11/26 Consumerism Commentary: A Personal Finance Blog Since 2003

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Consumerism Commentary: A Personal Finance Blog Since 2003

Triage Your Finances
November 25, 2009 at 2:00 pm

Over the past couple of weeks, six finalists have been auditioning for the opening of “staff writer” at Consumerism Commentary. Each is providing two guest articles to share with readers. After the six writers have shared their guest articles, readers will have an opportunity to provide feedback before we select the staff writer.

This article is presented by Kelly Whalen, a mostly stay-at-home mom who writes about personal finance at The Centsible Life.

When I was 16 I participated in a mock emergency drill. The drills are staged for members of the emergency services (police, ambulance companies, hospitals, firefighters, etc.) to help prepare them in case of a large scale emergency. As a volunteer “injured” person I got a card stating my injuries. My job was to act as if I was injured. We had about 10 minutes to choose a place to hide, and then the emergency workers come on the scene and start sorting the injured. They used a system called triage to help classify the injured. There are 4 levels for triage in most systems.

0: The deceased or mortally wounded who are beyond help
1: The injured who can be helped by immediate transportation
2: The injured whose transport can be delayed
3: Those with minor injuries, who need help less urgently

Surprisingly triage translates to managing your money. Here’s how you can use the triage system to better manage your money.

0 / Beyond Help: Some financial decisions are a done deal. No use in spending energy and effort on past decisions that you can’t change. For instance you may have a home that has depreciated in value with the housing market crash, and you’re stuck in an underwater mortgage. You may be able to negotiate with your lender, but then you move on. Come up with a plan to do what you can. For me, this means not worrying about our too expensive car payment since it makes sense for us to pay it off over the next 2 years instead.

Examples of #0:

Mistakes that you’ve already made.
Issues with credit
Debt

1 / In need of immediate attention: Focusing on things that need immediate attention comes first. Bills need to be paid on time. You should be saving a percentage of your income automatically. At this time of year my level 1 issues are continuing to pre-pay our bills (we pay everything 2 weeks to a month ahead), staying in budget for holiday gift giving, and using up our HSA before December 31st.

Examples of #1:

Funding retirement accounts, emergency fund, and savings for larger purchases
Past due or current bills
Future purchases/expenses for the next month
Major life changes that are upcoming in the next 12 months

2 / Attention can be delayed: These are issues that are important, but should not be put off for long. Life insurance may not be a priority if you are single with no dependents, but it’s something that should be on your radar. Another example: if you are paying off high interest debt you might be delaying maxing out your retirement savings while still taking advantage of any match from your employer. This is fine in the short term, and you should keep in mind that the goal is to fully pay off debt so you can focus more on saving. For my family we are delaying saving for college. Paying off debt, funding our emergency fund, and maxing out our retirement savings comes first.

Examples of #2:

Bills that are more than a month or more away
Major life changes that are 1+ years away (they should be on your radar, you should be planning for them, but only after your #1s are taken care of)
Organizing paperwork, setting up an online account manager, or switching credit card companies are examples of things that may be on your list. These are items to tackle once a month, and they shouldn’t be at the forefront of your money management.

3 / Minor issues, that can need attention, but are not life threatening: Things that need minor attention are things that can be ignored 90% of the time. These are small things that can save you some cash, or some time but aren’t going to have a huge impact on your finances. Often people focus on the small things instead of first trying to tackle the bigger wins. If you have tackled all the big wins, and want to spend time finding the cheapest toilet paper per square, go for it. For instance if you have 3 high interest credit cards, coupon clipping shouldn’t be your first priority.

Examples of #3:

Extreme frugality: Do it if you love it, but don’t do it as your first step to getting your finances in shape.
Rate chasing: Not worth your time in most cases.
Credit card rewards: Most people who love credit cards talk about everything they do to earn their 1% maximum. If it’s easy to do, then by all means go for it, but obsessing over getting every last reward dollar isn’t always worth it.
Other: I’m sure you have many things that fall into this category. I’d love to hear what you think are 3s in your life.

By using triage, you can tackle your biggest personal finance issues first, and work your way from critical condition to minor issues. By categorizing what are the most important financial issues to you, you can focus on the things that will have the biggest impact on your finances and ignore anything that’s not important.

This is a guest article by Kelly Whalen, one of six finalists interested in being Consumerism Commentary’s staff writer.

Photo credit: Steve Mann

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Triage Your Finances

Annual Benefits Enrollment: My Cost Increasing 10%
November 25, 2009 at 8:00 am

The open enrollment period for my company’s 2010 benefits came to a close yesterday. My procrastination came to an end when I logged into our benefits management website, reviewed the options one last time, and decided to stick with the same plan I’ve had since I joined the company, an HMO plan offered by Aetna and a dental PPO plan offered by the same provider.

Overall, including my other benefits such as long term disability, the cost of the deductions to my paycheck will increase 10% in 2010 over the cost in 2009. Part of this is due to a change in my company’s subsidy formula. In 2009, the company has been paying for a certain percentage of the total cost of my benefits on my behalf, but next year, the percentage is decreasing.

This is a big increase when considering the Consumer Price Index looks like it’s heading towards a rate of 3.4% this year according to the Bureau of Labor Statistics. This increase is the latest in a line of similar increases over the past several years. The price increases spurred me to consider High Deductible Health Plans and Consumer-Directed Health Plans this year, but after reading through the details, I decided the HMO continues to be the best option for me.

Even my 10% increase is overshadowed by the increases other people are seeing. Without dependents, some might say I have it easy. I can afford the increase. Well, I can afford it right now, but there is always the threat of that ability disappearing in the future. Consumers do not normally agree to pay an increasing amount each year for a service that stays the same, or in some cases, for a service that decreases.

I’ve also recently begun pricing how much I would pay for similar health benefits as a self-employed individual. To have a plan that is even remotely similar to the benefits I have now, I would be paying about twelve times my current premium. The more reasonably priced health insurance plans offer incredibly low benefits and high deductibles. I may have more affordable options by qualifying as a small business rather than self-employed, but that is going to require more research.

What is your annual enrollment story? Are your costs going up?

Photo credit: ZaldyImg