1. It feels great to have a few extra dollars.
2. You can use your savings to leverage better deals from your bank, or start an account.
3. When an emergency occurs, your first thought won’t be “Where will I find the cash to pay for this?”
Do we need more than three reasons?
Wednesday, November 30, 2011
Saturday, November 26, 2011
Why We Should Not Give Holiday Presents
Personal finance guru Suze Orman had her staff ask people on the street what presents they got last year at the holidays. No one could remember.
This amazing consensus is proof we shouldn’t strain our finances to give holiday presents. They aren’t appreciated beyond the moment. The sad truth is, most of the presents we give make no impact on the recipients’ lives.* Why go crazy spending tons of money, especially tons of money we don’t have or can’t afford to spend?
What Suze Orman didn’t ask the people on the street was this: Did they remember not getting holiday presents? Did they hold it against someone because that person did not buy them a present?
Isn’t one of our chief fears at the holidays that we will not appear generous enough? That people will think ill of us for not getting them gifts, or for getting them presents that are not sufficiently lavish? And doesn’t that fear suck us into a never-ending effort to prove, through spending more and more money, that we are good people?
Our holiday gift-giving efforts are futile. The recipients do not remember what we give them.
This realization should be freeing. If no one remembers what we give them, it hardly matters what we give them, or even if we give them anything at all. Will they remember what we did not give them? If this year, we announce we won’t be giving gifts, will it be held against us for the rest of our lives? Probably not. This time next year, the people we did not give presents to won’t remember what they got or didn’t get, or from whom.
If we know people ready to be seriously offended because we do not give them holiday gifts, these are not our friends or loved ones. People who don’t like us will not like us any better if we spend big money on them. Within most families, there typically are some relatives who don’t get along with each other. Should they be forced to give gifts? I don’t believe so. In-laws are a common case in point. Or siblings. Presents don’t do it. If our decision not to give presents this year is held against us by someone, we should think seriously about why we are in such a judgmental relationship, and what we can to do change it or walk away from it.
Don’t get me wrong. I like buying holiday presents. I like wrapping them. I like seeing people open them and enjoy them. However, gift-giving is an art, and not all of us are artists. It can take years to learn how to give a memorable gift to even one particular person. Odds are that most of our gifts, year in and year out, will fall flat. Worse, sometimes the presents we give become a burden on the recipient. People don’t need to be reminded at the holidays that they can’t afford to give lavish presents in return. Be kind, and rein it in.
Buying a holiday gift is often an impersonal action taken to fulfill a conventional expectation. That’s why a singing bass and a pet rock and a chia pet all became best sellers. Offices have figured it out; the Secret Santa tradition limits the dollar amount to be spent, and everyone gets to unwrap one surprise item. That’s a civilized convention. Too bad we don’t seem able to carry it over to our families.
Yet it is easy enough to change the implicit family rules, and even long-held traditions. Just tell your relatives you won’t be giving presents this year, except perhaps one item each to the children. Ask your relatives do the same. When you release yourself from the social onus of buying presents, you should release others. You might be surprised to learn that not giving gifts is a relief to them, too.
Most important of all, you should not go into debt to buy anyone a holiday present. People who love you want you to be happy, not burdened by debt and regret come January.
(*Children are the exception, but they don’t need lots of toys. They'd rather unwrap less and participate in more fun holiday events, from outings to decorating and everything in between.)
This amazing consensus is proof we shouldn’t strain our finances to give holiday presents. They aren’t appreciated beyond the moment. The sad truth is, most of the presents we give make no impact on the recipients’ lives.* Why go crazy spending tons of money, especially tons of money we don’t have or can’t afford to spend?
What Suze Orman didn’t ask the people on the street was this: Did they remember not getting holiday presents? Did they hold it against someone because that person did not buy them a present?
Isn’t one of our chief fears at the holidays that we will not appear generous enough? That people will think ill of us for not getting them gifts, or for getting them presents that are not sufficiently lavish? And doesn’t that fear suck us into a never-ending effort to prove, through spending more and more money, that we are good people?
Our holiday gift-giving efforts are futile. The recipients do not remember what we give them.
This realization should be freeing. If no one remembers what we give them, it hardly matters what we give them, or even if we give them anything at all. Will they remember what we did not give them? If this year, we announce we won’t be giving gifts, will it be held against us for the rest of our lives? Probably not. This time next year, the people we did not give presents to won’t remember what they got or didn’t get, or from whom.
If we know people ready to be seriously offended because we do not give them holiday gifts, these are not our friends or loved ones. People who don’t like us will not like us any better if we spend big money on them. Within most families, there typically are some relatives who don’t get along with each other. Should they be forced to give gifts? I don’t believe so. In-laws are a common case in point. Or siblings. Presents don’t do it. If our decision not to give presents this year is held against us by someone, we should think seriously about why we are in such a judgmental relationship, and what we can to do change it or walk away from it.
Don’t get me wrong. I like buying holiday presents. I like wrapping them. I like seeing people open them and enjoy them. However, gift-giving is an art, and not all of us are artists. It can take years to learn how to give a memorable gift to even one particular person. Odds are that most of our gifts, year in and year out, will fall flat. Worse, sometimes the presents we give become a burden on the recipient. People don’t need to be reminded at the holidays that they can’t afford to give lavish presents in return. Be kind, and rein it in.
Buying a holiday gift is often an impersonal action taken to fulfill a conventional expectation. That’s why a singing bass and a pet rock and a chia pet all became best sellers. Offices have figured it out; the Secret Santa tradition limits the dollar amount to be spent, and everyone gets to unwrap one surprise item. That’s a civilized convention. Too bad we don’t seem able to carry it over to our families.
Yet it is easy enough to change the implicit family rules, and even long-held traditions. Just tell your relatives you won’t be giving presents this year, except perhaps one item each to the children. Ask your relatives do the same. When you release yourself from the social onus of buying presents, you should release others. You might be surprised to learn that not giving gifts is a relief to them, too.
Most important of all, you should not go into debt to buy anyone a holiday present. People who love you want you to be happy, not burdened by debt and regret come January.
(*Children are the exception, but they don’t need lots of toys. They'd rather unwrap less and participate in more fun holiday events, from outings to decorating and everything in between.)
Monday, November 21, 2011
What to Do About Medical Bills You Can’t Pay
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. And 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.
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. And 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.
Thursday, September 15, 2011
Throw Out Old Financial Advice
You can keep whatever advice your mother told you. I'm sure that's engraved on your heart rather than taking up storage space in a paper or electronic file.
Otherwise, you're probably better off pitching every single piece you saved that tells you to invest in real estate (!), play brinksmanship with your credit cards and then do an easy bankruptcy, or get all the equity of out your house to finance new self-indulgence. I just spent an hour culling my financial article clippings and was discouraged by how time-sensitive all the well-meant advice was. The financial situation of this country has changed dramatically in the last ten years. The real estate bubble and its burst caused dramatic spending and equally dramatic regrets. Practically nothing about finance that was written before Lehman Brothers went down in 2008 is worth keeping, because at that moment, all the tried-and-true theories went out the window.
Nothing dates and becomes irrelevant quicker than specific financial advice. Laws have changed affecting credit and bankruptcy in particular, so consulting old advice that cites prior legal rights could be a crucial mistake. Holding on to dated expectations is just as foolish. Think of all those old retirement calculators that imagine you can average 10% interest on your investments. Try getting 5% today.
It's a sad world at the moment. Keeping around old personal finance advice that was keyed to a time of much fuller employment and wild credit card spending on consumables isn't going to increase happiness or give anyone pointers on how to live today and in the future. We return instead to the tried and true, the more general advice: Live below your means. Save as if trouble is around the bend. It might be.
Tossing all that now-useless advice in the recycle bin felt good.
Otherwise, you're probably better off pitching every single piece you saved that tells you to invest in real estate (!), play brinksmanship with your credit cards and then do an easy bankruptcy, or get all the equity of out your house to finance new self-indulgence. I just spent an hour culling my financial article clippings and was discouraged by how time-sensitive all the well-meant advice was. The financial situation of this country has changed dramatically in the last ten years. The real estate bubble and its burst caused dramatic spending and equally dramatic regrets. Practically nothing about finance that was written before Lehman Brothers went down in 2008 is worth keeping, because at that moment, all the tried-and-true theories went out the window.
Nothing dates and becomes irrelevant quicker than specific financial advice. Laws have changed affecting credit and bankruptcy in particular, so consulting old advice that cites prior legal rights could be a crucial mistake. Holding on to dated expectations is just as foolish. Think of all those old retirement calculators that imagine you can average 10% interest on your investments. Try getting 5% today.
It's a sad world at the moment. Keeping around old personal finance advice that was keyed to a time of much fuller employment and wild credit card spending on consumables isn't going to increase happiness or give anyone pointers on how to live today and in the future. We return instead to the tried and true, the more general advice: Live below your means. Save as if trouble is around the bend. It might be.
Tossing all that now-useless advice in the recycle bin felt good.
Sunday, July 31, 2011
Worrying about Saving for Retirement
Do you worry a lot about saving for your retirement? Neither do I. Are we idiots?
No. Some of us will die before we can retire. Some of us will die only a few years later. People born during the baby boom---the group about to reach retirement age now and in the next few years---can be expected to live another for 20 years or so. Except if they are already dead, that is. According to the U.S. Census Bureau, those currently alive have a better life expectancy than those born in the year they were born. What this means is that even though life expectancy for baby boomers was circa 70 years when we were born, it now is circa 80 years simply because we (individually) aren't dead yet.
This presents an interesting puzzle. People are always dying. Although we have a better chance of living to be 80 than we did at birth, again, some of us won't make it. So how do we plan for retirement? Most personal finance counselors would advise us to plan as if we are going to live to be 90 or even 100. Some of us will, and we don't want to run out of money and have to live on cat food in some miserable rented room in a rat-infested inner city slum. Just painting a horrifying future to contemplate. No worries. It won’t happen to you.
Anyway, if you retire at 65, the magic number that no longer holds any magic, you’ll still have to wait a year or two to collect your full Social Security, so why do it? If you retire even later, at age 70, you can collect a higher Social Security benefit because you waited, and you’ll have had more years in which to put away more savings. Sounds great, yes? It is, unless you’re one of the unlucky baby boomers who dies about when expected when we were born, or even earlier. In which case you just wasted your last years working when you could have spent them living it up in retirement. Dang.
Truth is, the joker in the deck is not really whether you die when expected circa your 1946–1964 birth, but whether you get seriously ill. It is possible to spend down quite a decent fortune on medical care unless you spend it first on very good medical insurance. And, supposedly, unless you make the effort beforehand to invest in preventative health care and self care, such as eating right (however that is defined this week), getting regular exercise that doesn’t tear up your body, and so on. Still, whether you get cancer or have a heart attack or are run over by a truck remains rather random.
Meanwhile, what should you do about saving for retirement? And about working until retirement? Look at your own personal circumstances, not those of the mass of Americans. Some of us will receive substantial pensions. Some of us have very nice savings, inheritances, paid-off houses, and more. Some of us have hardworking or wealthy spouses, or grown children who've made it big and can turn around and help their parents. Our circumstances vary. Why shouldn't our preparations for retirement vary, too?
Mainstream media advice-givers keep painting a picture of gloom and doom, saying our money will inevitably run out. These experts tell us not even a million dollars in savings is going to be enough. A million dollars. It still sounds like a lot of money to most of us, because it is. Advice-givers usually offer whatever the current wisdom is about investing. Sometimes it’s not good advice because the deal is not in our favor. Sometimes, the tide of affairs works against us. Hasn't anyone yet figured out that if millions of people flock to a sweet deal, the sheer weight of their participation causes it to tank? Regardless, nobody can foretell the future. Seemingly solid investments can and do go sour. Companies that are deemed rock solid go bankrupt.
Should we be terrified of our future unless we are immensely wealthy? Are we all going to die broke? I don’t think so. The scary part about retirement is not running out of money, because we all will have some income. Even people who do not qualify for Social Security (and that would be who?) are likely to qualify for other government assistance. What is scary about retirement is the finite quality of our income. Those of us who have never successfully lived within a budget finally have to learn a new approach to spending. That’s a lesson the baby boom generation has been spectacularly bad at learning so far.
We could try that now. Live within our means, or a little under, and save the difference. Build up a cushion for the future. Who knows? We might save up that million dollars yet. Some of us will sleep better, too.
No. Some of us will die before we can retire. Some of us will die only a few years later. People born during the baby boom---the group about to reach retirement age now and in the next few years---can be expected to live another for 20 years or so. Except if they are already dead, that is. According to the U.S. Census Bureau, those currently alive have a better life expectancy than those born in the year they were born. What this means is that even though life expectancy for baby boomers was circa 70 years when we were born, it now is circa 80 years simply because we (individually) aren't dead yet.
This presents an interesting puzzle. People are always dying. Although we have a better chance of living to be 80 than we did at birth, again, some of us won't make it. So how do we plan for retirement? Most personal finance counselors would advise us to plan as if we are going to live to be 90 or even 100. Some of us will, and we don't want to run out of money and have to live on cat food in some miserable rented room in a rat-infested inner city slum. Just painting a horrifying future to contemplate. No worries. It won’t happen to you.
Anyway, if you retire at 65, the magic number that no longer holds any magic, you’ll still have to wait a year or two to collect your full Social Security, so why do it? If you retire even later, at age 70, you can collect a higher Social Security benefit because you waited, and you’ll have had more years in which to put away more savings. Sounds great, yes? It is, unless you’re one of the unlucky baby boomers who dies about when expected when we were born, or even earlier. In which case you just wasted your last years working when you could have spent them living it up in retirement. Dang.
Truth is, the joker in the deck is not really whether you die when expected circa your 1946–1964 birth, but whether you get seriously ill. It is possible to spend down quite a decent fortune on medical care unless you spend it first on very good medical insurance. And, supposedly, unless you make the effort beforehand to invest in preventative health care and self care, such as eating right (however that is defined this week), getting regular exercise that doesn’t tear up your body, and so on. Still, whether you get cancer or have a heart attack or are run over by a truck remains rather random.
Meanwhile, what should you do about saving for retirement? And about working until retirement? Look at your own personal circumstances, not those of the mass of Americans. Some of us will receive substantial pensions. Some of us have very nice savings, inheritances, paid-off houses, and more. Some of us have hardworking or wealthy spouses, or grown children who've made it big and can turn around and help their parents. Our circumstances vary. Why shouldn't our preparations for retirement vary, too?
Mainstream media advice-givers keep painting a picture of gloom and doom, saying our money will inevitably run out. These experts tell us not even a million dollars in savings is going to be enough. A million dollars. It still sounds like a lot of money to most of us, because it is. Advice-givers usually offer whatever the current wisdom is about investing. Sometimes it’s not good advice because the deal is not in our favor. Sometimes, the tide of affairs works against us. Hasn't anyone yet figured out that if millions of people flock to a sweet deal, the sheer weight of their participation causes it to tank? Regardless, nobody can foretell the future. Seemingly solid investments can and do go sour. Companies that are deemed rock solid go bankrupt.
Should we be terrified of our future unless we are immensely wealthy? Are we all going to die broke? I don’t think so. The scary part about retirement is not running out of money, because we all will have some income. Even people who do not qualify for Social Security (and that would be who?) are likely to qualify for other government assistance. What is scary about retirement is the finite quality of our income. Those of us who have never successfully lived within a budget finally have to learn a new approach to spending. That’s a lesson the baby boom generation has been spectacularly bad at learning so far.
We could try that now. Live within our means, or a little under, and save the difference. Build up a cushion for the future. Who knows? We might save up that million dollars yet. Some of us will sleep better, too.
Saturday, June 25, 2011
A Signing Bonus Instead of Unemployment Checks?
Todd G. Buchholz, a former White House economist, had a huge spread in the Washington Post’s Outlook section recently about his idea of paying people who have been unemployed for 26 weeks to take jobs instead of continuing to draw unemployment benefits. “Will Work for Signing Bonus” contains a number of interesting ideas, and his math appears to compute, but alas, I don’t think Buchholz realizes just how nasty the job market is today. After being unemployed for half a year most people are considered dead meat to potential employers. No offers are being made. Many of the long-term unemployed aren’t even getting interviews, because people who already have jobs are openly preferred. Next come people who have left jobs within the past month or so. People who have been out of work long-term reside at the bottom of the employment heap.
The crux of the problem is most people are not sufficiently humbled immediately after losing their jobs. They don’t grab at the first thing that offers, and in this economy, likely they ought to. If the new job is a poor fit, the person can continue the job hunt from a position of strength—that of being employed. Unfortunately, most people who lose their jobs are in a state of shock when it happens, and they need time to recover. Time is what they don’t have in our fast-changing society. We have so many safety nets, not only unemployment benefits but also credit cards and spouses with jobs, that many recently laid-off workers aren’t quite desperate enough right after the event. They should be. This is a buyer’s market and employers have their pick. A resume is viewed as fresh for a month or so, but after two to three months, the resume is definitely sour. People who lose their jobs should settle for whatever is offered within the first two months, because there may not be any more offers for a long, long time. If ever. I know it sounds awful, but it’s the practical thing to do unless unemployment benefits happen to pay more than the new job would.
Buchholz wants to pay people bonuses to take a job, but impose an enormous penalty if the person quits or changes jobs in under a year. This presumably is to encourage people not to game the system, as has been done with the first-time homebuyers' credit and various other tax advantages. I think it would be more fair to require the worker to pay back the bonus with interest, raising that interest over time if payback is dilatory. Regardless of the details, Buchholz’s idea of giving unemployed people a financial incentive to take jobs instead of extended unemployment benefits is interesting. If it worked, it would save the government money and add to government coffers as the employed person began paying income taxes again.
Should we all rush out and take whatever jobs we are offered? Yes. If the worst your resume shows is a little job-hopping rather than a lengthy period of unemployment, you have a competitive advantage over other job seekers. And meanwhile, you have a job.
With one caveat. This strategy does not apply to low-level retail employment. The field is not stable enough, and your prospects are not good enough, to give up anything to enter it. In many cases, even working full-time at a big box store will not be enough to pay the rent if you previously held a moderately good office job. Also, I've done plenty of tax returns for people who only lasted for half a day at McDonald's or Home Depot. Firing people from these jobs is dead easy and happens all the time. Many out-of-work people are nagged to go work at these places, but accepting such underemployment is a strategy of last resort, to be taken only after all other avenues have been explored, including using up all unemployment benefits, getting a roommate, and selling possessions.
The crux of the problem is most people are not sufficiently humbled immediately after losing their jobs. They don’t grab at the first thing that offers, and in this economy, likely they ought to. If the new job is a poor fit, the person can continue the job hunt from a position of strength—that of being employed. Unfortunately, most people who lose their jobs are in a state of shock when it happens, and they need time to recover. Time is what they don’t have in our fast-changing society. We have so many safety nets, not only unemployment benefits but also credit cards and spouses with jobs, that many recently laid-off workers aren’t quite desperate enough right after the event. They should be. This is a buyer’s market and employers have their pick. A resume is viewed as fresh for a month or so, but after two to three months, the resume is definitely sour. People who lose their jobs should settle for whatever is offered within the first two months, because there may not be any more offers for a long, long time. If ever. I know it sounds awful, but it’s the practical thing to do unless unemployment benefits happen to pay more than the new job would.
Buchholz wants to pay people bonuses to take a job, but impose an enormous penalty if the person quits or changes jobs in under a year. This presumably is to encourage people not to game the system, as has been done with the first-time homebuyers' credit and various other tax advantages. I think it would be more fair to require the worker to pay back the bonus with interest, raising that interest over time if payback is dilatory. Regardless of the details, Buchholz’s idea of giving unemployed people a financial incentive to take jobs instead of extended unemployment benefits is interesting. If it worked, it would save the government money and add to government coffers as the employed person began paying income taxes again.
Should we all rush out and take whatever jobs we are offered? Yes. If the worst your resume shows is a little job-hopping rather than a lengthy period of unemployment, you have a competitive advantage over other job seekers. And meanwhile, you have a job.
With one caveat. This strategy does not apply to low-level retail employment. The field is not stable enough, and your prospects are not good enough, to give up anything to enter it. In many cases, even working full-time at a big box store will not be enough to pay the rent if you previously held a moderately good office job. Also, I've done plenty of tax returns for people who only lasted for half a day at McDonald's or Home Depot. Firing people from these jobs is dead easy and happens all the time. Many out-of-work people are nagged to go work at these places, but accepting such underemployment is a strategy of last resort, to be taken only after all other avenues have been explored, including using up all unemployment benefits, getting a roommate, and selling possessions.
Monday, June 13, 2011
How to Get Out of Debt
1. Stop buying on credit.
2. Contact your creditors and push to get your interest rates lowered.
3. Balance transfer your high-interest debt to lower-interest accounts.
4. Pay off your highest-interest debt first.
This simple advice presumes you have income. Maybe not enough income, but there's a paycheck coming in steadily, and that gives you some choices.
Another set of tips to try:
1. Change up your eating habits. Do not buy food at the same places, or the same food. Instead, try to work from a budgeted food amount outward. If you have $100 for food this week, what can that buy you, and how long can that last, and how often must you shop, and is food preparation involved?
2. Sell any vehicle on which you are making payments, and buy a used vehicle outright. It has to be in good condition. You have to be reasonably certain it won't beggar you with repair costs. But a paid-for car is usually cheaper to own and run than a new car.
3. Hold a yard sale (or post on Craigslist, which is free) and sell anything you no longer need or want. It may surprise you how little people are willing to pay for your used goods. They may not buy them at all. A good reminder not to spend so much money on buying all that new stuff in the first place.
4. Empty your clothes closets into your suitcases. What you own doesn't fit? Reduce it until it does, and never buy a piece of clothing again without getting rid of a piece. Be mindful of this when you shop for clothing, because it is easy to think you need multiples when the truth is you don't. If your suitcases are full, you have enough clothes.
Add your own tips for getting out of debt if you've got 'em.
2. Contact your creditors and push to get your interest rates lowered.
3. Balance transfer your high-interest debt to lower-interest accounts.
4. Pay off your highest-interest debt first.
This simple advice presumes you have income. Maybe not enough income, but there's a paycheck coming in steadily, and that gives you some choices.
Another set of tips to try:
1. Change up your eating habits. Do not buy food at the same places, or the same food. Instead, try to work from a budgeted food amount outward. If you have $100 for food this week, what can that buy you, and how long can that last, and how often must you shop, and is food preparation involved?
2. Sell any vehicle on which you are making payments, and buy a used vehicle outright. It has to be in good condition. You have to be reasonably certain it won't beggar you with repair costs. But a paid-for car is usually cheaper to own and run than a new car.
3. Hold a yard sale (or post on Craigslist, which is free) and sell anything you no longer need or want. It may surprise you how little people are willing to pay for your used goods. They may not buy them at all. A good reminder not to spend so much money on buying all that new stuff in the first place.
4. Empty your clothes closets into your suitcases. What you own doesn't fit? Reduce it until it does, and never buy a piece of clothing again without getting rid of a piece. Be mindful of this when you shop for clothing, because it is easy to think you need multiples when the truth is you don't. If your suitcases are full, you have enough clothes.
Add your own tips for getting out of debt if you've got 'em.
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