Ok so there seems to be a lot of confusion around the Health Savings Account that the government is now allowing. So I figured it would be good to go over the kinds of medical savings accounts currently available and point out the differences. First of all some definitions:

Health Savings Account:
Its a tax-advantaged medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to federal income tax at the time of deposit. The funds in the account can be used to pay for qualified medical expenses at any time without having to pay taxes on them. Withdrawals for non-medical expenses are treated very similarly to those in a retirement account in that they provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a huge part of consumer driven health care.

Health Reimbursement Account:
These are accounts that allow an employer, as agreed to in the HRA plan document, to reimburse for medical expenses paid by participating employees. HRAs reimburse only those items (copays, coinsurance, deductibles and services) agreed to by the employer which are not covered by the company’s selected standard insurance plan (any health insurance plan, not only high-deductible plans).

Flex Savings Account:
This is actually similar to the other two but it is offered with more traditional (such as the 80/20) plans as well.

These are all (FSA being the slight exception to the rule) consumer driven health care plans.

What is a consumer driven health care plan?
It is a plan that allows members to use personal income to pay routine health care expenses directly, while having a high deductible health insurance plan that protects them from huge (catastrphic) medical expenses. Its called “consumer driven” because it gives patients greater control over their own health. It also makes consumers more health care cost conscious…though in more of a good way. For example a study showed that people with chronic problems were 20% more likely to follow their treatment regime carefully if they were part of a consumer driven plan.

What is the main advantage?
There are many advantages and some disadvantages but the main advantage is that it is before-tax money. So if you do not use health care much, you will save a good deal of money in the long run.

All of that being said here is an overview of the differences:

There seems to be a lack of information around on these types of accounts so I hope this helps clear things up a bit. I personally am going to open a health savings account for next year. My employer pays for everything for a high deductible plan, and I am currently on an 80/20 plan but I just don’t go to the doctor very often despite a very serious injury from a few years ago. I especially like that it can be rolled over into retirement and that it can sit and collect interest.

Because I don’t go to the doctor, I have one fixed monthly medical cost: $69/month for propecia. Now, I have all my hair. My dad has no hair (not that he looks bad, I’d like to just wait until I can pull off the “Im old and bald but I am a BA” ala Patrick Steward/Bruce Willis). I decided Id like to keep mine for a while, so propecia it is. Thing is, health insurance doesn’t cover it, so its all out of pocket. If I used a health savings account this WOULD cover it, so by using that to pay for it every month I would effectively be giving myself a $30+/month raise.

Of course this banks on no huge medical bills, but I figure this is the only time in my life that I could get away with that. Maybe you can too.

There are some things in life you should save money on. There are other things you most definitely should not try to save money. These are those second things:

8] Toilet Paper
I really shouldn’t have to explain this, but for anyone that has ever worked in an office, if you buy that same stuff for your house, you are a masochist. I promise you the extra two dollars you spend on angelsoft or whatever will be probably the best two dollars you have ever spent in your life.

7) Mouse
Whats more annoying than a new cher album? More aggravating than waiting in line at the DMV? How about a cheap mouse. Unless of course you like choppy scrolling all over the page, clicking the wrong buttons, and carpal tunnel. All fun. And people who used photoshop during the time of ball mice deserve some sort of lifetime achievement award for patience.

6) Pens
I could never understand the obsession some people have with pens. I borrow a pen from a coworker or another student and they would say “make SURE you bring that RIGHT back” and I smile and say “sure” and think “HAHAHAHA whatever” because I am a jerk like that. Turns out, as i’ve been writing more, I hate bad pens. And ever been writing a check in a hurry, say because you need to mail your mortgage and the mailman is outside and your pen stops working? Oh and then you look in the drawer, no pen there either. Ok you get the picture.

5) Mattress
Good night sleep means productivity. A good mattress means a good nights sleep. Use your logic skills to figure the rest out.

4) Beer
Because if you are going to drink it, make it worth it.

3) Laser Eye Surgery
Seeing ghosts and funny colors for the rest of your life sounds sort of psychotic break inducing. Oh heres some other possible problems: double or triple vision so severe patients can’t watch TV or read, light distortions so blinding they can’t drive at night and eyes so dry that goggles must be worn outside. “Hey, your goggles are fogged up man” “Yeah its ok though, even if they weren’t Id see three of you anyway….assuming of course Im not blinded by the light.” Dear Lord.

2) Engagement Ring
Nothing preps you for a life of unhappiness and the label of “cheapskate” like a cheap engagement ring, perhaps bought online on an ebay auction. Thats like having a “shoot insult here” target painted on your butt for your entire marriage ….and in case you don’t remember, marriage is a long time, like life (well for 50% of the population). Oh and its great feeling like a chump when all her friends check out her teeny little rock and scratched up gold.

1) Skydiving lessons
For nearly everything, there is a reason that it is cheaper. And after all: what is the difference between a bad golfer and a bad skydiver? A bad golfer goes “whack……….damn” and a bad skydiver goes “damn……whack”

Remember, personal finance is managing your money, not being cheap.

There is an episode of the TV show South Park where there are a group of “underpants gnomes.” The “Underpants Gnomes” are a community of underground gnomes who steal underpants, notably from Tweek (one of the characters).

The Underpants gnomes have a three-phase business plan, consisting of:

1. Collect Underpants
2. ???
3. Profit

None of the gnomes actually know what the second phase is, and all of them assume that someone else does. This sounds surprisingly like a lot of people I know. And it seems to be pervasive in EVERYTHING.

The Bad Career Plan: In my life I have probably asked at least 3000 people “what is your degree?” and a there was a good splattering of every major you can think of. Unfortunately outside of the engineers, who are a very minor number of total people I know/grads (so we shall ignore them) I would say 80% had NO idea what they were going to do when they graduated.

The Worse Career Plan:
A very large portion of those graduate and STILL don’t know what they are doing

The Ugly Career Plan:
A good portion end up working doing the exact same thing they were doing DURING school, or doing something making comparable money.

The Insane Career Plan:
16% of Americans said winning the lottery is an important wealth building strategy. I should add that you are 4X more likely to DIE driving to buy a lottery ticket than you are to win the lottery.

The Lesson:
If you don’t have one already, make a career plan. No matter what you got your degree in, figure out where you want to be in twenty years and make a plan to get there. The magic-career-fairy is too busy to help you so help yourself. If you are in the career you want to be then for your twenty year plan ask yourself these questions:

1) Is it possible to get there in my current job?
2) What salary do I need to achieve to get to that place?
3) Am I building the necessary connections to help me get there?
4) Where do I want to be living?
5) Does this fit with my family/life goals?

Next up on our list of “plans people don’t seem to think they need, but they are so wrong I want to give them the business end of a cattle prod” is retirement planning. Most peoples retirement model looks like the picture on the right. This one is both simple and extremely complex at the same time. The simple part: download my 401k/Roth IRA calculator and go to town assuming 8% rate of return (conservative). The complex part: deciding how to setup your portfolio, deciding what age you want to retire at. If you want to retire early, deciding how you are going to get by before you can withdraw from your retirement accounts (and don’t tell me you WANT to pay those huge tax penalties unless your retirement portfolio contains the united states treasury). Next make a plan (just like the career plan….how’d you guess I was heading that way). Ask yourself the following questions:

1) What age do I want to retire?
2) At my current rate of contribution can I retire at that age?
3) How much more can I afford to contribute to retirement?
4) Am I being aggressive/conservative enough considering my current age?
5) What is my favorite golf course?

Just remember, plan your career, plan your retirement, and when we are retired we can crack open a high quality beer on the golf course and talk about how smart we were to plan.

So this morning, I was minding my own business getting my morning caffeine fix that if I ditched I would save two dollars a day (but I would also be without my delicious lo carb Monster goodness) and I was waiting in line to pay.  The guy in front of me was paying for: 2 burritos (2X$4.75), a small starbucks energy drink($3), a snickers bar(.79), shock tarts(.59), chips(2.99), 4 packs of cigarettes(4X$4.00).  Ok, whatever, but here is the conversation he had with the gas station attendant:

Her: “how you doin this morning?”
him: “Be a lot better if I wasn’t making 10 bucks an hour cleaning ducts”
her: “yeah, I hear ya. $35.21 (his total)”
him: “well i could always work overtime, we get 2 and a half pay for that, but <edit> that, I aint workin past 4″

He pays and leaves.   Now, maybe its just me but if you spend half your days wages on breakfast, and you get paid 2.5X for overtime, MAYBE just MAYBE you should work an extra hour or two.  I’m going to guess he doesn’t have much if any of a retirement plan going on.  Of course, to each his own, but if you are reading this, please, never be this guy.  When we are both 60 I don’t want you to be cleaning my air ducts while I’m out golfing.

Hey, everyone checking out this page, FYI I am giving away two iPod nanos. (click to check it out)

Last night my girlfriend and I got into a discussion over children and expenses. Though I am about as stubborn a person as you can find, she made a good point about affording kids and kids expenses that got me thinking about big picture. The truth is that as life goes on, there will never be a BETTER time to save money and pay off debt. For that matter there will never be a better time to do ANYTHING. Follow me here…

Saving money and paying off debt NOW
-No matter where you are in life there is no better time. If you are recently graduated from college or in your 20s and you can’t save money and pay off debt right now, how the hell are you going to do it when you are when you have a new home complete with mortgage payment, how about a car and car insurance. Or if you already have a home how about wife/husband, kids, diapers, babysitter, kids sports, family vacations. Or if you already have kids how about when your kids go to college? Or if your kids are all out of college and you are in your say, 60s, how about increasing cost of insurance, and medical bills. Or even if you are older and in good health you best be saving and paying off debt before your retire. As you can tell there is NEVER a better time than now. Salary increases WILL just get eaten up if you don’t get into the right spending habits right now.

Start a business NOW
A lot of the same things that apply to saving and debt also apply to starting something new. One of my friends told me he didn’t want to start a business until he had saved up a good amount of money and had “learned some more.” Now thats great and all, except that his idea had to do with social networking and quite frankly who knows where thats going to be in five months let alone FIVE or TEN years. And who wants to be 30, 40, 50+ working on a college social networking project? For some reasons I get visions of that old perverted creeper standing around at the bars just waiting for some college girl to be drunk enough to wander over to him. Other reasons: when do you have more time than before you are married with kids?

Getting in shape NOW
Theres that peyton manning commercial where he gives the pep talk that if you aren’t a professional athlete or under the age of 23 forget the six pack and just buy a bigger shirt…well there is a certain truth. As we age our metabolism slows down and our hormone levels drop making it harder to lose weight and harder to add muscle. Just think about having to run twice as far when you are 40 as you do when you are 20 to lose those l-b-ses, that should motivate you, you lazy couch potatoe you. In fact, stop reading this article and go to the gym, then come back and finish. Unless you’re at work, then you get a pass. I won’t even mention the fact that being healthy with benefit you greatly as you age. Oh, I guess I just did.

Clean your house NOW
The dirtier you let something get (I know, I have lived with 5 guys before) the harder it is to get it cleaned up later. Do it now, unless you like dirty crap all over the place. Especially dishes, nothing smells better than a dish thats been sitting in the sink for days or a week or a month or NINE MONTHS (I actually saw this at an apartment several years ago. Apparently they simply stopped using dishes but didn’t bother to clean the ones that HAD been used).

Do your taxes NOW
I hate doing taxes. I would rather clean the bathroom at your local gas station than do taxes. Really. That being said, getting it over with is better than having it hang over your head.

Take risks NOW
Invest in risky stocks. Don’t even bother with bonds. Go skydiving. Travel to a part of the world where you dont speak the language. These are the kinds of things you can only do (responsibly) when you are young.

The absolute best thing you can do for your worries and regrets in the future is taking care of them right now.

Recently a lot of employers have started to offer the roth 401k as an option. My employer started offering it last month. The roth 401k, quite frankly, is a dream come true in my opinion. Ok so thats a little exaggeration but it truely is the best of both worlds - 401k and Roth IRA.

So what exactly is it?
It is, in effect, a blend of a the traditional 401k and the Roth IRA. It is a 401k with company match, except that you invest after-tax dollars and pay no tax at the end, just like a Roth IRA.

Why is this so great?
If you are like me you plan on making more money when you retire than you are making right now. I intend to have money coming from stocks, dividends, real estate and who knows what else. Plus I am sure that I will be working at least part time. All of this adds up to me being in a higher tax bracket than I am right now. Does any one of you really plan on being in a lower tax bracket than you are right now? This means that the “roth” plan is the best choice.

Some other benefits:
-Roth IRAs are limited to $5000.00. With a Roth 401k you can contribute up to $15,500.00
-Roth 401k allows you to actually put MORE money in per year than a traditional 401k because it is after tax. Assuming you are in a 25% tax bracket, 15,500 in a roth 401k is like putting 20,667 in a traditional 401k.
-If you leave your job or are fired you can roll the roth 401k into a roth IRA.
-NO income limit

Special rules that are different from all other accounts:
-You can withdrawl contributions as in an IRA however the account must have been open for more than 5 years
-Employer match much sit in a pretax account
-Cannot be converted to a regular 401k

Some other big things to consider:
-These kinds of accounts are only available until 2010. The government may or may not renew them, so don’t waste the opportunity.
-Common sense says that considering our current national debt, taxes will be higher in the future.

This article will save you thousands, I promise you.  Number one alone is a monster.  Now here are some ways to save money on your car that you probably  haven’t seen around the web that I have learned through trial, error, and driving everything from the worst beater you can imagine (an old datsun 210 that looked like a lemon) to a new sports car.

1) If a light comes on on your engine that says “Service Engine Soon” Don’t rush over and pay $100 (I have made this mistake) for the local dealership to tell you whats wrong.  Go to autozone and they will give you the code your engine is throwing FOR FREE.  Then go home and google the code.  You can save yourself hundreds, even thousands of dollars doing this.

2) Do not use the dealer to make repairs unless you absolutely have to.*  This is especially true on older cars because they are much less complicated as far as electronics go.  However even on new cars independent repair shops generally will be just as good and charge hundreds or even THOUSANDS less.  The trick here is to make sure and find a reputable repair shop in your area.  As your friends and coworkers if they know of anything and if all else fails try the internet.

3) Whatever you do, do not buy an extended warranty.*  There was a survey done and the extended warranty was worth it only 1 percent of the time. Ouch.

4) Take your car to jiffy lube or do your oil changes yourself.  There is nothing magical to doing an oil change, anyone can do it if you read up on it.  On the other hand Jiffy Lube does it for 40 bucks.  At a dealer you will usually pay over 100 dollars.*  Ridiculous.

5) Do not buy premium gas unless your car HAS to have premium gas.  This will save you hundreds.  There is absolutely no advantage to using a higher octane gas if your car isnt knocking (making a click click or clunk clunk noise) when it is running.  It is not a special treat that will make your car run better.  I know in some parts of the country the LOWEST octane you can get is 91.  I promise you you will never need higher than 91 octane as far as current gasoline cars go…and thats the mechanical engineer in me talking not the personal finance guru.  Worst case scenario lets say you live in colorado like me and you put 87 octane in your new high compression engine and it knocks a bit.  Go grab an octane booster from autozone, or fill the rest of the tank with 91, and problem solved.

Hope these help, I know there are a lot of tips out there “inflate your tires to the correct pressure” “change oil <x> miles” whatever, we’ve all heard them; take these ones to heart and you will save even more.

I’ve had quite a few friends ranting and raving about Apple stock, that its just going to keep going up, mac sales are up, iPhones are hot, and Jesus himself might come back to earth early so that he can get his hands on a new iPod nano. They are all  going hog wild buying their stock….BUT while Apple is doing well, there are some less obvious things going on that could (potentially) cause a DROP sometime in the not too distant future. Its just one more reason you should diversify, don’t bank on any one stock. ALWAYS diversify. Even the so called experts are 50-50 guessers.

So for your benefit, here is an analysis of Apples last quarter earnings I did for an investment site, and due to the advantages of freelance writing, I can post it to my own blog too…

Apple released its quarterly earnings statement and overall things were positive. Macintosh and iPhone sales are way up. There is, however, one very troubling thing. Until about five years ago Apple was on its way to Packard Bell-esque oblivion and Steve Jobs seen as “the guy who could have been almost like Bill Gates.” Then the iPod helped the company come roaring back. Well, it appears we have come full cycle. The iPod is now the apple product on life support and Apple is now a computer company again.

Ok, so life support might be a bit of an overstatement but there is no denying that the iPod has seen better days. During the companies holiday quarter this year Apple sold only 5% more iPods than it did last year. Of course the knee jerk reaction is to blame consumer spending and the threat of a looming recession. The problem with that is that over the same time period Mac sales increased by 44%. A more likely scenario is a combination of changing consumer interests and market saturation. I was at a store when a six or seven year old came up to me to show off his new “iPod.” I looked down as he pulled out his Zune. That goes to show just how widespread the iPod has become, MP3 player is now synonymous with iPod. Though that kind of statement might give Microsoft PR a bad case of heartburn, for a product that prides itself on being edgy, sleek, and cool, commonality is not necessarily a good thing. Add this to format incompatibility and steep itunes prices and this may only be the beginning of the decline of the iPod.

In a way Apple is helping to bring about it’s own product’s demise. Media capable mobile phones are outselling dedicated MP3 players six to on. You can argue both sides of the same coin: Apple was too late introducing the iphone when they had the market cornered on MP3 playing devices or that the introduction of the iphone is fueling the iPods downfall. Why should I buy an iPod when I can have an iPod that can make calls and surf the internet too? Of course when it is all said and done Apple is still the leader in personal music playing technology but if they don’t want to go the way of the walkman it is time to take some steps to invigorate the product that put them back on the map.

Let me sum up: yes they are still good, but its not all roses and champagne and caviar.

A bunch of the personal finance bloggers I know are doing a little segment called “whats in your wallet” so I figured I would join in too because after all my Wallet needs a good cleaning. So without further ado:

The Start:

Notice it is stuffed full of junk. So I went about cleaning it up. I have to say I have a TON of cards and stuff. A rather intimate look at my life. Sorry though, no credit card numbers, as much as I would love to have one of the spambots come by and pick that up. So just going through got health insurance card, pre-paid mastercard I wont at the company Christmas party LAST year that has $1.11 left on it that I cant see to use but won’t let myself throw away. Next a noodles frequent diner card that I have had for probably 5 years now (and never use). King Soopers card, vital. Platinum credit card from my credit union, beer tour card from old C’s, an old card insurance card, big city burrito card (these are probably the best burritos in the world, I could eat one a day if it wouldn’t make me fatter than Rosie Odonnell after thanksgiving), check card and drivers license.

And now here is the cleaned up piles. Before throwing away receipts, always check then against your own records (story on THAT some other time). Now finally a layout of my most vital things back on the right.

You could definitely argue that I don’t need both credit cards, and you would probably be right but Ive had both forever. My most proud piece is the irony of my old chicago world beer tour card right next to my GNC card. Anyway, from a personal finance perspective, its a good idea to go through make sure your wallet is organized. If you have extra credit cards in there, REMOVE them because should one happen to fall out, you might not notice until someone has already charged up who knows how much. So, whats in YOUR wallet?

My girlfriend and I walked into king soopers today and there were (see right, we took a picture) literally swarms of guys looking for a last second present for their girlfriends/wives. As we walked by they had prices listed. Roses were $10/piece! ouch! There was the “super deal” of a dozen for $70. Thats right, for a dozen roses. Wow. So we came up with some better ideas that don’t involve you spending $70 for a bunch of wilty overpriced flowers.

1) Plan and make a romantic dinner
You don’t have to spend 50-100-200 dollars just to have a romantic meal. This is great too because it gives a lot more freedom on what you want to eat while spending just a fraction of the cost. Very few women would prefer a cookie cutter restaurant date over a thoughtful dinner at home.

2) Do a scavenger hunt around the house. Cheap, fun, easy.

3) Bring the movie theater home…just get a movie, some popcorn and a variety of snacks.

4) Hide little presents throughout the day where she will find them

5) Make a mixed tape..errr CD of meaningful songs

6) Wait till weekend do something special. Celebrating on a weekday can really cramp the fun, so why not wait till weekend and do something fun during the day.

7) Have a massage and hot bath waiting.

8] Clean the house - my girlfriend is adament that this is a turn on for women

9) Have a wine and cheese sampling

10) Buy your flowers and card ahead of time…you don’t pay as much, and you can be more thoughtful and thorough about what you pick out.