Archive for the ‘General’ Category:
There’s been a lot of debate in the press lately about inflation vs. deflation. The inflationary side says that the Fed is printing money so fast that we will inevitably incur inflation. (ie: the value of the dollar goes down so it takes more of those dollars to buy things)
The deflationary argument says that people are out of work and home values are falling so folks aren’t spending. When people don’t spend prices naturally come down to where demand is created. When prices fall that is deflation.
I will leave it to the much smarter economists to battle it out on what will eventually take hold, but for purposes of this financial infotainment blog let’s take a look at real world examples:
The wife has been wanting to wrap up our 9 month basement project by purchasing a home theater system. You know the deal: large flat screen plasma tv and surround sound audio system. I knew that we would eventually do this, but since the thought of spending this kind of money causes an anxiety attack, I have been stalling. Stalling for the better part of 5 months. The main reason is that each Sunday I would check out all of the ads in the local paper from electronics stores. Guess what? The price of TV’s have steadily declined. I knew that there was no way the prices were going to rise so by putting off the purchase I could get a better price. This my friends is the problem with deflation – nobody can make consumers spend if they feel that they can get a better price by waiting. If everyone adopted this philosophy the economy would be in real trouble. Consumer spending would halt. That is deflation. The Fed hates this because there isn’t anything you can do to force folks to spend, unless they think prices will eventually rise (inflate your way out) or if jobs return and growth resumes (then you feel better about spending).
So that is the real world example. On the flipside, I have been looking at the grocery bill lately and it definitely has not gone down. In fact it appears to be creeping up.
I guess we are faced with inflation in some items and deflation in others. Where it ends up will be interesting.
Being self-employed I watch my healthcare costs very closely. We have a high deductible plan for the family (no maternity coverage if you have read the earlier posts) to save money on the monthly premiums. What that means is that outside of normal office visits for the kids, I have to eat the cost of everything until I reach the per person deductible of $3000. This also means that because the wife likes to take the kids to a “pediatric dentist” instead of the few that are offered in our plan that we pay full cost. Don’t even get me started on what those fillings cost!
Needless to say, I don’t frequent the doctors office unless I am feeling like death. I also encourage this for the family although they are a bit quicker to go for their ailments.
This all leads to today’s post regarding a recent trip to the emergency room. Since we are still debating healthcare in this country I figured a real-life example would be appropriate. Before I get any nasty emails this is not a political discussion and is not a slap against doctors or hospitals. I work with a number of physicians and completely agree that they should be compensated well because of their skills and knowledge. I also understand that hospitals can charge their fees because they provide the equipment, facilities and services. I accept this and like every other capitalist I believe that you can charge whatever the market will support.
So, a couple of weeks back my son had been suffering from a multi-day stomach virus that would not seem to go away. I had been a bit concerned because my experience with viruses is that they last about 24 hours and then you get better. After having this thing for 4 days he woke me up at 12:30am on a Sunday night complaining of severe stomach cramps. He was in pain and my inital thought was that this may not be a virus but something more serious like appendicitis. So I put him in the truck and rushed over to the local hospital emergency room. We were immediately put in a room and promptly attended to by an ER Nurse and then checked out by an ER Doc. (both great folks) The doc did some general tests such as blood work and physical movement which ruled out the appendicitis, but thought that a CT Scan would be warranted to make sure (and I agreed). Finally at 4:30 am we left the hospital and went home.
The following bill arrived in my mailbox a week later:
- med-sur supplies $71
- Lab $275
- Urology $88
- CT Scan $5048
- ER room $1706
- drugs $466
so the grand total for 4 hours at the hospital was $7654 (i paid a $150 deductible upon entering). Once again I am not against paying folks what they are worth, but even if I wasn’t a miser this seemed a bit steep. I agree that the doc, nurse and facility are worth their charge. My gut tells me the CT scan and drug charge is off base, but since I don’t have any other access to a CT scanner I guess it doesn’t matter what I think!
So the thing with insurance is that they have negotiated rates, so even though I have a high deductible my insurance company followed up with an itemized list that reduced the charges based on “contractural adjustments” and the total bill came out to be $1109.
After this ordeal I am left to ponder the following things:
- if I did not have coverage and was a cash paying customer, would I have gotten the reduced rates or been stuck with the inflated rates?
- if the state / fed government let hospitals expand and buy equipment as they wanted, would it not bring the prices down due to competition? (did you know that the hospital has to get approval from the state to have a CT machine (or to add any equipment/service)? did you know that the hospital has to get approval to add even one additional bed? (so much for free market competition)
- exactly what would be a fair cost for the treatment we recieved? I am guessing somewhere between the inflated rate of $7654 and the insurance rate of $1109.
By now anyone reading the blog knows that I like a deal. I consider it somewhat of a challenge to find what I am looking for at a deep discount. Hope and I have used this as a sort of game between the spouses. We each see who can score the best savings. Sometimes it is using coupons or sometimes simply snapping up a bargain on closeout.
The difference between us of course is she is a shopper. She will go and browse the stores like many females until she finds something interesting. I on the other hand am more of the hunter type. I have to know specifically what I am looking for and then I start the search. This is why Hope absolutely hates shopping with me. Case in point is a recent evening out we had some time to kill and were at a local mall. I mentioned needing a few dress shirts, so we hopped over to Macy’s. After finding what I needed (on the discount rack of course) we were heading out. She then mentioned that I needed new jeans……..
Guys I don’t know if you have been to a mall lately, but it isn’t just Levi 501’s anymore. There must have been 50 brands and 500 different choices. She had decided that I needed something a little more hip. I looked around for a few minutes and then felt that shopping anxiety kick in. Have you ever had that? I mean just to many choices, it was complete overload for me.
I don’t know why it can’t be simpler in the guys section of clothing stores. If they would limit the selection so that you don’t get analysis paralysis, they would increase their sells. I don’t think it was just me. I truly believe I saw at least 5 other guys run screaming out of the store gasping for air. Needless to say I did not buy any new jeans. That will have to be another day when I am specifically looking for jeans….
Since the holiday’s I really haven’t had a lot to rant about, especially with the wife’s spending. She did slip in that chair she bought online back in January that I caught on the Amex bill, but she swore that was the last purchase for the basement project for awhile.
Actually I have to give her kudos over the past few months. I think I am rubbing off on her. She takes her coupons with her to the grocery, makes sure we have our free kids meal coupon before dining at the neighborhood restaurant and today she is getting a load of old kid’s clothes and toys ready for the consignment sale. If this keeps up I may have to change the image on the blog!
On a completely unrelated note: For those interested, the March e-newsletter discussing IRA’s has been sent this week. It can be found at www.theadvisoryfirm.net/afnews.html
The communication has been a bit slow, I know – lack of anything to post lately along with the holidays. So today I wanted to give a quick update on the basement progress. For those following along I mentioned last month that I was finishing our basement. Although it has very little to do with personal finance, I am sharing the progress just for your enjoyment. So the story is that Hope has been on me for 5 years to get the basement finished. I of course didn’t want to spend the money. But as with everything she finally won the battle.
My thoughts were that as long as I was agreeing to finish the basement I would at least try to save a few dollars along the way. Here is a quick summary of where we are at:
- had the HVAC folks run the ventilation and motorized damper $2200
- carpentry to frame out the vents (tray ceilings) $1000
- insulate walls and ceilings $600
- plumb the water lines for bath / wetbar $1100
- electrical $1500
- sheetrock $3300
- primer / ceiling paint $250
- floors $5000 (ouch!)
So around $15k right now invested and that will at least give us a finished guest room and playroom. My entertainment room will be a bit longer to complete. I was looking for areas that I could do myself to save some money, but after second thought I decided that plumbing and electrical needed to be done by pros that could knock it out in a couple of days. If I tried to tackle it I would probably still be working on it. I have also tried hanging and finishing sheetrock before, but I was smart enough this time to sub it out. That takes talent and a strong back. I did install the insulation which is another nasty job. That fiberglass is challenging stuff to work with. I went ahead and insulated all the interior walls and ceilings to cut down on noise. That is one of my biggest pet peeves with home construction is that sound carries throughout all the interior rooms because there is no insulation inside the walls.
I knew the floors were going to be one of the costliest items. I did my research though and actually saved about $1000 by comparison shopping on the web. I was just about to order through one of the major wood flooring stores on the web and at the last minute found a store in Alpharetta called SimpleFloors that had a real nice wide plank hand scraped wood floor that looked great. I opted to do the install myself, which I am now having second thoughts about. It is tedious work installing glue down wood floors. It is after 10pm on Monday and I just finished the first room. I would estimate it took me at least 8 hours to complete. Let’s see if my math is correct that room was about 200 sq foot. I only have 1100 sq feet to go! At this rate I should finish sometime around New Years. So much for having the basement finished before the holidays!
I try to keep the posts fairly light on this blog, maybe even to conjure up a laugh at the expense of my miserly ways. But there is an organization that I am associated with that is trying to tackle bigger issues around the looming fiscal issues in this country. One of my colleagues in the financial planning community who is also a part of this organization sent me this note this morning. I thought I would repost for the benefit of the readers here. It’s not meant to depress but more of a call to action. I will get back to the lighter stuff soon:
FACT: By 2019, 92% of all US tax revenue will be spent on Medicare, Medicaid, Social Security and interest on the debt. By 2023 it will be 100% leaving NOTHING AT ALL for anything else…..roads, education, defense……the list is long. Cutting fraud, waste, and foreign aid won’t make a dent in the problem.
Dear All,
About a year and a half ago I decided to “just say no” if anyone asked me to be part of another board, another project. But then in December of 2008, Phil Smith (political director of the Concord Coalition) asked me if I would chair the Atlanta Fiscal Advisory Council, one of 7 groups around the country that would work with very diverse groups of both grass tops and grass roots, first explaining about the very real fiscal crisis faced by our country and then working to find areas of agreement as a basis for moving toward solutions. I simply thought “How could I possibly say no.” Indeed, of all the things I’ve ever worked on, this is the most important and the most immediate.
I just got back from DC where each group delivered the reports that were compiled from our year long effort. To get an idea of what I’m talking about you can visit:
http://money.cnn.com/video/news/2009/12/09/n.deficit.nation.debt.concord.cnnmoney/
..or go to cnnmoney.com and search for “Deficit warriors storm Congress” under “videos”
This short video is a snapshot of the issue and the purpose of our trip. I do have one line I think is funny. You have to laugh or you’ll cry.
http://money.cnn.com/2009/12/07/news/economy/citizen_suggestions_debt/index.htm
The article written by CNN in advance of our actual visit based on a summary report of our findings.
http://www.concordcoalition.org/files/FAC_Full_Reports.pdf
The actual report. The Atlanta section is first.
www.iousathemovie.com
You can see a 30 minute version of this outstanding documentary that explains the basics. An update of this documentary will be coming out later this year.
After you see this I hope you will be alarmed enough to say to yourself, “What can I do?” I have some suggestions:
· Try to educate your friends, families, and co-workers about the problem. Making the necessary changes will be painful and people have to understand why they need to swallow some nasty medicine. Our government will never have the political will to do the right thing unless citizens demand it.
· Stay informed….. the facts…… by accessing non-partisan information at www.pfpg.org and www.concordcoalition.org They both sponsor the Fiscal Wake Up Tour and had a big part in making the movie IOUSA. They need your support in this very important work.
· There are 2 non-partisan commissions that are trying to take the politics out of this: Senate commission (Conrad / Gregg Commission http://senatus.wordpress.com/2009/12/09/conrad-gregg-to-announce-deficit-reduction-commission/ ); House commission (The Safe Commission from Cooper / Wolf http://wolf.house.gov/?sectionid=202§iontree=7,202 ). Write your Senators and Congressmen and urge them to support and listen to these commissions.
· Be flexible. The nature of compromise, the only thing that will move us forward, requires that we accept things we might not like to get the results we must have.
Thanks for listening. Now go be part of the solution.
Here’s to many more years of happy holidays.
Bobbie
We attended a wedding out of town over the weekend and as we were sitting on the airplane Hope happened to point out the differences in our reading material. She of course had Us Weekly and InStyle, I on the otherhand had Kiplingers Personal Finance and Money Magazine. It got me thinking that we were probably not that abnormal in that most males and females have wildly different tastes in what they read for entertainment.
Hope is a self professed magazine addict. I have fought this battle many times but ultimately just bite my lip as a couple of new gossipy women’s magazines appear on the table each week (I don’t even want to think about how much money is wasted on these!). I really don’t understand the appeal, all of the weekly magazines cover the same celebrity stories and to me seem like the same magazine with slightly different name. Seriously, if Brad Pitt is on the cover of one of them then he is on the cover of all of them. It’s the same story and for the most part the same pictures! Big waste of money if you ask me. But those publishers know what sells. If you look at the checkout lanes at the grocery stores, what type of magazines do you see? Certainly not Kiplingers or Car&Driver.
So the next time your are at a friends house, check out the magazine selection. I’ll bet that we aren’t that different.
In case you were wondering, no I don’t pay for my magazines. Benefit of the trade as I probably get 8 different monthly magazines covering personal finance and investing sent to me free. I really enjoy reading this stuff even for entertainment, besides I would look funny reading Us Weekly.
I now know to never underestimate the creativity that females can use to break the news of a big purchase.
Disclosure to any ladies out there that may use this one, IT WILL ONLY WORK ONE TIME! (sorry guys, this one will not work for you)
I was speaking with the wife this morning on the phone and she said, “You sound like your in a good mood”. I said yeah it’s Friday, yada yada. The next thing that came out of her mouth was “Great, I have something to tell you”. After which was a long pause. Well she paused and I started gasping for air! The last time I heard that statement was back in 2003 when we found out she was pregnant. Now, don’t get me wrong. I love our kids, but officially I am done with the baby thing. We had always agreed that two kids was enough.
So here I am gasping for air with a million thoughts running through my head, not the least of which is the fact that we don’t have maternity coverage on our health insurance. (I opted out of course to save some money).
So after the long pause she says, “I bought a new camera”. Now mind you, when Hope buys a camera it is a pricey endeavor. We are talking the big macdaddy Nikon digital type. She then follows it up with “I was waiting to tell you cause I thought you would be mad at me spending the money”.
It was the perfect setup! I mean how could I be mad? One minute I have visions of $8000 hospital payments, crying babies at 2am and the fact we don’t have a spare bedroom to then finding out she bought a silly camera! Mad? I felt the biggest sense of relief ever.
I am still sitting here wondering if she planned this. I know she would never admit it but man that goes down in the hall of fame on how to break the news of a big purchase to your husband.
Okay, so I admit that I look for deals. Even on date night dinners with the wife. There are so many restaurants offering 2 for 1, free appetizer or other discounts that it seems silly to me to not use the coupons. It may sound cheap, but these are good restaurants and places you might not normally try (out of your typical weekend comfort zone choices).
So, yes when I took Hope out this past weekend the choices were from places where I had coupons. One invaluable tool that I use is my friend Mike’s website: www.localflavor.com If you are going to try out a new or even an existing restaurant the site gives you a menu along with discounts you can use. (currently this is only available in two regional areas but he is expanding).
I don’t limit the coupons to date night. Last night was father / daugher night out and yes we went to where I had a free kids meal coupon!
This is off the beating path of personal finance, but since it’s an area that many folks consider so I figured we would share it!
We have recently begun the process of finishing our basement. Hope has been after me for 5 years to finish out the extra space. I of course have procrastinated, not wanting to fork over the cash needed to build it out. All I have done was to actually complain silently about why I didn’t at least have the builder rough it in prior to closing on the house.
Well it seems that it is time. Realistically, I can come up with a million reasons why I should not be spending extra cash to do this but I would probably come up with the same excuses 5 years from now. So over the next few months I will be notating some of the ways I am going to do this on a budget. For fair disclosure we do have some experience with sweat equity having renovated 2 homes in midtown Atlanta prior to moving out to the suburbs. It’s been awhile but I think I can still do some of the labor involved. The first part is acting as my own general contractor. Nothing against GC’s, but as a lifelong DIYer I like to get involved in these things. It’s not for everyone and if you don’t have the time or inclination to manage a project like this then it is worthwhile to higher someone to do it turnkey.
The hardest part to getting started was cleaning out all of the items that have been stored down there for 5 years. In all honesty that was the biggest hurdle. What to do with all of this stuff we couldn’t part with for so many years. Well over the weekend we parted with a good bit of it to a local non-profit. If we haven’t looked at it in 5 years, it wasn’t needed.
I had the HVAC guys come in Monday to add a system. It turns out our main level HVAC system was oversized and could accomodate the square footage of the basement. So instead of a $4500 for a separate system we elected to go with new ductwork and a motorized zone damper system for $2500. For basements many times it’s not the temperature but airflow that is an issue. I definitely needed the air to circulate to eliminate any musty smell that is common in basements. I will have to give kudos to Neese-Jones HVAC for suggesting the damper system. Anytime I can start a project and save $2k, then I am happy.
Next up is some carpentry work to frame out around the ductwork and to frame out a closet in what will be the guestroom. I have enlisted the help of a local carpenter and will let you know how it goes in the next update.
Older Posts »
