Category Archives: Budgeting

How My Tiny Toe Taught Me More About Health Insurance


I recently injured my second toe.  I’m not sure how it happened exactly, but my doctor thinks it was due to a combination of overuse and poor foot bio-mechanics.  Basically, my foot does a terrible job of spreading the load around evenly to all my toes when it hits the ground.  He diagnosed me with capsulitis (or metatarsalgia) – an inflammation of the toe joint.  The treatment involved a month of rest, an orthotic shoe insert, and a stiff dose of physical therapy.

Alex, I’ll Take Toes for $500

During this whole process, I discovered things about my medical insurance.  For one, I pay a $60 copay to see a specialist such as a podiatrist.  I also pay a $30 copay each time I make a trip to the physical therapy office.  I also had to pay $60 out of pocket for the orthotic insert that my insurance did not cover.

In all, the whole ordeal ended up costing me about $500 out of pocket.  Really not too bad considering how much a new set of tires can cost on a car; and my toe is far more important than a couple of black rubber donuts.  Don’t tell the doctor, but I’d probably be willing to pay at least twice as much to get my toe back to normal.

Deductible Blindness, Coinsurance Ignorance, and Copay Carelessness

It’s been a while since I’ve had to use my health insurance for anything more than a simple visit to the doctor.  Getting a chance to actually exercise my health insurance, I was reminded that just because I have insurance, doesn’t mean I get free healthcare.  When shopping for insurance, it’s very easy to fall into the trap I like to call deductible blindness.  You focus your attention on lowering your premiums because that’s the amount you pay every month no matter what.  But, you ignore your deductible – the amount you pay out of pocket when you get sick or hurt.

You also tend to ignore the coinsurance, or the amount you owe after the deductible has been met.  For example, it’s quite common for insurance providers to cover 80% of the bill after the deductible is met.

Copays are usually small, but they can quickly add up.  I may have been discouraged from going to physical therapy if my copay was any higher.  But, I’m glad I now I’m glad I went.

Proactive Procedure Pricing

It might not be a bad idea to find out how much common procedures like an MRI or repairing a broken bone might cost.  If you really want to be prepared for worst-case scenarios, take a look at how much major procedures like heart-bypass surgery or cancer treatments cost.  CostHelper has a great section on health where you can find out the average cost of most medical procedures.  If you want more specific numbers, contact your local hospital or insurance provider and see if they’ll give you more specific pricing.

Next Stop, the House

With all this insurance talk, I just remembered.  Our homeowner’s insurance premium just went up by about 30%.  I need to message my insurance agent and see what I can do to lower the rate.  I may end up increasing our deductible.  Mrs. Pennypacker and I have enough in savings to pay the minor claims ourselves.  It’s the big catastrophes that we still would rely on insurance to cover.

Have you had any recent insurance epiphanies that you’d like to share?

Do You Work Work Work Everyday to Pay the Bills?

Do you ever feel like bills run your life?

It’s an endless cycle.  You’ve got bills.  So you work.  You get paid.  You pay your bills.  More bills come in.  So, you work some more.  But, the bills just keep coming.  Your cable bill goes up, then your electric bill jumps.  But, your pay stays the same.  It seems like there’s no end in sight.  Your sole purpose in life is to pay bills.

LunchMoney Lewis - Bills

How do you break this cycle and get control? When do you work for more than just your bills?  Well, you can’t just ignore them and hope they go away by themselves, because they won’t.  You have to take action.

Make a list

Start by simply making a list of all your bills.  Seeing all your bills on paper can be frightening.  But you may have forgotten about some of them or you may have just convinced yourself that some of them didn’t exist.  Putting things in writing is a great way to be honest with yourself.  Keeping track of bills in your mind, it’s easy to fudge the numbers and play games with the truth.  But, putting actual pen to paper makes it little more difficult to lie to yourself.

Look for easy wins

Now that you have all your bills out there on a piece of paper, take a good look.  Is there anything on that list you don’t need are could easily live without?  Maybe you forgot you had an old magazine subscription you’re still paying for or maybe you have a membership to that fancy gym in the high-end part of town that you’ve only been to once in the last 6 months.

Now pick off the medium wins

Is there anything you could trim down?  Maybe downgrade your internet speed one level.  Or, cut out one or two restaurant meals every week.  I’m not talking about anything extreme.  Just small changes you could make to your lifestyle that would be fairly easy to adapt to.

Add a little elbow grease for some tough wins

Are there any bills you might be able to re-negotiate.  Cable is usually a good candidate.  Every cable company offers deals.  It might be worth your time to call up and see if the person on the phone can hook you up with one of those specials.  Insurance is another bill that can be trimmed with a little research and a couple of phone calls.  Don’t be afraid to shop around.  Is there another insurance company out there that can give you a lower rate on your car insurance?  Maybe.  But, you won’t know unless you shop.

Be cautious about cold turkeys

Some people take one look at their bills and are so disgusted, they think they need to completely cut out all restaurants, cut out TV completely, go to the library to use the internet, and sell their car so they can start riding their bike to work everyday.  It’s called going cold-turkey and it might work for some people.  But, chances are, you’re actually setting yourself up for failure.  it’s like dieting.  If you start out by completely cutting out entire food groups and chopping your calories in half, you’ll probably run right back to the food a few months later.  On the other hand, if you approach your diet with slow, gradual, measured changes, your chances of succeeding in the long-run become much better.

Free money

Once you have all your bills written down and you’ve gone through the list with a fine-toothed comb.  You should find some extra money you didn’t know you had.  You can actually start setting some money aside for things like emergencies, your next car, travel, or retirement.  You’re no longer trapped working for your bills.

Sometimes Bills Sneak up on You When You’re Not Looking

Let me start off by saying, Mrs. Pennypacker and I have always paid our bills on time (okay, well maybe there was that one time back when we were young).  However, a few days ago, this commitment was put to the test when we were border-line late paying the trash bill.

It started off on a Thursday when I grabbed the stack of mail from the mailbox and opened the envelope containing the trash bill.  I already had a feeling we were cutting it close this time.  My eye immediately went to the due date.  I looked at the calendar.  The bill was due Sunday (I’m not sure what kind of business makes a bill due on a Sunday).  That meant only one business day between us and a late bill…NOOO!

We usually pay our trash bill through our bank’s online bill-pay service.  But, with only Friday and Saturday left, there was no way bill-pay was going to get a payment to the trash company in time.  Snail-mail wasn’t going to save us either.  My only choice was to call the trash company and see if I could pay them with a credit card over the phone.  Looking back now, I probably could have driven down to their office and given them a check in person, but the thought didn’t occur to me until just now.

Anyway, the person I spoke to on the phone was great.  I think she felt sort of bad that the bill was due on a Sunday.  So, she said we could just use our bank’s bill-pay service and she would make a note in our account that the payment would be arriving a couple days late.  She also said we wouldn’t be charged a late fee.  While technically the bill would be late and a blemish would go on our record (at least in my mind), it wasn’t going to cost us anything extra.  I guess we can live with that.

So, how did this bill end up on the endangered late list in the first place?  Well, several stars had to align to make this possible.

  1. The trash company normally gives us a tight window to pay the bill – generally two weeks, which doesn’t leave much of a buffer.
  2. We don’t check our mailbox more then two or three times a week.  There usually isn’t anything important in there, except every three months when there’s trash bill.
  3. We lost one of our mail keys (when I say “we”, I mean Mrs. Pennypacker).
  4. Mrs. Pennypacker went on a four day trip to see her family and left me with a replacement key she had made at the Minute Key machine at Wal-Mart.  Good thinking!  But, the replacement key didn’t work.

So somehow, with all this going on, we probably went a good week and a half between mailbox trips.

To avoid this kind of drama in the future, I thought about setting up auto-pay.  But, the trash company doesn’t have any sort of auto-pay feature.  We could set it up through our bank, but that wouldn’t have helped in this scenario because the trash company raised our rate on this bill – the bank would’ve sent the old amount.  So, the payment would have arrived on time, but we would’ve been short a few bucks.

Have you had any close calls paying bills on time?

Wait…Most People Don’t Have an Emergency Fund?

Where’s your rainy day fund?

More than 60% of Americans don’t have a sufficient emergency fund to cover unexpected expenses. At least according to the people who responded to the December BankRate Money Pulse poll.

This is crazy to me.  What happens if someone in your household loses their job, or has to go to the emergency room?  The article also mentions an unexpected car repair, but I actually think that car repairs not emergencies, but expected events, and should already be part of your budget.  I would also add natural disasters and emergency trips to see family members who might be sick or dying.

Not to be a Debbie Downer, but emergencies are going to happen.  Having the money to deal with that emergency sitting in a place that’s easily accessible makes the emergency far less stressful.

Do you have an emergency fund?  If so, how much do you have?

How do you budget?

Another survey question asked as part of BankRate’s Money Pulse poll is, “How do you keep track of how your income and spending match your budget?”   I’m amazed that 36% of the respondents keep a budget with pen and paper and 18% keep track in their heads.  I suppose, if it’s working, it’s better than nothing.

Do you keep a budget?  If so, what do you use to keep a budget?

Use an Envelope to Stabilize Your Gas Bill

In case you hadn’t noticed, gas is getting cheap.  Prices are plummeting – below $2 at one gas station in Oklahoma City.  Now before you jump in your car and high-tail it to the Sooner state, you have some dollars to organize.

Since the price of gas is always changing and the number of miles you drive can vary, it’s hard to predict exactly how much you’ll spend on gas in a given month.  Rather than trying to guess every time you create your monthly budget, use an envelope.

If you use cash to buy your gas, grab one of those envelopes you get in the mail with those credit card offers you usually throw away and write the word “gas” on the front.  Fill your envelope with the amount of cash you spent last month on gas and add 25%.  So, if you spent $200, you would actually put $250 in your gas envelope.  This is the amount of money you have available for gas next month.  Try not spend more than what’s in your envelope.  If the price of gas continues to drop, you’ll probably have more than $250 in your gas envelope for the following month.  If, on the other hand, gas prices stay the same and you decide to take a road trip to the mountains, you might end up with less than $250 in your envelope for the following month.  Either way, each month you’ll always add $250 to that envelope.

What if $250 isn’t the right amount?  After a year goes by, calculate the average amount you actually spent on gas and adjust your envelope contribution amount up or down to more closely match that average.

What if you don’t use cash?  If you use credit or debit cards to buy your gas, you can still apply the same concept.  It’s just that your envelope is imaginary.  It only exists as a number in your budget.  Every month you’ll simply designate an additional $250 of your checking account for gas.  Just make sure you keep track of how much is left in your imaginary envelope.

Congratulations!  You’ve just stabilized your gas bill.  Now every month you can count on setting aside the same amount of money for gas making budgeting a whole lot more predictable.

Starting From Square One

You’re living paycheck to paycheck, you have zero dollars to your name, and you and credit cards aren’t on the best of terms.  You’d like to save more for retirement.  You’d love to save for a house.  You wish you could spend more on gifts during the holidays without feeling guilty in January.  Someone has set the financial treadmill to mosey and you don’t feel like you’re getting anywhere.  How do you get off the treadmill and start going places?

The good news is, you’re on the right track.  The first step to solving a problem is realizing there is actually a problem in the first place.  The second step is understanding the scope of the problem – how big is it, really?  And to understand where you are financially, you have to create a budget.

I’ve written about Brewing Up a Basic Budget before.  Basically you’re putting all your income and expenses for the month in writing.  Once you’ve poured your financial life out on a spreadsheet (or on low-tech paper), you’ll be able to see things you may not have otherwise noticed.  Maybe you’re spending $100 per month on Starbucks, $300 on going out to eat, or $400 on impulse buys from Target.

Creating your first budget is not about fixing anything, it’s about identifying where your paycheck is going every month.