Anachostic

Well, that was a quick resolution.

In my last post, I was lamenting the financial vulnerability I had keeping the bulk of my liquid assets in my checking account, tied to an ATM card that I had to use 10 times a month in order to get a preferred interest rate.  My solution to reduce my liability was to move a large chunk of my money out to another savings account that didn’t pay as good of an interest rate.  So, problem solved.

Today, I was just doing some random account maintenance, and logged into my checking account.  There was a small ad/offer/banner that invited me to create a savings account on the home page.  Uninterested, really, but I clicked the link anyway.  It was a savings account that paid 1% on the entire balance, which is exactly what my checking account paid on the excess of the 4% preferred rate.

To most anyone, this would be a big meh.  It’s the same thing as keeping your money in the checking account.  Why bother?  But to me, this is exactly what I needed.  I needed to isolate the bulk of my money from anyone who could steal my ATM card.  There’s so many benefits of this to me, I can count them on one hand! (I’m saying there’s not a lot of benefits, but they are very important to my needs.)

So again, first priority is to isolate my cash from ATM thieves – check.  I can keep my checking account balance limited to the amount that gets the bonus interest.  Any small amount over that gets paid at 1% interest.

Second, keeping the (relatively) good interest rate on my large balance – check.  The compromise in my last post had me move a large sum to another online savings account, which currently pays .5% interest.  That’s actually better than it used to be, I guess since the recent interest rate hike by the Fed, but whatever, it’s still half of what I can get from T-Mobile.

Third, having quick access in case of fraud – check.  I had mentioned in the last post about a worst-case scenario, where a hacker does get your funds.  You can claim fraud, but money is not returned to you until after the investigation.  If you have funds elsewhere, you can move them in to fill the gap and pay bills, so automatic payments don’t fail or things get paid late.  But transferring from an external account can take a couple of days.  However, having the checking and savings account at the same bank?  Instant transfer with no delay.  There’s value to that.

So, yes, I did immediately open a savings account and tested out the funds transfer.  It was immediate, just as I expected.  Now I can begin moving funds back into this account to get my extra interest.

I think in a future post, I’m going to document the complexity of my financial web.  There’s eight bank accounts and two payment services that all link together and it would be a good opportunity to review them and visualize them for example’s sake.

Its a new year, sort of.  I’m a little late.  But anyway, a new year is a new start and time to chart a direction.  As part of that, I’m working on re-managing my finances.  They’ve kind of been on auto-pilot for some time.  The auto-pilot is pretty good, but I need to confirm the route and make some adjustments.

Big news about 6 months ago, I took on a new job.  That changed a lot of things in my life, with mixed results.  In the financial realm, it appears I’ve taken a small pay cut.  But that’s fine, the new work environment is worth that.  When you change jobs, a lot of other stuff changes as well.  You lose access to a 401k for a brief while, insurance costs and payments become strange and unknown, and other things change too, but we’ll focus on the two I mentioned.

So, the 401k.  I left my old job at the end of July and I didn’t become eligible for my new 401 until January.  So something like 5 months of no 401k contributions.  And now I have two 401ks.  But I’m in the process of moving my old 401k into my IRA accounts, like I’ve done with my previous two employers.  The process isn’t that difficult, but I’m leaning heavily on their support staff to get me the right forms and say the right things so it all goes smoothly, with no tax surprises.  I apparently am considered high-value, because my form has to be certified with a "medallion signature guarantee" which is something rather stupid.  What’s wrong with a notary?  I guess the medallion stamp is multi-colored and they verify the color gradients for fraud.  Ridiculous.

Next up, insurance.  I was going to make this a whole post of its own, but I don’t really have that much to say.  My original intent was to do a deep analysis between my old insurance and my new insurance to see which was better, cost-wise.  While this isn’t as deep, it’s still a comparison worth having.

I wasn’t expecting my new plan to be so bad, because it had a lot of marketable elements.  Foremost in those features is that you get an HSA – a health savings account.  And the company puts in $600 every year to pay for your healthcare.  When selling the HSA, a lot is made of the tax advantages – any contributions are pre-tax, your balance can be invested and grow tax-free like a traditional 401k, whatever you spend from the HSA on healthcare expenses is not taxed as income.  See, it’s mostly about the taxes.  I was thrilled with the $600/yr the employer contributed to it.  Based on my previous plan, I would be turning a profit every year.  Then I had my first doctor appointment under the new plan.

Checking in at the doctor, I was told I didn’t have a copay.  Wow, that’s even better!  I used to pay $35/visit before.  This plan is an HMO compared to my old PPO plan, so I assumed that was how HMO’s work – stay in network, pay no copays.  A month or so down the line, I got a bill from the clinic.  There must be a mistake; I’ve never gotten a bill before.  The insurance didn’t pay anything toward the bill and didn’t have any in-network discount.  The bill was ~$150.  A call to the insurance company confirmed how it worked.  I had to meet my deductible before they would start paying. 

Here’s the thing about plans that come with HSA’s.  They’re all high-deductible plans.  I don’t recall whether my deductible is $6k or $8k, but at that level, there’s no difference.  So I paid my bill with my HSA card, which had just enough to cover the bill between my $50/mo contributions and the company’s $50/mo contribution.  But I had to think ahead, I had another appointment coming up, and a 3-mo followup, and I got sent to a specialist.  And on and on.  This was not going to work for me.

I quickly crunched the numbers tonight.  On my old plan, I was paying $28/mo for insurance per biweekly check, so about $780/yr.  Then I had my copays.  Let’s say I had 5 appointments a year, $175.  Let’s round up and say my medical expenses were $1000/yr.  Now under the new plan, I’m paying $150/visit, with no paycheck deductions and no copay.  Although it might be confusing, I do pay $50/mo to my HSA, but that money is still mine and it goes to pay the medical bills.  With 5 visits a year, the bills are about $750.  So, a surprise to me, my new plan is actually cheaper.  And, if my employer is contributing $600/yr, that’s a net cost of $150.

To be completely honest, before I ran the numbers, I was certain my new plan was much, much worse.  I guess that shows the psychological power of frequent small costs.  I don’t miss $28/pay.  I don’t miss $35/visit.  I am freaked out about $150/visit, but it happens only a few times a year instead of every other week.

I’m not going to get excited about the tax benefits of the HSA yet, because I don’t know if they are part of itemized deductions yet, and there’s no likelihood I’m going to have enough deductions to beat the standard deduction.  But I’m also not going to get excited about my plan because I feel I am gambling on the future here.  If I have more visits than normal, the $150 is going to outpace the $35 pretty quickly.  Not to mention lab work and other specialist stuff that may not be a simple copay.  Right now I’m working with estimated numbers.  Next year we’ll see the actual results.