More than one year has gone by since my family and I migrated here in the US. Here are the Top 10 Money Saving Tips which we employed during our first year of stay:
1) We bought second hand family cars. Our first car was paid in cash from the money we acquired selling our cars in the Philippines. The remaining money was used to pay for our second car with the balance costing us $100/month payable in 5 years, interest-free from a loan made with a relative. To date, that is the only loan we have.
2) We rented a fairly new 2-bedroom apartment. We saved a lot in terms of energy consumption, maintenance and even start up furnishings. We get to use the gym (which is surprisingly well-equipped) and swimming pool for free. I think it will take a lot of convincing for me to decide to purchase a house. There is too much freedom derived from renting.
3) We paid our credit cards in full at the end of each billing month. We saved from paying hefty sum in interest rates. It taught us the discipline to live within our means. We only buy stuff that we know we can pay with our available cash. Within six months, our credit rating improved, from a no-credit history to a credit score of 750 (excellent). It also helped that we got an extension credit card a year ago which got us approved immediately by the same credit card company. The other credit card companies simply rejected us because of no-credit history on record.
4) We set aside at least 10% of our income for savings through the 401k. In less than a year of being employed, we've accumulated a savings of at least $4,000. We set aside another 5% for cash savings which we can access in times of emergency. Despite the fact that our annual income is just $40,000 - $50,000.
5) We bought all our furniture and appliances using our credit card to earn points and paid for it with the cash we earned from selling our stuff when we migrated. We bought most of our furniture from Ikea which made everything affordable, at the same time elegant and presentable.
6) We registered as parishioners where our kids were enrolled so we were able to avail of the discount and subsidy of the parish and still got a Catholic education for our kids.
7)We gas up our cars in Sam's Club where it costs $0.10/liter less than the going rate of the cheapest gas station in town.
8) We make good use of the public library. We avail of freebies and discounted rates offered by amusement parks and zoos which gets published in the free magazines in the public library. We borrow books, magazines, DVDs and CDs in the public library also. It's surprising to see updated copies of these, free for the taking.
9) Our cellphone plans are extensions of our relative's plan which in turn are needed in their work. We pay our minimal share of less tha $13/month while their rate is being paid for by the company they work for.
10) We buy stuff from thrift shops and discount stores like Big Lots, Dollar Tree, Gabriel Brothers and of course, Walmart. For non-perishables, we go for bulk purchases in Sam's Club. For perishables, I've learned that buying in small quantities is better because I just threw out 3 grocery bags of expired perishable products from my pantry recently. For rice, it is cheaper to purchase it in sack of 25 lbs from an international or Asian store which may be a long drive for most. So visiting these specialty supermarkets every quarter is an added treat without being expensive. We buy fruits and vegetables from a farmer's market and I usually blanch(immerse in boiling water for a few minutes) most of the vegetables to stop enzymatic degradation and put these in the freezer. That way, I don't get rotten veggies simply because I did not have the time to cook. We purchase chicken whole and I chop and segregate the parts before putting it in the freezer. Meat is also cheaper purchased in bulk from Sam's Club. I just chop it to desired cut and put it in small packages before freezing.
Wednesday, August 11, 2010
Tuesday, August 3, 2010
Benefits of Being an Employee
As a self-employed doctor in the Philippines, I did not have benefits. There was no IRA that I could invest in. But my husband and I were smart enough to save and invest some of our money in mutual funds since that was the best thing we could think of, rather than put all our money in a savings account where it will just depreciate with the inflation.
So it was totally foreign for me to be able to invest in a 401k or be receiving benefits from the company that I am working for. Since I was not yet sure about our expenditure, I chose to set aside 10% of my income to 401k. As soon as we are able to financially establish ourselves, I will increase that to 20%. Since I am still far from the retirement age of 65, I decided to invest 90% of that in stocks and 10% in bonds. Even if the stock market is not doing too well right now, eventually it will pick up. Now is the best time to invest because I can buy low and years from now, sell high. With the market plunge, there is no other way but up.
What I did not avail of, to my regret is the flexible spending account. I thought at that time that we were in a pretty good shape and the past years, we never really spent that much on health. But when I injured my back, I saw how a couple of doctors' visits could amount to a considerable amount of money. I only chose the basic health insurance for my family so my co-pay was also higher, at $40 per visit. Again, I am not so familiar with this because back in the Philippines, I don't really pay professional fees since I was a doctor myself. Either I self-prescribe or just call my friends. We do not charge PFs to our co-doctors as part of the professional oath where we treat each other as brothers and sisters. Most of my friends do not have health insurance. I decided to get one just for diagnostic coverage because that is something that will not be waived by the hospital even if we practice in that hospital. We are only given a 20% discount which is not really that much considering how expensive diagnostic work-ups can be.
Here in the US, our health insurance takes care of our bill but there is an out-of-the-pocket co-pay which can be reimbursed using the flexible spending account. In short, the FSA is a kind of health savings account. I can dictate how much I want for that, say $1,000/year. This will be deducted in my salary before tax. The advantage of having this is the immediate availability of the fund even if you have not yet contributed the full amount of $1,000. So all my co-pays for doctors' visits could have been reimbursed using the FSA. The only main drawback for the FSA is that you have to use it by the end of your eligible year or you lose whatever is left there. So it might be best if I start off with an amount close to my past year's health expenditures. I am just fortunate that my 3-week physical therapy was entirely covered by my insurance. I would have skipped it had I been required to give co-pays per visit. Then, just today, when I visited CVS to buy some stuff (not even medicine!), I saw a Flexible Spending Account Summary at the bottom of the receipt. It gave a $3.72 amount eligible for reimbursement. I can't believe how I missed out on this benefit.
But it is not too late because every year there is what you call open enrollment where you can opt to modify your benefits and health plans. So having learned my lesson, I plan to make some modifications on my benefits. I will definitely avail of the FSA and even the short-term disability so I do not need to use my paid-time offs for short term sick leaves due to disability. I just realized I am not so invincible after all. Experiencing this back injury and its initial debilitating consequences, I can never be too sure of what can happen in the future. No matter how prayerful or blessed I am, bad things can still happen because I am living in this imperfect world, inhabiting this imperfect body.
I also plan to include vision in my health benefits. Having an ophthalmologist for a husband, I thought, my family will not be needing it. Lo and behold, just early this year, we found out that my eldest daughter had an error of refraction. To think, my husband refracted her just before we left for the US last year and her eyes were perfect. Now, she's wearing glasses. We would have paid for the service of refraction if not for a very opportune moment when my husband went to a vision center in the mall and there was no optometrist on duty. My husband asked if he can use the instruments because he knows how to refract. Surprisingly, the manager allowed him. Well, he did get a customer anyway, because my husband bought my daughter's first pair of eyeglasses in that vision center. But this expense may have also been covered by an FSA if I had one.
As for our primary care provider, I like the Group Health Associates because of the MyChart feature where I can just go online and ask questions to my health provider. Just imagine having to pay $40 just to ask my rehab. doctor if I can bike or run. Rip off!
So a word of advice for new immigrants, never take your benefits for granted. Save as much as you can in your 401k, at least 10% if not 20% of your income. Get a Flexible Spending Account even if just for $500 or so, then modify during open enrollments as needed. Get a short-term disability benefit too. These are all pre-tax savings. Ask your co-employees which health plan work for them and why. For someone new to these things,the gravest sin you can commit is NOT to ask.
So it was totally foreign for me to be able to invest in a 401k or be receiving benefits from the company that I am working for. Since I was not yet sure about our expenditure, I chose to set aside 10% of my income to 401k. As soon as we are able to financially establish ourselves, I will increase that to 20%. Since I am still far from the retirement age of 65, I decided to invest 90% of that in stocks and 10% in bonds. Even if the stock market is not doing too well right now, eventually it will pick up. Now is the best time to invest because I can buy low and years from now, sell high. With the market plunge, there is no other way but up.
What I did not avail of, to my regret is the flexible spending account. I thought at that time that we were in a pretty good shape and the past years, we never really spent that much on health. But when I injured my back, I saw how a couple of doctors' visits could amount to a considerable amount of money. I only chose the basic health insurance for my family so my co-pay was also higher, at $40 per visit. Again, I am not so familiar with this because back in the Philippines, I don't really pay professional fees since I was a doctor myself. Either I self-prescribe or just call my friends. We do not charge PFs to our co-doctors as part of the professional oath where we treat each other as brothers and sisters. Most of my friends do not have health insurance. I decided to get one just for diagnostic coverage because that is something that will not be waived by the hospital even if we practice in that hospital. We are only given a 20% discount which is not really that much considering how expensive diagnostic work-ups can be.
Here in the US, our health insurance takes care of our bill but there is an out-of-the-pocket co-pay which can be reimbursed using the flexible spending account. In short, the FSA is a kind of health savings account. I can dictate how much I want for that, say $1,000/year. This will be deducted in my salary before tax. The advantage of having this is the immediate availability of the fund even if you have not yet contributed the full amount of $1,000. So all my co-pays for doctors' visits could have been reimbursed using the FSA. The only main drawback for the FSA is that you have to use it by the end of your eligible year or you lose whatever is left there. So it might be best if I start off with an amount close to my past year's health expenditures. I am just fortunate that my 3-week physical therapy was entirely covered by my insurance. I would have skipped it had I been required to give co-pays per visit. Then, just today, when I visited CVS to buy some stuff (not even medicine!), I saw a Flexible Spending Account Summary at the bottom of the receipt. It gave a $3.72 amount eligible for reimbursement. I can't believe how I missed out on this benefit.
But it is not too late because every year there is what you call open enrollment where you can opt to modify your benefits and health plans. So having learned my lesson, I plan to make some modifications on my benefits. I will definitely avail of the FSA and even the short-term disability so I do not need to use my paid-time offs for short term sick leaves due to disability. I just realized I am not so invincible after all. Experiencing this back injury and its initial debilitating consequences, I can never be too sure of what can happen in the future. No matter how prayerful or blessed I am, bad things can still happen because I am living in this imperfect world, inhabiting this imperfect body.
I also plan to include vision in my health benefits. Having an ophthalmologist for a husband, I thought, my family will not be needing it. Lo and behold, just early this year, we found out that my eldest daughter had an error of refraction. To think, my husband refracted her just before we left for the US last year and her eyes were perfect. Now, she's wearing glasses. We would have paid for the service of refraction if not for a very opportune moment when my husband went to a vision center in the mall and there was no optometrist on duty. My husband asked if he can use the instruments because he knows how to refract. Surprisingly, the manager allowed him. Well, he did get a customer anyway, because my husband bought my daughter's first pair of eyeglasses in that vision center. But this expense may have also been covered by an FSA if I had one.
As for our primary care provider, I like the Group Health Associates because of the MyChart feature where I can just go online and ask questions to my health provider. Just imagine having to pay $40 just to ask my rehab. doctor if I can bike or run. Rip off!
So a word of advice for new immigrants, never take your benefits for granted. Save as much as you can in your 401k, at least 10% if not 20% of your income. Get a Flexible Spending Account even if just for $500 or so, then modify during open enrollments as needed. Get a short-term disability benefit too. These are all pre-tax savings. Ask your co-employees which health plan work for them and why. For someone new to these things,the gravest sin you can commit is NOT to ask.
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