Personal Finance

Buying a used (or new) car from a dealership can be a very overwhelming experience. The salespeople are trained very well – they know exactly what to do to get an inexperienced person signing on the dotted line (and paying far too much) before they know what’s hit them. But never fear! We’ve had our own debacle, and we’ve learned a great deal in the process – NOW we’d like to share it with you and hopefully save you some heartache (and your wallet some green). Once you step on the lot, you need to keep a few rules in mind:

Rule #1: YOU are in control

Don’t EVER let them forget this – and don’t forget it yourself. If you don’t absolutely have to leave with a car that day, then keep that in mind – and let THEM know. You’ll be amazed at how things turn in your favor when you start heading for the door. But they may just let you go – in that case, GO.

Rule #2: You are dealing with PEOPLE

Be kind and courteous; like them or not, even used-car salesmen are people. Oh, and people are pretty flexible. Once they KNOW for sure that you aren’t going to bite, you’ll probably get a better deal (price, APR, or what have you). See Rule #1.

Rule #3: Don’t lose after you’ve won!

Whew! The negotiating is over, the dust has cleared, and you’ve got 0% APR for 70 bazillion months! DO NOT get sucked in to their after-the-sale schemes. When we purchased our last car and got to this point, the salesman told us there’s a 90% chance one of the processors would go out within 2 years, so we needed an extended warranty (for the record, it’s been over 2 years and that hasn’t happened). They’ll tell you anything they have to – they WANT to make money. Things not to buy:

• Rust proofing
• Fabric Protector
• Paint Sealant
• Oil changes for life!
• Extended warranty

All of the above are SEVERELY overpriced – just watch how hard they try and sell you on them. They’re trying to make money – they do NOT have your best interest in mind (no matter how much they insist they do).

Something to do BEFORE you go car shopping

Hopefully you’re paying cash – we will be for our next vehicle! Whether you are or not, know how much you’re willing to pay for the car. In our case, we had picked out about 6 of the same car online, so we knew the general price range. We ran some APR calculations, and knew what a 48 or 60-month loan would cost us per month. Armed with price and monthly payment info, we were far more prepared than our first (incredibly inexperienced) foray into a car lot; and this would prove hugely in our favor later in negotiations.

After taking a test drive, we decided this would be the car (make/model) for us. So we went in and sat down in their office. After negotiating for far too long, they sat us down, punched our info in the computer, and told us we would be paying somewhere around 26% APR. I laughed, told him we didn’t NEED a car that day (we didn’t), got up and walked out. We were planning on driving around and checking out several other cars we had found online. But we didn’t even make it out the door – the manager stopped us and said “What do I have to do to get you in a car today?” My reply? “It needs to be the right price”. So we go back in, and “OH LOOK, this car qualifies for the Certified Used program, and there’s a 2.9% APR for 66 month special right now.” Now, we didn’t qualify for this, and I knew it. But after they realized we weren’t buying any other way – WE GOT THAT DEAL. We didn’t expect it, and we didn’t pressure them. We simply used the power of NOT HAVING TO BUY and they did all the work for us.

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I posted the Getting Your Finances in Order Monday post early, I have no idea what I was thinking   If you’re here today looking for the latest post, you can click on over – we’re discussing this topic:

Getting Your Finances in Order: Your Tax Refund Is Not a Good Savings Plan

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I get emails often from readers who are struggling with Health Insurance related issues – whether they are fully un-insured as a family or they are just paying for their children’s insurance, among many other scenarios.  I’m no expert in this area, but we’ve done a lot of research in trying to figure out what is best for our family.  PLEASE feel free to add your input or experience in thecomments section below.

Today I’ll be covering the HSA (Health Savings Account) and assuming you are a married couple without children. I’ll also write a brief example at the bottom of this post for a family like ours with 4 kids.

What is an HSA?

An HSA is basically a savings account for medical expenses with the added benefit that anything you deposit into this account is done BEFORE taxes and is 100% free from any taxing.  You are limited to how much you can deposit annualy, 2010 are $6150 for Family, $3,050 for individuals.  (HSA holders 55 and older get to save an extra $1,000 which means $4,050 for an individual and $7,150 for a family)  You’ll get a debit card associate with your HSA account that you can use on doctor visits, etc.   You can also use your HSA to cover dental and vision expenses.

Can anyone sign up for an HSA?

Yes and no.  Yes, you can IF you also have a High Deductible Medical Insurance Plan.  I know, this scares many of you because high deductibles mean quite a bit out of pocket when you visit the doctor.  However, high deductible plans also mean low monthly premiums. So if you’re able to save 2-3 hundred dollars each month in monthly premiums, and instead you put that TAX FREE money into and HSA to cover any doctor visits (or lack thereof) then little will change for you.

You must also:

• Covered by high deductible health insurance plan
• Not covered under other health insurance
• Not enrolled in Medicare
• Not another person’s dependent

What are the financial benefits to an HSA?

Let’s play with the numbers I got at the time I wrote this post (Dec. 2010) when I used the Kaiser Health Plan Calculator  to get an idea of what your savings/cost would look like. Remember this is for a married couple.

1. $618 per month – $25 Copayment Plan (or $7416 per year) : The Copayment 25 plan offers broad coverage, predictable out-of-pocket costs and prescription drug coverage — for a higher monthly rate. Office visits have fixed copayments and no deductible.
2. $255 per month – $5000 Deductible Plan w/ HSA (or $3,060 per year): This plan features a $5,000 deductible, low premiums, and no cost for covered services (after the deductible). Open an HSA to enjoy tax advantages with this plan. Maternity coverage is provided.

So let’s see how the math would look, assuming you’re a fairly healthy active couple and visit the doctor infrequently. You’d be surprised to know that even with an HSA you aren’t paying 100% out of pocket every time you visit the doctor, you still have low a co-pay for several services just as you would with a standard Copayment Plan.  For example well-child visits and routine exams are FREE with no co-payment or deductible paid.

$618 – $255 per month = a savings of $363 per month.

If you put that $363 into an HSA for 12 months, you’d be close to maxing  out your HSA account ($6150 for Family, $3,050 for individuals).  You’d have $4,356 in savings and you didn’t pay a penny in taxes on that money.  Now let’s say you got a really bad cold or had a reaction to a spider bite and you had to visit the doctor once or twice  this year, and let’s just say your deductible was $150 per visit you’re still ahead of the standard Copayment Plan by thousands of dollars and the money is YOURS and is sitting in your HSA account instead of in Kaiser’s pocket for coverage and doctor visits you never needed.

What about in a “Worst Case Scenario?”

Ok, I’ll admit the above is in a best case scenario with a healthy couple that only took 2 trips to the doctor last year.  Let’s assume (God forbid) that you or your spouse is involved in a car accident this year or you get really sick.  If you’re putting the $363 into your HSA, hopefully you’ll have some funds to draw from to cover your deductible, but remember the MAX is $5,000 OOP and after that everything is covered.  So absolutely WORST CASE SCENARIO you’d pay $255 per month and you’d have to pay $5000 in deductible costs this year, you’d be out a total of $8,060 which is just $644 more than the standard Copayment Plan.  In my world, that’s a risk I’d be comfortable taking seeing as though I’ve never had an expense that high other than child birth (and even that is covered in some high deductible plans).  Even in that case, it’s only 1 per year (hopefully!) and if you’re planning ahead and saving that $363 per month, and if you take a year off between babies, financially you’d still be ahead!

What can I use my HSA Savings account funds to pay for?

I’m going to write this next section assuming it’s already 2011 because this info will be changing effective 1/1/2011.  Here is the exact description from the HSA Center:

A qualified medical expense is one for medical care as defined by Internal Revenue Code Section 213(d). The expenses must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision. Most expenses for medical care will fall under IRC Section 213(d).

However, some expenses do not qualify:

• Surgery for purely cosmetic reasons
• Health club dues
• Illegal operations or treatment
• Maternity clothes
• Toothpaste, toiletries, and cosmetics

In the past you were able to use your  HSA account for over-the-counter medicines, however that will not be the case in 2011.  You also cannot use your HSA to pay for your monthly insurance premiums.  If you withdraw this money or use it for non-health related expenses, you can expect to see a 20% tax penalty – so just don’t do that. If an individual is age 65 or older, regardless of whether the individual has been enrolled in Medicare, there is no penalty to withdraw funds from the HSA.

FOR THE FAMILIES:

Using the exact same theories from above, I will run the numbers on our family of 6 (2 adults and 4 children).

1. $1,062 per month – $25 Copayment Plan (or $7416 per year) : The Copayment 25 plan offers broad coverage, predictable out-of-pocket costs and prescription drug coverage — for a higher monthly rate. Office visits have fixed copayments and no deductible.
2. $366 per month – Deductible 30/2700 with HSA: The Deductible 30/2700 with HSA plan offers the lowest monthly premium of all HSA-qualified Plans. It also offers an optional tax-advantaged health savings account. (NOTE: This was the lowest option for our family size, and also note that there is still a small co-payment AFTER the $2700 annual deductible)

$1,062 – $366 per month = a savings of $696 per month.

If you put that $696 into an HSA for 12 months, you’d MAX OUT your HSA account ($6150 for Family, $3,050 for individuals).  You’d have $6,150 in savings plus an additional $2,202.

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We’re taking the Dave Ramsey Financial Peace University at our church this Fall and we are really enjoying it!  We already had most of the tips and ways of living under our belts and have been working out way out of debt for some time now.  However we were NOT gazelle intense, we were simply wandering our way out.  Now we are GETTING OUT OF DEBT!

I’ve written in the past about the Envelope System and I plan to go into more detail in another post soon.  Using cash ONLY will revolutionize your financial life.  Guaranteed.

I thought you’d find the video above hilariously funny.

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If you’re new here, we want to make sure you know about the FREE Online Coupon Class.  If you’re not familiar with how that whole story unveiled here is a recap:

We had been so eagerly awaiting the release of the Online Coupon Class as many of you had as well.   We released it with a lot of hoopla and excitement and watched one by one as you signed up (both as subscibers and affiliates).  We were enormously blessed by your support!

However Mr. Frugal and I have had something heavy on our hearts and as we sat to discuss a few TFF matters, the topic of the Online Coupon Class came up.  Almost instantly we both shared the burden we had about the class.  We felt that God wanted the Coupon Class to be offered to our readers free of charge.  You see The Frugal Find, in our eyes, is a ministry and a service to our readers.  The Lord has used it to sustain our family and to meet our needs – but the reason we started the blog was for YOU and to honor the Lord’s calling in this area of ministry to our community and to our readers.

We are very excited to announce that the class is now FREE and anyone can sign up to watch the videos and get the information we’ve compiled all in one area!  We do ask that in return you PLEASE sign up to receive the TFF Daily Digest of  Deals email.  We’re asking that you do this to help us keep in contact with you in case any changes occur and so that you have access to the best deals every day!  Of course  your email is private and would never be shared with any for any reason.

By coming daily to The Frugal Find, reading my blog, printing coupons, etc you are actively supporting my family and we couldn’t be more thankful.  So thank you from the bottom of our hearts.

Are you ready to dive in?!

1. Sign up to receive the TFF Daily Digest of  Deals email
2. Head on over the Introduction Page of  The Frugal Find Online Coupon Class, I hope you enjoy it!
3. Please comment if you have ANY questions at the end of any of the segments, I’m happy to help walk you through any of the topics.

Lastly, the most ginormous way you can helps us is to SPREAD THE WORD about The Frugal Find – please share this class with your friends and family, it would bless us immensely!

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I get many questions by email that I think would be great post topics, this one in particular!

Hi Julia,

I’m wondering what other families spend on their kids and families for Christmas.  I am trying to lower my budget while my kids are teenagers!!  So knowing what other people are able to get away with will help me set up my goals and have hope I can reach them. Thanks so much!!

We shared our budget recently in my Groupon Buying Our Way to Christmas post – but honestly that seems a bit high.  With that said, if you’re going to buy any type of video game/system you’d easily blow through what we have budgeted per child and they’d only get one gift.  I do think it gets harder as they get older because they have preferences and you can only buy so many cheap Hasbro games.

(So I thought a friend shared with me recently their method of buying this year, but when I asked her about it she said it wasn’t her.  I remember laying in bed thinking about it, but surely it wasn’t me who thought it up – I know I heard it somewhere.  Either way this is one way you could shop…

1. Something they Need
2. Something to Read
3. Something to Wear
4. Something to Share

But then I’m not sure where the fun, just because they want it gift comes in.  Alas, we need YOUR ideas!

So what is your Christmas budget, who do you buy for, and if you’re comfortable sharing – let us know how much you spend per person.  I think this would be so helpful!

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After using mint.com for several months now I am thoroughly impressed. I figured it would be complicated to setup, but I couldn’t have been more wrong. Virtually any account that you have a username and password to log into online is already setup in their system. You login to all of your accounts through their secure system, it downloads all available transaction data and gives you a detailed read out – automatically categorizing each transaction. Some transactions are occasionally mis-labeled, or you may want to label them differently; no problem, just a couple clicks and you can change the one transaction, or that transaction and every other one from the same store.

I currently have my Chase bank, Paypal, Upromise, US Bank, American Express, Capital One, Bank of America, Citibank, and Toyota Financial accounts all imported. It gives me a total of how much cash I have, how much credit card card debt, and how much loan debt. It’s really nice to have a quick snapshot that is updated daily. Highly recommended!

About Mint.com

Mint’s primary service allows for users to track bank, credit card, investment, and loan transactions and balances through a single user interface. Users also have the option to manually enter cash or check transactions. Mint connects securely and has been verified by Verisign and TrustE to download transactions from virtually every bank, credit union and credit card account in the United States with Internet banking capability.

But what can it do for me?

1. Mint will connect securely to your bank electronically.

2. Your purchases are automatically categorized for you! Ie, groceries, toiletries, entertainment, etc. This is incredibly helpful in tracking exactly how much you are spending and where. They also offer pie charts for those of us who need a visual.

3. With Mint you can also track all of your investment income and see how well (or not so well) you’re doing. Knowledge is key!

4. Mint will communicate with you (you set the perimeters) via text, email, etc. and keep you up to date on any account changes, low balances, and any possible fraudulent activity.

5. The best part is that you use Mint.com completely anonymously. You never enter a Social Security number or even your name!

Have you used Mint.com, please share your experience in thecomments – let’s help each other out!

If you’re ready to register (or just peak around) head on over to Mint.com!

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I recently read an article on MSNBC (I think it was emailed to me by a reader, so thank you!) about debt, there were a few points that were very encouraging!

The amount consumers owed on their credit cards dropped to its lowest level in eight years, as cardholders continued to pay off balances in the uncertain economy.

More borrowers also made payments on time. The number of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.

You can read the entire article here.

Are you finding yourself to be a part these numbers?  I know our family is and it feels so nice to be working our way out, slowly but surely. 

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