Disability Insurance

Everyone who has a job and needs the income should have disability insurance, but it can be very expensive. Disability insurance pays about 60% of your wage if you are injured and cannot work. Some pay only if you are unable to work any job, other will pay if you cannot work in your current position. The real kicker is that if you buy disability insurance not through your employer it costs about two to three percent of your salary. Now if you are like me, you are sitting there going "ouch". I'm suppose to save 10-20% of my salary, now you saw I have to give up another 2-3% for disability insurance? And we are not even counting in taxes here.

But disability insurance is important and worth the cost. What are you going to do if you can't work? What can you do if your job requires you to talk and you have lost your voice? Or what about loosing a hand? Do you think you could do your current job if you lost a body part or were in a wheelchair? The only benefit on buying disability insurance not through your employer is it is not taxable earnings but if your buy disability insurance pretax, through your employer, it will be taxable earnings.

My fiance and I have been looking for disability insurance for him for a few months but again, it is very expensive. We could only find disability insurance costing 3% of his salary. We had decided to wait to the wedding and then just bite the bullet and get it. A month ago we were at a home show and MetLife had a booth there. Since I am an eternal optimist, I thought lets see if they have a lower price. We just finished the paperwork and MetLife gave a quote that is under 2% of his salary. What seemed to make a difference with them is that my fiance is a researcher and paid by the government and that is something MetLife considers. Also, his lifestyle and job are not risky and I believe someone with a risky lifestyle would pay more. With that combination MetLife made us an amazing offer. I honestly was shocked on how low the price was. We went home and I read over every little bit of the paperwork and it seems legitimate.

Side note, I make no money off this post.

Because of the savings, my fiance and I are now able to afford life insurance as well and may also be able to put more into our retirement accounts.

Reminder-Lack of Coupons

Because of Easter Sunday there should be no coupons this Sunday. For some reason on holidays newspapers do not include coupons. I do not understand why coupons are not included but they are not. You can get online coupons through mypoints at http://www.mypoints.com/emp/u/centers/couponCenter.vm, also when you use the coupons on mypoint you will earn 10 points per coupon.

It does appear that next Sunday, May 1st, 2011, should have double the amount of coupons that we normally get.

Cash Payments, ER and Getting a Discount by Just Asking

A month ago I had to work a very early shift at work, starting at 6:30 in the morning and we were not able to get lunch until 12:30. Now, to some that may not be a big deal but I eat every three to four hours so by six hours I was not feeling well. I went down to eat and yet I did not start feeling any better. I went back to work and then just started shaking and was afraid I would fall.

Now you may be wondering, what does this have to do with personal finance? Well, my boss told me to go to the emergency room but I told I could not afford it (my copay is $200) and she told me worker's comp would take care of it. After resting for a bit, I still felt bad but I did not think I needed to go but she insisted and I did not feel up to arguing. That was a mistake. My employer did not cover it because it was not an injury even though the doctor believes I started feeling sick based on not eating.

Now comes the kicker, because I did not tell my insurance (again, because I thought work would pay the bill) they would not cover it. The bill came to me and it was $275. I had always heard that hospital bills are negotiable but because I had amazing insurance I had no experience with it. I called the billing department and left a message and within a few days got a call lowering my bill $100 and allowing me to pay $10/month. Now I only owe $175 and because I will not be charged interest I have decided to take the entire 18 months to pay the bill off. I had some money put aside for health costs but had two other health bills so that fund is low. By calling and asking I will not have to dip into my EF or derail some of my other goals.

Financial Independence

My definition of financial independence is enough income producing assets to pay my bills without having a job. Right now the net income I need is about $24,000 per year but that would increase if my fiance lost his job, because we get health insurance through his job. The additional cost of insurance would be about $500 per month so $6000 per year. This means my goal, at this time, is to get enough income producing assets to make $30,000 per year.

So far my investment income from 401ks, Roth IRAs, Traditional IRA and taxable accounts give me less than $300 per year. This assume about a three percent withdrawal which should last me indefinitely. My rental should bring me $525 per month, which is about $6300 per year at best, more likely to be about $5250 because of vacancies. Obviously I am no where near financially independent.

But what could make me financially independent? I could buy more duplexs/rentals or I could put more in my investment accounts, or I could pay down the debt we owe. I should do all of them, but I do not have the money currently to do so.

This is when one must decide what minigoal will help achieve the goal the best. In my case, we were looking at buying a second duplex but with my other, nonfinancial goals, that did not seem to be a good idea at this time. Paying down debt, at this time would not change my monthly payments for quite sometime therefore I decided against prepaying my loans. However, in the end getting rid of my debts will remove $4595.76 of expenses from my annual budget. This amounts to 15% of the budget. That is major and I think I should pay down the debt but I do not think it will be as immediately helpful as my other option. Therefore I will be putting more in my investment accounts. As of next month I will be increasing our contributions to our Roth IRAs. I am still deciding how much to increase by, but it will be increased by at least $150/month.

Goals

Goal, true goals, not wishes, are a great thing to have. Goals help us achieve what we truly want and stop life from passing us by. But what are goals? Are goals wants? Yes they can be, but not entirely. Goals are defined wants. I want to be able to retire, my goal is to have four million dollars in investments and 10 duplexes. I want to be debt free but if I want to get through graduate school, I need to take student loans out for a couple years. Which is more important? By defining your goals you determine what is possible, what is most important and most importantly, how you are going to reach your goal.

The first part of having goals if defining them. Goals are not just financial, I have personal and professional goals as well. Professionally my goal is to get a professorship and get paid to do research in my own lab. Personally, my goals include such things as getting married, having children and making connections in the community. And, of course, financially, I plan to become financially independent.

But I cannot just jump from this point to my goals. I need minigoals along the path to help me stay focused and to continue getting me toward the main goal. For example, to reach my main professional goal to become a professor and get my own lab I need to get into the master's program and then into a PhD program. Along the way I need to publish at least two papers and get one grant that I can use as a post-doctoral fellow. During, my post-doctoral fellowship I need to publish at least one more article and get one more grant. This path, should get me a professor position at a university. However, determining this path does not mean there will not be detours but by having goals and minigoals I increase my chances to achieve my goals. I must note that my goal of becoming a professor will require many years and some money to pay for tuition which will affect my other goals. It may even make it harder to achieve my other goals.

Next post I will go in depth regarding my goal of financial independence. I'll talk about where I compromised on that goal for other goals and where I made the choices to make myself be independent in the future.

Update on grocery savings plan March

Considering I decided to cut down my grocery bills during the middle of March, I did pretty well overall for the month of March. My goal for the average weekly spending on groceries was $50 and I spent $50.40. An extra .40 is not much, so I am very pleased but .40/week is still $20.80/year and I have better places for that money so I am going to continue this plan and see if I can't even get under $50 average for the year. Because so far I am already over this goal I will have to cut down below $50/week to make my yearly goal. So far my average for this year is $53.71 and to get the average down to $50/week I will need to average $48.76/week from now on.

I do not expect to cut my spending down to $48.76 next week or even next month but I do plan on trying my hardest to reach this goal and you never know, maybe I will. Slow and steady works much better than extreme frugality and then splurging.
The ladies over on the WIR grocery board have been so nice and other blogs have been a great time saver as well as money saver. I do believe that with their help, by the end of the year I will be able to report on average spending of less than $50/week.

Also, my fiance and I will be preparing our garden both this weekend and next. We will be planting lettuce, tomatoes, cucumbers, cilantro, basil, red onions and jalapenos. We already have two blackberry bushes that we started last year. Though we consider the garden expenses part of our food budget we expect to save some money by gardening.

Is anyone else changing their lifestyle to save money? What about reaching out to others to save money? To get our budget down to what I want we will have to do both. Strange enough, I think both the lifestyle change and reaching out to others will be good for us, not just monetarily but socially and emotionally as well.

Off Topic: Hi visitors from Get Rich Slowly

I commented on an article on Get Rich Slowly (one of my favorite blogs) written by Donna Freedman (one of my favorite authors) and posted a link to an article I wrote about something similar for college students. Wow, the amount of people from Get Rich Slowly was amazing for a small time blogger like me.

This is the post from Donna on Get Rich Slowly http://www.getrichslowly.org/blog/2011/04/11/use-a-financial-fire-drill-to-prepare-for-the-worst-before-it-happens/
and my post here
http://frugalstudents.blogspot.com/2010/05/emergency-funds.html.
I would love to hear from those who traveled over here (and my small but loyal readership) about what they think of the two articles. What do you see as similar, and what do you see as different, between the two articles? Do you agree with the points or not AND why?