As everyone is painfully aware, the cost of everything keeps going up.  And one day I wondered about credit card rewards.  We still get the same percentage in rewards, but we’re spending more, so we’re getting more rewards.  But I guess it’s a wash because everything still costs more.  Unfortunately, the cost of rewards has also gone up.  I used to be able to get a $200 gift card for 20,000 points.  Now it costs 25,000 points.  That sucks.  but anyway, I’m sure I’ll get there quicker with the way everything is going.

So anyway, Capital One has been bugging me that I should apply for a credit limit raise.  That’s probably about due because with everything costing so much more, my credit utilization is actually affecting my credit score.  I had considered researching another card, and I still might, but just to get these guys off my back, I figured I’d have a try.  It was a quick and simple form, but I much prefer to imagine I was talking to someone about the increase, because the end result is much funnier that way. 

So Mr. Anachostic, if that’s your real name,  why do you want a credit increase?

Well, shit costs more now.  But you don’t want to hear that, so… my credit line does not meet my long-term needs.

I see.  And tell me about what you do for a living.

I’m a programmer.

Uh huh.  So big money man.  And what do you pay for your mortgage, Mr. Warbucks?

$720.

I think you made a typo.  No one pays $720 for a mortgage.

I do.  Same house for almost 20 years.  Never upgraded.

Well, well.  This sounds all good then.  So, how much did you want to increase your limit to, sir?

Uh…  I didn’t think I really had a say in that.  I’ve been at $10k forever.  Hmmm.  Well, if you’re going to ask, how about $20,000?

$20,000?  No, we can’t do that.  That’s just way too much.  We can make you a lesser offer, though.  How about $19,500?  Is that sufficient?

I’ll make do.

Thank you sir, and enjoy your new credit line.

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.

It was back in 2016 that I had made a post talking about my life insurance policies and how such policies were considered to be a bad decision by many economic people and I argued in favor of having the policies.  I had said that at some unknown future point, my insurance would be free.  Well, I was doing some account maintenance and review because of an upcoming significant life change and guess what?  That time has come.  I’m not going to go back in time and try to determine when I actually crossed that line, but I can say in 2021, I have made more in dividends than I have made in payments.

Here’s the actual numbers involved.  I pay about $135/mo for my two insurance policies.  So far in 2021, I’ve paid $945 in insurance premiums.  Now I don’t regularly check the balance of my whole-life policy because it’s not something that really needs any attention.  I’ve checked it three times this year and in those three times, the cash value of the account has grown $1433.  If it’s not obvious, that number is larger than $945.

Insurance is a bill, an expense in your life.  You should consider it lost money.  Even more so because you’re not supposed to get any benefit out of it – it’s for other people.  Not so with Whole Life policies, there is a cash value that you can access in retirement.  Detractors say that whole life policies are savings accounts for people who can’t save, because the deposits are faked as a bill.  So what!  It works.

So if my dividends for the year were anything over $945, I am effectively in the black.  And almost being 50% above my deposits, that is a decent return.  So now that this goal has been met, let’s look a little harder at the big picture.  This should make the naysayers feel more superior.

According to records, I have had my insurance policy since June, 2007.  My payment has actually gone down a little bit as the years have gone by, but $135/mo is a fair average of what I’ve paid a month.  So, how much have I paid to have insurance all those years?  Looks like almost $23k.  What is my current cash value of the account? A little over $17k.  If I want to be slippery about this I could say I’ve effectively paid $6k for 14 years of insurance, which is about $35/mo.  My $100k term life policy is like $16/mo, so I’ve been getting my whole life policy at term life rates.

But that whole discussion is just like dealing with percentages.  It’s bullshit.  Here’s the bottom line.  I purchased insurance at a rate that was not a hardship for me.  I’ve maintained that policy for 14 years.  The policy is no longer an expense and is now an investment.  It is behaving exactly how it was sold to me.

I do not believe whole-life policies are evil if they are crafted properly by a reputable company.