Is an HSA worth it?

I used esurance to find a pretty good high deductible health insurance plan for fiance. It has a $5K deductible. So, he's pretty much uninsured, but if he gets into a car accident or something he'll be covered and we'll be out $5K.

High deductible health insurance policies allow you to start a HSA. This is like a super-IRA. It is not taxed when you put money in (like a traditional IRA), AND it and its growth are not taxed when you take it out (like a Roth) for medical expenses. That's a pretty sweet deal.

But how do you open one?

Esurance offers four HSAs: Wells Fargo, Optum Health Bank, HSA Bank, and Bancorp Bank. All of them have awful monthly fees at least $2.50. I am not stupid enough to pay that.

The best HSA I could find was Sovereign Bank. No fees, a few decent mutual funds. That's good, I guess. There is a Fidelity HSA. It's in a lot of Fidelity documentation, but it looks like that is for companies and not the self-employed. So, Sovereign it is, I guess.

It would be nice to max out the HSA ($2,900). That money would not be taxed. But. Would we ever be able to use it? If it grows to, say, $15K in retirement, will we be able to spend it?

More importantly, do I want to disrupt my streamlined finances with a teeny account at a random bank just to leverage the tax benefits that we might not even be able to use?

Simplifying Finances

I had some time this week, so I canceled SEVEN accounts. I'm just trying to streamline.

Credit Cards: I canceled my 0% cards, Citi and Bank of America. I canceled Discover. That left me with an Amex, Fidelity Visa, and WaMu (for the FICO scores).

Bank Accounts: I canceled my old Wells Fargo--haven't used it in years--and HSBC, which hit me with a mystery $19 bank fee. That leaves me with WaMu, ING, and Fidelity money market.

Retirement: I rolled a small old 401(k) over finally, and I moved an old IRA to Vanguard. Now I just have Fidelity and Vanguard.

So, I canceled seven accounts, and am down to seven. This should make my spreadsheets more streamlined. I just wanted more simplicity.

Domestic Partner Health Benefits Are Expensive

Today I asked HR about declaring my fiance my "domestic partner" so that he could get health insurance through me. Texas doesn't have any kind of domestic partner laws, so it's just a non-gender-specific form that says you live together, love each other, and are financially responsible each other (and not related). HR said he could qualify if we submitted the form.

A co-worker told me that the domestic partner benefits for his partner (a stay-at-home dad) were quite expensive. I sent an email to HR about this, and they sent back this:

"Because of federal tax law, you pay domestic partner premiums after tax, and you are taxed on the employer contribution to that part of the plan. That contribution ranges from $125 to $250 a month, depending on the plan."

OK. So. If I were married, keeping this health care plan, which is a medium expense plan, my health insurance would go from $100 (pre tax) to $225 (pre tax). Thus, the cost of a spouse is $125 pre tax, or $83 a month.

For domestic partner benefits, I would pay $125 (post tax) plus taxes on $125-250, or about $50. So, the cost for a domestic partner is $175 a month.

Holy smokes! That's a lot of cash. Looks like for my family, a HSA ($70/month) will do. But this math is a $92 tax penalty month---or almost $1200 a year---just because the federal government taxes same-sex couples harshly. I wonder if it would be the same in a state with gay marriage...

Checks Rolling In!

The business got a few checks this weekend! Hooray!

The current debt is $12,500. After depositing these checks and paying some bills with them, that will be down 25%. I bet it will be down 50% by the end of the week! At this rate, the business will be profitable in less than a month!

I added a graph on the right for the business's profit. I am starting from here, at $12,500 in debt.

New Goals for 2008

In December, I set some goals. I've accomplished a couple, and some just don't make sense anymore. Time to revisit.

1. pay off credit cards (Almost Done!)
2. 2007 IRAs (Done 4/21/08!)
3. Wedding savings
4. 2008 401(k)s (Done on Autopilot)
5. 2008 IRAs (10K) (abandoned)
6. pay off car

Now that my fiance is self-employed, we control how much we are allowed to or want to put in retirement. Also, hopefully he won't qualify for a Roth this year. If he does, we'll fund that in 2009. Non-deductible, non-Roth IRAs are a waste now. If we want more in retirement, we can just ratchet up the solo K. So, that goal is gone.

We have a more important goal now--putting the business in the black.

So, revised goals:

1. pay off credit cards (almost done!)
2. 2007 IRAs (done 3/21/08!)
3. max out 2008 401(k)s (done on autopilot!)
4. business is profitable (12.5K)
5. wedding savings (35K)
6. pay off car (13K)

Whew. I am fired up about these goals, and I think we can accomplish them handily!

Budget Busted: Dental Bill

I thought I had good dental. Turns out I don't. I went to the dentist today and had over 3K in dental work.

My insurance kicked in half. Thanks, guys! Well, what did I expect for $7 a paycheck? Maybe I should get the better dental next open enrollment. My fiance doesn't have dental at all. I guess it's not that big of a difference.

I make enough money to absorb $1,500. It's not such a big deal. But two years ago, it would have been debilitating. I would have had to beg or borrow for the money. I am so grateful that I have the cash flow now to more or less handle this--or at least know it only derails me a little.

Open For Business!

The business is now up and running. All of the equipment and inventory is in the house or in the mail. This is almost all of the business costs for over a year or longer.

So, the lowest point:
Business checking: $317
Business credit cards: $8852

And we are off! The business's lowest point, right now, is $8500 in the red. I think we can be in the black in a few weeks. His first products are shipping out on Monday!

Yes, This 24K Credit Card is a Good Idea.

After getting only 3K from AmEx, and turned down by Bank of America, we were blown away to get a whopping 24K credit line on the Chase business card. I guess Chase thinks we need to finance a whole lot.

Thanks, Chase!

Fiance needs to buy about 7K in inventory and equipment. Once he quits his job at the end of the month, he just needs to make the stuff he has already sold to be profitable.

I am so excited and nervous. It's really scary out there on your own with no salary. No one in my family has ever done anything like this.

Going to Haiti, Even Though I Can't Afford It

A while back I posted about a vacation I wasn't sure if I could afford (My Car is Guzzling My Vacation). Since then, the perfect storm has occurred, so I am taking the vacation. Fiance is quitting his job at the end of the month. I got a small bonus. My boss decided to go on vacation at the end of the month... I have never taken a day off work when he is not on vacation, and I work through most of his vacations.

We're going to Haiti for four days! My friend works for a large charitable organization, and she is sort of running a program down there. Haiti isn't exactly my first choice for a vaca, but she will be there, and it will be cheap.

Costs:
Flights: $500 x 2 $1000 (have to connect through Florida, still cheaper than expected)
Food: $200/ day $800 (including friend)
Possible Hotel: $300 (mostly staying with friend)
Fun: $150
Total: $2250

It will probably be less, we'll see. $2k is a lot of money in my world right now, with the IRAs due imminently (his Roth, mine not) and with the business expenses.

But... I think it's important to celebrate milestones like starting the new business, especially because he already has enough products ordered to be profitable in about a month. Also, Haiti is one of the places in my (very cursory) research about international adoption. Maybe someday we'll come back with much more purpose. And this time we can come back ready to work and finally be debt free.

How Much Would Getting Married Cost???

I'm trying to navigate the maze of health insurance and marriage because my fiance is starting his own business. A while back, Living Almost Large suggested on my least romantic Valentine's Day post ever that I run the numbers on married filing jointly, and that being married might not cost us that much money.

I made this cool chart of tax liability for us if we were single or married. I made a lot of boring assumptions about the 401(k) and the SEP-IRA. They are reasonable--about 15% of income--and they are consistent, as to compare apples to apples. Most importantly, this chart leaves out the truly terrifying self-employment taxes. But those would be the same whether we were married or not.

The chart shows no matter what we're paying a lot of taxes, but I found it really interesting. The more money he makes, the money being married costs us...

I got my $100 from Ameritrade!

I was skeptical, but it showed up!

Over a year ago, I was one of the early ones into the Suze Orman savings account (money market) with Ameritrade called the "Save Yourself" account. Then, it had a 4.5% interest rate; who knows what it has now.

I was supposed to get a $100 bonus within 5 weeks of the last $50 automatic monthly deposit. Well, four weeks later there that $100 is!

I cashed it in, and I really needed that money.

Massive Update

Long time, no see. Here at the doghouse, we have been getting stuff done!

First, I turned down the job offer at the community college. I think I can make more freelancing a couple projects, but my day job AND teaching AND freelance would just be too much.

Fiance got turned down for one business credit card, but approved for another--for 3K. Uh Oh. He needs about 7K more in equipment/inventory to leave his employer. Well, since then he has made about 2K, so now he has to wait until he can make about 2K more. Hopefully, that shouldn't take too long.

I feel a lot better about that plan anyway. 3K debt in inventory is not that big of a deal to me, but somehow 7K in debt seemed pretty stressful. Probably because I know he can make 3K or close to it in one month or so. Whew, we have been planning.