Common Cents # 23 - Health Care

 

Common Cents – Health Care 

It is easy to see from the many TV and Social Media Ads that we’re approaching the Insurance Open Enrollment Period that will have new insurance plans and prices take effect on January 1, 2021.  It is easy to become overwhelmed and even paralyzed by the decisions that must be made.

The United States is the only country in the world that has health insurance connected to a person’s employment. There are about 70% of Americans that have insurance benefits through their employers.  These plans may not renew on January 1 of each year, but many do.  For those this year who have lost these benefits because they’ve been furloughed, have become part-time or have lost their jobs all together, it is usually a shock to learn the amount of the premium the employer has paid as a part of the job when we hear the amount that COBRA Continuation benefits will cost.  It often causes us to feel better about our employer when we understand what that has cost them each month.

The ACA Marketplace (Obamacare) is still available to individuals and will be continuing to offer plans to those who do not have insurance options at their place of employment or want to pursue other options than the plans their employer has decided is the best they can afford to offer.  Some people can obtain subsidies or discounts to these plans based on certain criteria and the amount of annual household income that they receive.

There are also short-term policies that can now be in force for as long as one year that may be a good choice, especially if there are no or limited pre-existing conditions since these are not usually covered on this type of insurance plan.

The important thing to remember is that the cheapest option is not necessarily the best. It is so important to spend the time to see what really is the best plan for each person.  We need to find the person in our world who can give good counsel on this part of our monthly financial investment.

It is interesting to note that there are four actual systems that provide medical care in the USA. 

System One: The hospitals are owned by the government or government agencies, the doctors and medical staff are government employees and health care is free to all.  This type is available to the military, government officials, and qualifying veterans.

System Two: Hospital are owned by for-profit or not-for-profit organizations and doctors are self-employed. A government-run insurance company pays the bills. This system is called Medicare and is available for people over sixty-five or Medicaid, available to many low-income families.

System Three: Same for-profit system as number two except for-profit insurance companies pay a good part of the bills. The insurance premiums are most often paid by employers who consider the expense part of payroll which would otherwise be used to increase salaries and wages of employees.  The rest of the hospital bill is paid by the employee and part of the premium is deducted from the employee’s payroll.

System Four: The hospitals are for profit and doctors are self-employed except that only the individual receiving the care pays the entire bill.  Private insurance is available for self-employed and other people who don’t have employee benefits and can afford to purchase it.

Unfortunately, many people are not participants in any of these four systems.  They go without health care or health insurance, being served by aid organizations such missionary groups, free-clinics and so forth.  They also rely on the benevolence of these four systems when their need for care becomes more than their normal providers can accommodate. Individuals and families in this kind of situation are in in great need for a reform to occur that does not leave anyone out of a category of care. It is certainly hoped that this will change as proposals and recommendations are made in our nation’s future healthcare legislation and decisions.

Common Cents # 22 - Work Smarter, Not Harder

 

 

“A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a robber, and want like an armed man.” Proverbs 6: 10-11. Part of the American myth is that if laziness leads to poverty, then surely, hard work will lead to wealth. Part of the argument against slavery before the Civil War was that a free man would work harder for his own benefit than a slave would under compulsion. The labor union movement came about as more and more people realized that hard work alone did not bring prosperity, especially to the workers.

I mentioned to my friend Eric, that I was taking a class called, “The Master Guide to Financial Reporting and Analysis using Microsoft Excel,” and that I really didn’t know why. I didn’t need it for my business, and I wasn’t looking for a new job. He mentioned the class to his wife who reminded us that we cannot know too much, every skill enhances our lives. Every new skill or bit of knowledge improves our lives, sometimes financially, but always in every other way.

I am reminded of the story about Steve Jobs taking a college class in calligraphy. It was a totally random elective, but he was so enthused about fonts and letter design that when the Macintosh operating system was being developed, he insisted on a wide variety of fonts and customizable type. Because of that one class, our use of computers and design is completely different than it might otherwise have been.

Most new businesses, innovations, and successes come from the combining of seemingly unrelated fields. It is this combining of skills and knowledge that lead to success, not working harder.

Our quality of life is determined by the skills we have, the variety of things we can do, and the knowledge of many different fields, not by how many hours we work or the number of widgets we can get on the truck. As the songwriter Hoyt Axton sang, “Work your fingers to the bone, what do you get? Boney Fingers, Boney Fingers.” Clearly, working smarter not harder gives a better outcome.

The income gap between people with college education and those with only High School or less is widening quickly. This is almost certainly because of skills, not work ethic. The greatest thing we can take away from formal education is the desire to learn new things and the desire to develop new skills.

The writer of Proverbs, Solomon, goes on to say in Ecclesiastes 10:10, “If the axe is dull and its edge unsharpened, more strength is needed, but skill will bring success.” In other words, take time to sharpen your axe.

Jim Mathis

Common Cents # 21 - Entertainment

 

Getting the Most from our Entertainment Dollars

 

My idea of entertainment always involves live music, delicious food, and educational travel.  The last few months have been full of dizzying changes of plans, cancelled reservations, and miraculous refunds.  For me, entertainment is a basic need for a full life. I don’t know where it falls in the hierarchy along with food and shelter, but I am pretty sure it is right up there once those basics are covered. Evidence of music, athletic contests, and various types of recreation go back to the earliest recorded history.

It is interesting that humans have such a variety of ways to entertain themselves. Some people enjoy sports, some enjoy music, while others would rather watch a movie. The current pandemic has thrown a curve at just about every form of entertainment. It has been weird to watch the Indy 500 and the Kentucky Derby on television with no fans in the stands.

We have been amazed that so many of the cancelled festivals chose to provide some kind of broadcast or streaming free of charge from previous years of these events. We have been able to see a number of wonderful concerts as well as touring world-renowned museums from the comfort of our living room. We have discovered a few more festivals to add to our bucket list when they actually occur again.

This brought up the idea of cost-benefit analysis. Of course, watching a show on a screen in our living room is not the same as being there, no more than watching a football game on television is like being at the stadium. But in some ways, there are advantages. It is a lot less hassle, we can see and hear better, and the food is likely better, not to mention cheaper.

So, how do we decide how to spend our entertainment budget? You do have an entertainment budget, don’t you? What percentage of our income should we spend on entertainment? Entertainment includes things like going out to eat, cable TV, Netflix and Sirius XM subscriptions, vacations, and concert and sports tickets. We probably spend more than we think if we add it all up. Maybe we should use this “off year” to take a look at what we spend and see if it adds up to the enjoyment we get. Some of us are anxious to get back to seeing the world, while others realize how much they enjoy staying home and saving the cash.

One year we had season tickets to the Kansas City Royals and it was a lot of fun. When they raised the prices the next year, we chose to use those dollars for a season of plays with the Theatre League. We all have different priorities and should spend time in family discussions talking about the best way to spend our entertainment dollars. I like to think in terms of smiles per hour per dollar. A hundred dollars will buy a very nice meal at a beautiful restaurant but would barely pay for parking at Arrowhead Stadium. For some people this would not even be a discussion, others will need to talk about it.

We don’t want to deprive ourselves of much needed recreation and entertainment, but unless we have unlimited funds, we need to use the money wisely to get the most bang for the buck for the activity that gives us the most pleasure. 

Common Cents # 20 - The Balance Sheet

 

CC # 20 – Balance Sheet

 

Taking a trip these days is made far easier by using GPS and Google Maps to point the way. The big advantage of these over a paper map is that the GPS will tell us where we are right now. Knowing exactly where we are is the key to figuring out how to get to our destination.

In our financial lives, the point we are now is called a Balance Sheet or a Net Worth Statement. The idea is pretty simple. We list the value of what we have and subtract what we owe to get a number which basically tells us where we are now on the financial road to our eventual goal.

We start by listing our assets, what we have. The normal way is to first list current assets or cash. This would be our bank accounts, savings accounts, and even money in our pockets if we love detail. Then we list the long-term assets. This includes the value of our house, cars, furniture, any retirement accounts, and personal items such as jewelry or collections. Add these all up to determine our total assets.

The second part of the balance sheet is liabilities, what we owe. Current liabilities are bills that are due soon, balance on our credit cards and things like that. Long-term liabilities are home loan mortgages, auto loans, student loans, or anything else that we will eventually have to pay.

Subtracting the total of all liabilities from our total assets gives us our “Net Worth.” Think of net worth as what we would have left if we sold everything and paid all of our bills. The amount that would be left is called net worth. Hopefully it is a positive number. It is certainly possible to have negative net worth.

The Balance Sheet is literally a dated snapshot of our current location. Because the numbers are always changing, the Balance Sheet only shows a moment in time. To be the most helpful, we need to update the numbers on a regular basis to see trends, where we are making progress, and where progress has stalled. An annual balance sheet is good, but quarterly or even monthly could be very valuable, especially if we’re just beginning to determine what course of action to take in an area of life. If we use Excel to prepare our balance sheet, the rows would be assets and liabilities and we can use columns for various dates so we can easily see progress in areas like growing retirement accounts, increasing equity in our home and so forth.

An accurate Balance Sheet also helps in setting goals and helps us determine how much money is enough, or perhaps even, how much is too much. We need to ask ourselves if a high net worth may indicate a lack of generosity, insecurity, or missed opportunities.

We can enjoy the journey toward reaching financial goals when we can identify clear progress along the way, comparing where we were, where we are, with our destination in view.