Day 149: Annual Enrollment

I completed my Annual Enrollment last week. I went back and forth many times, worrying about what it was going to do to our bottom line if I took the steps I wanted to take. Ultimately, I knew I had to make a decision and I decided that it was better to save money on the premium and go with the High Deductible plan. I contributed $900 annually to our HSA, which will be matched 100% by my employer. That only works out to $75 per month. When I plugged it into our monthly spreadsheet for next year, it did take us negative for a few weeks, but I have a few months until I have to worry about that.

I don’t know if I’ve shared or not, but because I’m so obsessed with improving our financial lot, I’ve created a spreadsheet. It originally started with just listing monthly bills and their due dates, that way I could check off items that I paid and I’d know what was still outstanding. As we’ve gotten further into debt and been teetering closer to the edge, I added columns with each weeks pay date. I now break down exactly what is coming out of each paycheck based on what we need to pay our bills. I added a conditional format to let me know when our balance for the week is below $0. In 2011, we have 14 weeks that are below $0, and two months that are cumulatively below $0, however, we have several months at the beginning of the year that leave us with $300-$500 extra after paying bills, which means probably $50-$150 after paying for gas and groceries, so hopefully it won’t be too much of a hit.

While completing my annual enrollment, I established a separate savings account. Since I am only contributing $75 a month towards our HSA, I have decided to have a separate savings/checking account for the additional premium, to balance everything out. I will be contributing every two weeks to this savings account. It is tied to a checking account because if we have to pay medical bills, I want easy access to this money. But, if we don’t have medical bills or a financial emergency, the debit card for this account is going to stay locked in our fireproof lock box. Assuming we have no medical emergencies, we would accumulate $2600 in this savings account, $900 of my own contributions to our HSA, and $1160 in company funds in our HSA by the end of next year. That’s $4660 that can go towards medical bills if we ever needed to pay our deductible.

I know putting the $2660 in the savings account is not the best financial decision since it is not tax free, however, since we do not have an emergency fund and the $200+ monthly hit would have been too great for us, I think this is a great option for this year. This money can serve as both our medical savings, and our emergency fund, should we have an emergency that demanded this money. If I contributed it all to an HSA, we’d only be able to use it for medical expenses.

My other plan is that I’m going to increase my exemptions to 3 and change my status to married, and contribute the difference to a secondary savings account. My credit union allows you to create multiple savings accounts for multiple purposes. My plan is to divert the money that we were previously paying in excess towards our federal taxes into this savings account. Every $500, I will put into a CD, staggering the maturity dates. This will allow me to earn interest on money I was previously loaning to the government interest free. If I owe taxes at year end, I will have that money sitting in a savings account/CD and it won’t hurt our financial position to pay it. If our taxes stay at the same level, we would still see a tax return, it would just be a lot smaller, and we’d have earned interest on the difference throughout the year.

I’m not going to lie, these changes make me very, very nervous. I’m used to knowing that I have a small deductible and that most everything is covered by my insurance. I’m used to knowing that I’m going to receive a large tax return at the end of the year. The thought of not receiving that lump sum of money makes me very nervous. But we have to stop living like we are, and having money in savings, even if it is an emergency fund, will reduce a lot of the stress in our marriage.

I really just want us to be happy again. And I want to be in a place that I can teach my kids to be responsible with their money so they don’t go through the same mess when they get older. Like I’ve said before, my parents didn’t really teach me anything about money, at least not anything good. I want to change that with my kids.