forget about the money we don't see directly in front of us. Our paychecks typically deduct for a wide variety of taxes and insurance, and once the shock of how little we get to take home wears off, we simply do not pay attention to whatever comes off the top. If we add an automatic deduction directly to a savings account, we won't notice it.  

Retirement savings should go directly into your 401k. Do this first, before you work on the other savings. You will grow old someday, if all goes well. When that happens, either you won't want to work anymore, or you won't be in good enough health to work. Your future self will be very grateful you saved to make all those years of being a geezer more bearable. Max out your contributions at work first, because the dollar amount you can put in a 401(k) is significantly larger than the maximum you're allowed to contribute to a regular IRA or Roth IRA—almost four times as much, in fact. Only the SEP-IRA, meant for business owners and self-employed sole proprietors who earn a profit, has a feature that allows individuals to pile up significant retirement cash. Of course you're not looking forward to growing old. You're sure it'll never happen to you. Save for retirement, anyway, okay?

Having set up retirement savings on automatic, it's now time to organize the other savings accounts. Some employers offer the option of making a direct deposit to a savings account as well as a checking account, which makes the automatic savings very easy. If yours doesn't, see if your bank will set up an automatic withdrawal from your checking to your savings. There's also the method of treating regular savings like the first bill you pay once you receive your paycheck, and writing that check to savings, or transferring the money from one bank to another, before you pay for anything else.

How hard is it to save a little more money? If you eat out four times a week as The Simple Dollar and other sources say is average, you're spending around $230 a month on commercially prepared meals.

If all you do is save the equivalent of one night out, $25 for two people (and find something fun to do that night that does not involve spending money, so you don't feel deprived) you will have approximately $100 extra for savings per month. At this time of New Year's resolutions, I've already seen a lot of people resolving to eat out less. Make the goal specific by signing up for automatic savings in the amount you intend to save per week, and you're done.

Once money has gone to a savings account, it should be subdivided and transferred into other savings accounts. Here's the rundown of what you need:

1. Rainy day savings of eight to ten months of living expenses. Do I have to tell you why this is a really, really good idea? Have you forgotten 2008 already? Build up this savings account as fast as you can.

2. Savings for large purchases, usually a car. Unless you live a strictly urban life, you need a car to get to work, to shop, to socialize, and more. Cars fall apart and have to be replaced. The moment your monthly payment ends on your current car, you should divert the same dollar figure (okay, rounded to an even number) to a savings account for the next vehicle. You can divert less if you imagine that the next car you buy will costs thousands of dollars less. Not likely, is it? If you're still paying on a vehicle, put a few token dollars into the fund for the next one, anyway. Your refrigerator might break down.    

3. Savings for vacations, toys, life's pleasures, etc. Everyone should have some savings that are not allocated to the business of life. Each person in a relationship should have a separate savings account, even if you funnel the regular paycheck deposits into a joint checking account. If I want to give my spouse a present, I don't want to do it through a joint account. It spoils the fun.

At first, the dollar amounts that go into your savings accounts may not amount to much. Be patient. Increase the amounts as you can. Getting into the habit of saving regularly is more important than the immediate total. You'll have more confidence to face life's ups and downs when you know you have savings.

Employee Assistance Plans Are For Real

Does your company have an Employee Assistance Plan (EAP)? Have you avoided making use of it because you're sure your HR department will tell your boss you're getting therapy? Are you convinced the EAP will directly rat you out to your boss about the exact problem for which you are seeking help?

That's not how EAPs work. They are completely, 100% private. The way you contact them is private. The provider does not even put your name on a file folder. You don't necessarily have to give your name to the provider. Even in these days of medical offices computerizing their files, the EAP provider is prohibited from listing your name anywhere. Therefore there are no records that can get hacked, or that can accidentally or on purpose be sent to your employer.

The other great thing about EAPs is that they are free. In the past, your medical insurance might have been stingy about the number of mental health therapy visits you're allowed and reimbursed those visits at a lower percentage than other medical services. Although the ACA is changing this, the trend is for people to pay more and more in co-pays. Not EAP counseling. It's free. If you obtain therapy through an Employee Assistance Plan, you pay nothing. Want to quit smoking? Access your company's EAP. Want to cut down on your drinking, or your legal or illegal drug use? Use the company EAP. Want a shoulder to cry on, or someone who'll listen calmly as you recite your fears? The EAP provider is your answer.

Of course you don't want to ask HR about the details of the company EAP when you need it, so make a point of asking when you first start working there. Learn enough about how their Employee Assistance Plan operates to be absolutely sure it is fully confidential.

I never knew the full range of benefits available in an EAP until after I didn't have access to one. Free services I could have used! Free as in free. Think about it.

 

Freeze Your Credit, So It Can't Be Stolen

Recently, someone I do not know blogged the sad story of losing her wallet out of her purse and then having to deal with repeated attacks on her credit. Yes, she was really stupid not to keep her purse on her; evidently it has been her casual habit to leave it unguarded in grocery stores and even hang it on the cart the bellhop uses at hotels. So of course we can smugly say she was asking for it. No question, the identity thieves pick the low-hanging fruit first. If you have visitors to your home frequently, find a good place to secrete your purse, too. People you know sometimes are shiftier than you think.

Let's not be smug, though. Unfortunately, credit thieves are coming for all of us, and it's just a matter of time when they get to you or me. It's very hard to protect ourselves completely because everybody wants our personal information. Facebook keeps trying to get details of my life--the very items that credit companies want as the answers to questions as backup to the basic password. And certain people I do not know have found my date of birth (a matter of public record) and celebrated it on Facebook, totally without my cooperation or permission. My address and phone number are easily found through a free ZabaSearch, too, so forget that cute "give us your zip code" at the gas pump. Dead easy to obtain. Some things are matters of public record, including addresses.

So what can you do? You can freeze your credit with all three credit reporting agencies. They used to charge a few dollars for the privilege, but recent legislation has made the service free. Also, you can tell each credit company with which you do business, and those that simply mail to you, not to send you credit offers (I haven't gotten them in many years). It's a little harder, but you can also demand that your credit card company not send you "convenience checks." We did this when our parent was high up in dementia, so no hired nurse could grab the checks and take her credit for a ride. It's also a good idea to cancel excess credit for elderly folks, and keep a remaining card in a safe place.

You can give false dates of birth when registering for websites (as long as you're 18, they're happy). You can remove excess credit cards from your wallet before you travel. You can make sure you never, ever give anyone your debit card number, or that your bank account from the debit card only has a few dollars over the price of what you are purchasing right now. You also can call your credit card companies whenever you plan to travel, and tell them the dates and locations. Without that prior call, I have found that credit has been denied for large purchases--even on a card that I routinely use for large purchases--and for small purchases, too, such as at a grocery store while visiting relatives out of state.


Of course do not carry your Social Security or Medicare card on a daily basis. Carry photocopies with the numbers blanked out; you know the number by heart, anyway. Don't remember the new Medicare number? Make it a game to memorize it. Change your online passwords, and use two-step verification whenever possible. Use only one credit card online, not all of them (I know you have more than one). Check your bank accounts regularly, and look at your credit card statements to make sure no unusual charges have slipped in. Use your middle initial, so your name is more distinctive. If you name is Kathy Jones or the like, consider legally changing to something less generic, even if the change is only to add and start using a middle name you've never had before. Proving you are the innocent Kathy Jones can be a nightmare otherwise. Seriously. People with common names get hit more often.

The lock on your credit with the reporting agencies is probably the cheapest and easiest preventative measure, and you do not need to buy a commercial plan to do this. It's free as of late 2018.

Get that lock activated, and don't bother with paid services that promise to tell you--after the fact--that someone has stolen your credit. Not useful. The lock is.

Pay Your Bills on Time

Lots of people have the money to pay their bills, but they are lazy and sloppy. They figure no one is calling demanding the cash, so what's the hurry? I hope that's not you. If it's a loan from a friend, you're likely to lose that friend. If it's a loan from a relative, you're storing up long-term resentment that can bite you in the future. If it's a credit card bill or utility bill, you're looking for trouble when attempting to get more credit to buy a house or a car, or obtain any kind of loan on low-interest terms.

My latest credit card bill devoted two pages to what it called "Useful Tips." Here they are:

1. Pay on time.
2. Pay at least the monthly minimum.
3. When you can, pay in full.

Pay on time? What's that? If your attitude about paying promptly is lax, do not be surprised when your credit scores go down and the cost of credit to you goes up. Entities that loan money take regular on-time payments as a mark of your financial responsibility. The credit card companies do not need to know how much money you have in a bank account or the stock market. The companies want to know if you will pay on time. If you do pay on time, you will always get better treatment from your creditors than if you don't.

If you are too disorganized to pay your bills on time, simplify them. Many bills can be put on autopay, or you can set an alarm on your phone or computer to remind you to pay them all the day you receive your paycheck. You also can charge only to one credit card each month (rotate through them to keep them active). You don't need to use store charge accounts when they accept major credit cards, another way of reducing the number of bills you receive. If you want to take advantage of a store card benefit such as a discount, use the card, but then walk over to the store's service desk and write a check then and there to pay the amount you just charged. Done.

Pay at least the monthly minimum. This is another no-brainer, since your creditors will tell you exactly what the minimum is. If you really want to pay their exorbitant finance charges, go right ahead, but at least avoid late payment and low payment fees. The minimums due are very low and the late payment fees are very high.

When you can, pay in full. We now have consumer laws in place to require our creditors to remind us that stretching payments over many months or years results in paying two or three or more times the purchase price. It's not a bargain buy if you end up paying three times the price. Think twice about buying anything you can't pay for in full by the end of the first billing cycle.

There is no "secret they don't want you to know" when it comes to paying your bills. There is nothing fancy or mysterious about maintaining good credit. Pay on time.

What a Dog Bite Costs You

Someone I know got bitten by a dog. He was taking his nightly walk in his neighborhood, and a lady walking her dog did not control the animal. It leaped at him and bit him. He cried out, "Your dog bit me," but the lady said, "No, he didn't, " and she ran away.

It was dark. He didn't know her or the dog. He certainly couldn't chase her. A man chasing a woman on a dark street? The police could have deemed that assault. He never got a good look at her or the dog. So he went home.

After he got home, he collapsed in a faint, and a relative rushed him to the ER. The ER doctors did a nice job, explained that the faint wasn't life-threatening, and shot him full of meds. They told him to come back for the necessary series of rabies shots. You'll be relieved to know these shots were not in his stomach, as legend has it, but in his arm.

Rabies is still a fatal disease, so opting not to get rabies shots is a mortal risk. Especially since where my friend lives nearly an estimated one-third of all dogs have not had their shots. Most jurisdictions offer rabies inoculations free when you apply for a dog license. Free as in free. A pretty good deal to safeguard your dog and your fellow citizens. But many people do not license their dogs.

The bills for treating the dog bite have now arrived. My friend has health insurance with a yearly $2,500 deductible since he's young and healthy. After the deductible was met and insurance paid its share, the out-of-pocket cost of this dog bite was $4,000 for the ER visits and the shots. Bills from the ER doctor and from the hospital are still expected.

That's right. Four grand.

Would there have been any way to get the shots less expensively? Probably not the first set, since they were given in an emergency situation. Perhaps my friend's regular doctor could have ordered the vaccine for the follow-up shots, and they would have cost less. Perhaps not. My own attempts to get my doctor to order the shingles vaccine were fruitless, despite it supposedly being commonly available. With rabies, my friend could not take a chance and wait to see if maybe his doctor could get the vaccine. His other option might have been to go to a freestanding pharmacy that gives shots, but again, whether the pharmacy could obtain the vaccine in a timely manner is a question. Most insurance plans will not reimburse for shots gotten at a pharmacy, at least, not without a fight.

The only sure way around the enormous cost of rabies shots would be to identify the dog and determine if it had been inoculated. I suppose my friend could have gone door to door in the neighborhood and attempted to describe the lady and her dog, but since he didn't really know what they looked like, he thought it was pointless. He could have reported the incident to the police as an act of good citizenship, but that might have been pointless, too. He knows that if identified, the lady could claim that he attacked her and her dog was protecting her. That's a serious charge and he might get arrested and have to hire a lawyer to be cleared. Meanwhile, her dog would be automatically impounded, and if not inoculated, would be destroyed. As soothing as that idea might be, the price my friend would pay would be too high: possible arrest, a police record, and a lady who is really, really mad at him. You're thinking, "Why should a man fear the vengeance of a woman?" Why not? Her dog bit him without provocation. Is she likely to be any nicer than her dog? Dogs don't just bite people; they get schooled to behave badly by their owners.

I advised my friend to carry a stick from now on when he takes his nightly walk. But there is some risk to him to be seen carrying a stick since he is not elderly. As it is, most women steer clear of a man on the sidewalk, just in case. This situation is a tough one, and expensive, too.




  

  
 

I Disagree with Suze Orman About This One

Last night the Suze Orman show was a repeat. That was surprising enough, but it was a repeat that when it first aired I thought gave poor advice. The setup was this: an employed woman in the social work therapy field has been spending unwisely, and now wants help. She has zero money, plus college debt, car loan debt, and credit card debt. Nothing unusual there.

The shocker was that this person admitted she had forged her mother's name to a college loan application. Suze Orman has several times had people on her show whose irresponsible parents had forged their names to get new credit cards, and effectively destroyed their child's credit before the child even reached majority. In no case did anyone suggest prosecuting any of these forgers for what, in my mind at least, appears to be a criminal act. And so it was last night on Suze's show. She chided the guest for being so self-centered and determined to get her own way, and that was that.

Suze did come down pretty hard on the guest for opening an account at an eyeglass store, buying expensive designer sunglasses, and then never paying a dime on the account. Suze likened it to shoplifting, which I thought was an apt analogy. If something is bought with a general credit card that is being used and paid regularly, the merchant does eventually get some payment. But if it's bought with a store card and no payments are made to the store account, the store is out the full amount.

Here's where I disagree with Suze: She suggested a very tough cutback of monthly expenses. I took one look at the guest and knew that would never happen. You don't tell a dog owner who has a good-paying job that she can't afford to own a dog. You tell that to a dog owner who does not have a job and is about to be evicted or foreclosed on. Then the person might listen. Suze also wanted to cut a fairly small amount per month of entertainment expenses to the bone. It doesn't make sense; people need to have an entertainment budget. I get that this person's bad behavior might cry out for punishment; Suze did confront her about making excuses to justify every rash financial action. But demanding an unrealistic period of financial sackcloth and ashes won't work. 

Suze was correct to tell the guest that she needed to earn more money and use that money to pay off her student loans and then her debts. But Suze was so busy talking about cuts to ordinary monthly expenses that she didn't give the details or emphasize that making more money was the only way the guest could balance her budget. If you don't have enough money to pay your bills, you need to get more money. Spending less is only a temporary fix unless you have been spending like a wild man. Saving $40 a month by having no entertainment budget--hardly a wild man amount--is meaningless when you can earn $1,000 more a month by just working longer hours. Suze was too concerned with punishment and not enough interested in building up the guest's feeling of having the power to solve her financial woes. And yet the guest is to receive no punishment for forgery or for messing up her mother's credit situation. Nor is she to make restitution to the eyeglass store she never paid for her designer sunglasses. Not good enough, Suze.

We all do have some power to control our financial problems, some of us more than others. In last night's case, here was a single woman with a very good job, who could easily earn more money, get out of debt, and start a savings program. She could pay back the eyeglass company in just one month. She could also make amends to her mother by paying her a set amount of money every month for several years, to reduce the effects of having ruined her mother's credit score (and thus causing her mother to suffer higher rates on her credit). I think Suze missed the boat on this one. 

We all know people who have behaved badly, not to say illegally, with other people's credit and with their own. Probably most of those credit thieves do not repent at all. Instead, they have a complex series of self-justifications that let themselves off the hook. They need to be helped to see the error of their ways, and to see that they do owe restitution. But given the innate selfishness of such people, it's pointless to demand that they make a lot of personal sacrifices in order to make amends. They simply won't do it. Instead, efforts by people like Suze Orman or family members or friends hurt by these selfish people should be aimed at getting the offender to accept moral responsibility to repay the money, not through sacrifice, but through extra work. Work makes us feel good about ourselves; work is empowering. A person who is desperate enough to grab other people's credit or misuse their own to get what they feel they need will benefit from feeling more empowered by doing more work.  

I hope this woman comes to realize that her financial life does not have to continue to be a series of self-centered mistakes. It's too bad Suze may not have put her on the right track to squaring herself with those she has hurt. No matter how deeply we bury our sins, we know what we did. Atonement is a very significant act on the way to lasting self-esteem and honor. 

Medical Bills Can Be Discounted If You Pay Promptly

Many medical providers will give you a substantial discount if you pay within 30 days. It saves them the cost of trying to collect from you over a period of weeks, months, or years.

I thought I knew everything there was to know about paying medical bills until I got a call from a provider's in-house bill collector. At first I was puzzled, and then I realized that I had received that bill, put it aside, and forgotten to pay it promptly. The medical bill was for the balance due after my insurance company had cut the charges down to the contracted rate agreed to by the supplier, and then had paid its share of the remaining charge. The provider had already received a nice chunk of change, and I only owed less than 20% of what had been originally billed, but it still was nearly $500.

Nothing unusual so far. Many of us eventually get a bill for a remaining portion that our insurance policy does not pay. The big surprise was that once I'd finally located the bill, the bill collector voluntarily offered to cut the charge by 20% if I would pay it within 30 days. 

I had not said anything about having any difficulty in coming up with the money. I had not suggested that I make payments over time. I had not asked for a discount. The provider voluntarily offered me a discount that saved me just under $100. I don't know about you, but for me, saving that much was definitely worth five minutes on the phone. I could have paid the $500 invoice, but I am quite happy to have paid only $400 instead.

Since then I have learned that all medical providers do consider giving discounts. But you may have to ask. When you get a bill, call the number on it, and ask if they can give you a discount. If they refuse, say you'll then have to make payments on account. At that point, even the stubborn providers may grant you the discount, rightly fearing that you might never make all those payments, or any payments at all. It's very expensive to go after people for unpaid medical bills and in most circumstances the medical providers are not legally allowed to add interest or penalty charges to what you owe.

Try to make sure the discount is at least 20%, but let them suggest the number. They may give you an even bigger discount.

If your doctor wants you to have a test or procedure or even a visit with another doctor that your medical insurance will not cover at all, you can call that other provider in advance and explain, and ask for a discount. I once negotiated a test fee in advance down from $700 to $75 simply by asking. The doctor involved did it as a courtesy to the referring doctor, whom he admired. That was very generous, and considering my lack of insurance at the time, very necessary.

It also is not unreasonable to ask a provider who would have been paid by an insurer to accept that amount as payment in full. There are at least two versions: (1) The provider simply forgives the remaining balance, or (2) If you have no insurance coverage for that doctor, or service, you pay the provider directly an amount that is the same as an insurance company would have paid. For instance, if a doctor charges $120 a visit, but routinely only receives $64 from an insurer, plus a $15 patient co-pay, and your current insurance won't pay at all, you can ask to pay $79 a visit, which is all the doctor would get anyway. You have in effect received a 33% discount.

If you need to go out-of-network for certain specialists or tests, and your insurance company pays a smaller percentage of the charge, you should try this method. It never hurts to ask.

Why I'm a Suze Orman Fan

It's not that other people haven't personally given me good financial advice over the years. It's not that sensible financial advice isn't available from many sources and keyed to many education levels and social styles. The reason I'm a big Suze Orman fan is that her urgency about my future pushes me to care.

This is a big deal. She goes on PBS and begs us to get wills, trusts, durable medical powers of attorney, and living wills, and her urgency opens a pit in front of us that we have not wanted to face. Still don't want to face, to be honest. How many of us actually have wills? Living wills? Durable powers of attorney? What about trusts? How many times must we listen to her message before we act to protect ourselves? As many times as it takes, which is one reason Suze hasn't retired to spend the rest of her life boating. She knows we listen and then we do not act. So she keeps trying.

Suze Orman has gotten rich selling personal finance books and having her own television show, no question. But do I care? No one forces me to buy her books, and no one forces me to watch her on television, either. Sure, she "sells" a kit that contains the documents, too, as a gift if you donate to public broadcasting. I have compared her documents and they are word for word what appears in the same documents drawn up by a lawyer. Word for word.

I first remember encountering Suze Orman doing a PBS television show. Possibly I had by then read one of her books, but if so, neither the book nor Suze herself had made a huge impression. But she certainly did that night. She stressed how a comfortable life could be hugely disrupted simply by not having a few legal documents. She pointed out that because today people wear seatbelts in cars and cars have multiple airbags and other safety features, dying in a car crash isn't as likely as being very seriously injured. If that happened, what rights would my spouse have to direct my care, or to take over my share of our finances? None, without going to court.

Both questions are critical. I need a living will, so my spouse and everyone else will know what I want, and so my spouse can successfully direct my care if I become incapable of doing so. We all know what a mess some families get into when wishes are not known and family members fight amongst themselves. There also have been many cases of medical personnel overriding a person's wishes. In a living will, I can assign decision-making and make my wishes known. For instance, feeding tubes sound pretty nasty to me, but pain-relieving drugs seem like a good idea.  

The second point Suze made is just as important. If my spouse has my durable power of attorney, and I survive the car crash and the hospital but need to live in a different home, my spouse can sell our jointly owned home and buy a place with an elevator or a spa, or whatever I need. Or he could sell my car and buy a van with wheelchair or motorized cart assist technology. Or he could sell my stock and pay to have an elevator installed in our current home, and a wheelchair ramp to the front door. Without that document, he'd have to go to court to make each and every financial decision on my behalf, or get appointed my conservator, or take orders from someone else whom the court appointed. That nightmare can be avoided with a single document.

Despite her brilliant logic, it took me a long time to get both documents. Yet Suze has never backed away from urgently recommending them, and every time I've heard her do so, I've gotten that much closer to doing what after all is purely in my own self-interest. 

During the pledge break of that long-ago PBS show, Suze pleaded with us all to protect ourselves. The urgency of her message resonated with me, but I'm just as stubborn as the next person and it took me years to act. Specific advice she has given about saving and spending varies with the economy, but this chunk of advice is evergreen and clearly from the heart.      

That's why I'm a fan of Suze Orman. And that's why I, too, urge you to immediately get yourself the legal documents that will protect you and your loved ones in the event of a catastrophe.

If You are Unemployed, Apparently You Do Not Want to Work

Nina Easton writes on economic topics in Fortune Magazine. Seldom have I read as wrongheaded an understanding of the unemployed in our country than her recent article, "Time to Get Creative About Helping the Unemployed Back Into The Job Market" (Fortune, Feb. 3, 2014). If she had cited some ideas about helping unemployed people, I wouldn't have an issue with what she wrote. But she offers nothing creative or helpful. Instead, she cites statistics that are supposed to convince us that people who get food stamps and disability checks actually are healthy people who are lazy, who could find employment but choose not to. Since anything can be "proved" with statistics, I'm not going to argue with her claims. Instead I want to talk about what the poor and unemployed really are facing.

People on disability are not faking it. They have been broken by years of working physically damaging jobs, by factory accidents, and by chronic illness. Some of them can still walk without a cane, but most of them are not in any shape to work at any job. They're in constant pain, they're on medications that fuzz their brains, and they often can't see well enough to drive. The young ones have very obvious mental incapacity; if they are able to work, they do work in sheltered workshops. But they can't be expected to count your change at a Sheetz, and Walmart has eliminated greeters. These people as a group also lack education, which means they are unlikely to qualify for many jobs. Then the reality is that employers today very rarely make any accommodations for people with disabilities, despite the laws in place that are meant to help such people. Why should a chain restaurant hire a middle-aged server who has trouble walking when it can hire a healthy teenager or young adult? Why should a discount store hire a mentally challenged person who can't speak intelligibly and can't comprehend the employer's list of duties when there is a college graduate begging for the same job? In an economy in which the best and the brightest of our young generation are struggling even to find minimum wage work because there aren't good jobs for so many people, it does not matter whether the least educated and least healthy among us are trying to get jobs or not. They lose out because their competition is younger and more agile. 

 

Regarding food stamps, I don't like when well-fed individuals begrudge hungry people a meal, which is what cutting down or cutting off food stamps does. How does it hurt me if someone else eats? It doesn't. People who get food stamps use government money to buy food, which in turn supports many other businesses and means there are more grocery store jobs and trucking jobs--and farmers' crops don't go to waste. No one loses if people eat. If the argument is that an unemployed or underemployed person probably could pay for food, the reality is that if a person meets the government's rules for qualifying for food stamps, money is scarce. The money that has to be spent on food then can't go for rent, or for a car repair that could make it possible to get to a job. Food stamps also help keep children from starving, which is a noble cause. Food stamps are good. We should keep this program going until no one in America is hungry.

What about disability checks? Easton indignantly cites Lexington-Herald writer John Cheves' claim that disability checks yield "as much as $710 a month per person." That might sound like a fortune to an eight-year-old, but is a mere $8,520 a year. I defy anyone to loll in the lap of luxury on so little income. It divides out to $4.09 per hour if there is a 40-hour-a-week job available. Who can live on $4 an hour?

So how do the unemployed in our country survive? They live with relatives and friends, or they rent tiny apartments or government price-supported housing. Mostly, they depend on a  personal support system. People who move in search of work from a chronically depressed town whose factories have fled lose the very support system that sustains them, which is why they mostly do not move. Even supposing there are many jobs for which they qualify, we have plenty of statistics and history books to tell us just how miserable people are when they follow good jobs and end up living far from family and home. Remember the excesses of the Gold Rush? Rampant crime. Brothels. Suicide. Back when Detroit was a powerhouse, Bobby Bare had a popular hit with "Detroit City," a song about the loneliness of moving there to work one of those good factory jobs. The most telling phrase was, "I wanna go home."

In an increasingly connected world thanks to the Internet, it should be possible eventually for unemployed people living in depressed coal-mining towns in West Virginia to do work from home. Even low-skilled customer service representative work. What is the advantage to this? Why shouldn't they all move to city slums? The social fabric is not destroyed when people don't have to abandon their personal support systems to work. The result is less crime. More money is saved when people live in families, and if money is saved, more education dollars and discretionary dollars are available. It becomes possible to start a business, because there is seed money for it and other people in the area are employed also and thus have money to spend. That's my idea: The Internet is going to save us all. Maybe I'm right and maybe I'm wrong, but meanwhile, considering all the stupid ways our government wastes money, I'm okay with helping unemployed, underemployed, and disabled people keep up a basic standard of living. This is a rich country and we should spread the wealth to our people as they need it.

   

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.