Bills


I usually don’t answer phone calls with “Unavailable” on the caller ID or numbers I don’t recognize.  I am on the Do-Not-Call list, but somehow some telemarketers still get through and I prefer to just ignore them.  Last week the phone rang with a number I didn’t recognize, but it was a number with my area code.  Thinking it may be a friend who had a new cell phone or parent from my child’s class I answered:

Me: “Hello?”

Caller(in an urgent voice): “Is this the “sahmCFO family” that lives on “Saving Money Lane?””

Me (concerned and nervous – did something happen to someone I know and love?): “Yes, yes it is.”

Caller: “Do you know a “Mr. Debtor” who lives on your street?”

Me (relieved and suspicious that this isn’t a call about somebody’s welfare but a fishing for info call): “Umm, No I don’t think so.”

Caller: “Well, I was just speaking with him regarding something extremely important but we got disconnected and I really need to speak with him.  Do you know him?”

At this point in the call I am seething mad.  My 3-year-old and 4-year-old were at preschool at the time of this call and my heart had skipped many beats in the first few seconds of that call, thinking something had happened at school, and that this was a legitimate call – not a fishing expedition.

Me: “WHO IS THIS!”

Caller:  “My name is “Jerk-Face” calling from “Scumbag Collections” and we are trying to reach your neighbor regarding an important business matter.”

Me: “I don’t know him, please don’t call again.”

In 2006, when my husband and I made the transition from 2 incomes to 1 income we had a rough six months, we endured endless but legitimate calls from our credit card companies.  We paid our bills late sometimes, and the phone calls would start at 8am and go on until 8pm.  I was home with an 11 month old and a newborn and it was one of the most stressful times of my life.  We have not paid a bill late in 4 years and I cannot tell you how nice it is to be able to answer the phone again with no fear.

Until now.

It’s called a “Block Party”.

What Is A Block Party?

The collection agency or debt collector will call three or four or five of your neighbors and tell each of them that an urgent message must be given to you. “Can you please go over to his house and see if he is home?” or “Is he OK-he hasn’t called me back.” or “Can you leave a note on her door?” or “When you see him in the yard go over and tell him to call me immediately” or some similar statement. Usually the debt collector will refuse to tell the neighbor the reason for the call – “Sir, I’m not allowed to say as this involves an urgent private issue”. This only arouses the suspicion and curiosity of your neighbors.

The result is you begin to get calls and visits from your neighbors. They tell you that you need to call “Mr. Jones” or whoever the collector is and, of course, they want to know what is this about. When this happens, the effect on you is exactly what the debt collector wanted – fear and embarrassment.

Back to my disturbing phone call…

I DO know my neighbor.  He is the best neighbor I’ve ever had.  He is a 75 years old gracious man, with a wife in ill-health who he takes loving care of, who teaches me how to fix and maintain my tractor.  He invites my kids over to feed his fish in his KOI pond.  He is always willing to lend me any tool for any job I need.   He helped my brother remove a dead-deer carcass from the undercarriage of his car (don’t ask:)).  He is one of the “good ones” and there is no way I’m ratting him out or embarrassing him.

I know for a fact he owns his house free and clear.  We sometimes get his mail by mistake and I have seen MANY elite credit card offers in there.   He lives a very simple life, so this may just be a bill that slipped through the cracks.

It doesn’t matter why the collection company is calling, it is NONE OF MY BUSINESS! I am not a secretary for collection companies and I refuse to endanger the good relationship I have with him over this sleazy call.

To top it off, this was not the ONLY call from a collection company I received last week.  There were two other calls from debt collectors both looking for someone with the same last name as us.  Calling here in hopes we know the debtor.  And Yes, we also know this debtor they are looking for –  it is a family member. But again, I am not a secretary and I know the financial situation of this particular family member.  It is not good.  They have fallen on hard times and are trying to keep food on the table.  I’m not ratting them out either.

I am VERY ANNOYED THOUGH!  We pay our bills on time but still must endure numerous collection calls. This is ridiculous, but apparently NOT illegal. The collection companies also seem to be “caller ID spoofing“, so you assume the call is local and are more likely to answer.

Be aware.  Even if you pay ALL your bills on time you still may get “Collection Calls!”  Tell them to not call again.  But “Block Parties” and “Family Fishing” expeditions are the new thing.

You should be in the clear though if every person you are related to, has the same last name as you, lives in your vicinity or works with you pays every bill on time….

Otherwise you may be invited to the “PARTY”.

(If you are being harassed by collection companies you may want to read the Fair Debt Collection Practices Act (via FTC.gov) and know your rights.)

UPDATE:

This is the phone number who called me about me neighbors debt:

(954)538-7533

UNITED COLLECTION BUREAU, INC

I did a little research to get their “real number” – Apparently I’m not the only one getting these types of calls…

I do plan on calling the FTC (filed online – reference number: 25959253) and my AG’s office to file a complaint.

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This is a story of the troubles that ensue when you live paycheck to paycheck and your paycheck is late.

My husband has been at the same job for 15 years and has without fail, been paid on time via direct deposit.  Paid on time and in full every 15th and last day of the month for the past 15 YEARS!   And even-though, with all my technophobia (my budget is still on paper), I have had such faith in the timely paycheck deposits that I automated ALL of our payments, bills, investments.  The mortgage is automated for the 1st and most of the rest of the bills (car insurance, car, electric, phone, credit cards…) are all set up to be paid on the 15th.

This was all going along swimmingly, until this Monday, March the 15th.

I had a feeling something was amiss on Saturday when the paycheck wasn’t listed in “pending”  on the banks website.  If payday falls on a Monday it ALWAYS has been deposited after midnight on Friday night, although it won’t actually “clear” until Monday.  I really felt uncomfortable on Sunday morning when it still wasn’t there.  I stayed up Sunday night into the wee hours of Monday morning because the knot in my stomach was getting larger by the minute and was hoping against hope it was going to go in there.

I had 16 scheduled payments automated to come out of that checking account on Monday the 15th.

I freaked, it wasn’t there Monday morning by 7am.  I scrambled to every website where a payment was scheduled to be made, canceling the payment, hoping it would cancel this late in the game.   Trying to remember 16 logins and passwords and clumsily navigating websites I hadn’t visited in months.  One website was “Experiencing Technical Difficulties” – “Try Back Later”, *sigh*.  I was picturing an endless, disgusting cascade of bounced checks. 16 Bounced checks would = $576 in NSF Fees!!! I eventually figured out how to, and did cancel all the payments.

I called the bank.  “No, we see no incoming deposits”.  CRAP, the Ides of March got us.

As a SAHM, I say all the time, “I work, I just don’t get paid.”  Apparently now, my husband does too.

He gets to work Monday morning, with the office all abuzz and comes to find, “a glitch with the payroll company and the problem will be resolved and deposits will be made by end of business.”  And it was, at around 3pm the deposit went in the bank.  Magically, it bypassed “pending deposits” and went straight to “available balance.”  He was paid in full and on time (it was the 15th).

Now I had to login back in to 16 different websites and redo the payments.

The bills and payments were in no danger of being late, but I liked paying them early and the money left over on the 16th was “uncommitted money”.  Our milk money, if you will.   I never doubted it would be more than 2 days or so that he would get paid, but the drama of having A LOT of money set to come out of an account where there was NO MONEY was too much stress to bear.

I’ve UN-automated all our payments.  No more “scheduling payments” or “automated bill pay”.  We’re going old school.  Well, I’m not going to write actual paper checks or anything that crazy, but I will pay each bill individually after I make sure the paycheck is in the bank.

We can’t afford to take the chance…

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FIRST COMES LOVE, THEN COMES MARRIAGE, THEN COMES CHOOSING A HEALTHCARE PLAN….

My sister’s employer recently presented them with new health insurance choices.  They can pick from a Traditional Plan (PPO) or a High Deductible Healthcare Plan (HDHP) with an Health Savings Account (HSA) savings account.

I’m the “big sister” and as such, a bossy know-it-all – so of course she asked me for some advice on which plan makes better financial sense for her.  I’m kinda at a loss here.  Very complicated stuff even when you do try to plan ahead.

She getting married in July, will add her husband to her plan and they hope to start a family soon after they tie the knot.  In regards to healthcare, the question for her is, “WHAT WILL THE MATERNITY COSTS BE” under each plan?

“Which plan will cover more pregnancy related costs?”  The Traditional Plan or the HDHP with HSA?

It took her while to flush out the true costs for either plan.  Insurers and provider’s don’t make it easy for you gauge what is covered, what is considered “preventative care” (what the IRS will allow as Preventative Care under HSA’s – not necessarily what YOUR plan will cover as preventative care), what is subject to deductibles…

After much back and forth with her “Policy Rep” she finally felt confident enough to do a cost comparison of the two plans.  If she chooses get pregnant under a HDHP with an HSA , she COULD pay less than the PPO plan, it all comes down to how much risk you are comfortable with (and a little bit of gambling).

Imagine you have “Employee + Spouse coverage” and plan to have baby.  Your “POLICY YEAR” runs January 1st to December 31st (why that matters later) and you get pregnant in February, have a pregnancy with NO complications and deliver with NO complications in November:

This is quick look at cost she had to consider (only in regard to maternity coverage) with that hypothetical in mind.

Choice #1 – TRADITIONAL PLAN COSTS (PPO) – 100% Coverage after Deductible is Met

Yearly Premiums (deducted from paycheck pre-tax) – $5460

Co-Pays (Prenatal exams – $20) (Ultrasound – ($20) – $40

Deductible (Delivery is considered an “In-Network Hospitalization”  and subject to meeting deductible) – $500

Co-Insurance  – $0

COST OF UNCOMPLICATED PREGNANCY= $6000

Choice #2 – HDHP with HSA – 100% Coverage after Deductible is Met

Yearly Premiums – $3016

Co-Pays – $0 (but all “non-preventative” care is subject to deductible)

Deductible – $4000 (Paid from tax-favored  HSA account – Employer contributes $1500 a year to HSA)

Co-Insurance – $0

COST OF UNCOMPLICATED PREGNANCY =($7015-$1500 employer HSA contribution) $5516

You would save $484 with the High Deductible Plan in the above scenario.  So is it a no-brainer?  The HSA all the way?

But what if you get pregnant in JUNE instead of JANUARY? The pregnancy now spans “TWO POLICY YEARS” and therefore you now have to meet the deductible twice before any coverage is paid out.   It’s very likely that with a pregnancy with no complications you won’t meet the full deductible for the pregnancy during POLICY YEAR ONE, maybe only paying out from the HSA account for an ultrasound or a few tests.  But that’s the GAMBLE.

So the choice to get pregnant money-wise becomes:

1.) Prepare for a “TWO YEAR POLICY” pregnancy but hope for the best.

HDHP Plan – AS MUCH AS $8016 –  AS LITTLE AS $5516

OR

2.) Know the costs beforehand but pay more.

Traditional Plan – $6000

Which would you choose?  I’m pretty risk-adverse so I’d probably pick #2 – the PPO. Ironically, I’ve had three uncomplicated pregnancies, three uncomplicated deliveries and somehow completely unintended on our part THEY ALL spanned  only ONE POLICY YEAR.  We have an HMO so it would have been a  moot point – but if we had the same choice we would have saved some money by going with option #1!

If you have an HDHP and had a baby did you actively try for that “ONE YEAR POLICY” window?  That’s a lot pressure the get pregnant in very specific timeframe!

Is maternity care/pregnancy the only “health issue” treated with such a risk-reward scenario for the insuree?

If you find yourself with a similar choice you may want to read the “Kaiser Foundation” report on Maternity Care and Consumer-Driven Health Plans. (Long but VERY informative.)

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The “great debate” that centers around whether it makes financial sense to get a tax refund or not usually entails one of two perspectives:

The “No Refund” crowd loathes the fact that you are loaning the government your money for free.  Your monthly overpayment in federal taxes could be put in a high-yield savings account and earn you interest throughout the year.

The “Pro-Refund” people usually argue that getting the big refund allows them a forced way to save money that they wouldn’t otherwise save.  The refund can be used to pay down debt or put away for a rainy day.

I’m a reformed “Pro-Refund”.  We used to get the big refund and pay down the credit card.  The same credit card that we were forced to use throughout the year for necessities.  There was no end in sight, the credit cards would never get paid-off because the take-home pay was not enough to cover our lifestyle. What a crazy cycle, we were giving our own money away(letting the government hold it), and then we would have to use credit cards (at about 18% interest over the year) to borrow our own money, pay off the credit card with the refund and start it all over again!

Last week I asked my husband to bring an updated W4 to HR so we can avoid a refund.  Not so we can put this extra money per paycheck in a savings account or use it to pay off debt.  We will use it to avoid using credit cards. We are a paycheck-to-paycheck family.  We are fed up with that lifestyle.  For us, not getting a refund will result in an extra $200-$250 a month.

The majority of our credit card purchases were made because there was not enough wiggle-room in the budget to pay for our monthly expenses.  Even with our cost cutting measures, we were still one small hiccup away from using a credit card to get us through. Maybe down the road, when we have better control of our finances, this money can be used for a “Vacation Fund” or the like.  For now, I’m looking forward to NOT putting groceries or gas on a credit card.

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I recently posted about my ingenious “mini-escrows” (in my case bi-monthly budgeting for yearly expenses) and how they are the number one reason we haven’t (and hopefully won’t have to) resort back to credit card use.  If you are REALLY serious about getting out of debt, next to having $500 in the bank, I believe this method is THE most important way to get out of the credit-card-crutch cycle.

I’m not the only one.  I just found the other term used for this method is a “SINKING FUND”.  Everybody’s doing it!     These are some great posts about how other Personal Finance bloggers are using the same strategy:

Deliver Away DebtHow to Create Sinking Funds

Fiscal Geek Sinking Funds:  taking Budgeting to the Next Level

Frugal Dad: Sinking Fund Eases Strain of Annual Expenses

Call it a “Personal Escrow Account”, “mini-Escrows” or “Sinking Fund”, by any name you are prepared for the bills you know are coming!

Today our credit card debt alone totals over $11,000, but for the first time in a long time I fall asleep at night with hope rather than despair.   I’ve tried for over 2 years to get out debt but truth is we never made a dent in it.  It seems so obvious to me now why I’ve failed at getting our family debt.

One of the big reasons – I was unprepared and underfunded for the yearly bill/irregular bills when they came.   The fact that I never properly budgeted for the sewer bill or the car registration/inspection meant using credit cards or spending any “emergency savings” we had built up.   Basically back to square one.

Then I had an awesome idea that would revolutionize the personal finance world!    I would take all the irregular yearly bills, add them up, divide by 24 (my husband is paid bi-monthly) and make that part of my monthly budget.  I would call it our “Personal Escrow Account.”  GENIUS!

Of course this idea is old news.   In fact Charlotte, the subject of  an article at “Get Rich Slowly”, even calls her method a “Personal Escrow Account.”

While I won’t win any points for originality, this method has saved my budget and my sanity.  Breaking down big irregular bills into smaller semi-monthly payments not only makes me feel prepared but provides breathing room in the budget.

EXPENSES         YEARLY BILL         NEED TO SAVE per PAYCHECK

Sewer bill                        $204                                       $8.50

PreSchool                        $2430                                    $101.25

Cars(approx)                  $400                                      $16.70

Propane                            $1400                                    $58.35

These “mini-escrows”(I’m patenting that) have helped alleviate the pressure that would come any time a non-recurring bill would come due.  I round up the numbers to the nearest $5 and put them in designated ING accounts.  To build up the proper amounts I needed to borrow from the “Emergency Fund”.   I know, I know, YOU NEVER TOUCH the emergency fund but I would have had to either used the emergency fund to pay these bills or a credit card so what’s the difference?

I also add bi-monthly in sub ING accounts to the “Emergency Fund”, a “Christmas Fund” and a “Whatever Fund”.

When you NEED credit cards to pay bills you know you are in trouble.  That is where we were.  Hopefully, no more!  Over $11,000 in credit card debt is no joke, and while the amount we owe is still there I feel the crutch they provided may be gone.

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It’s snowing AGAIN right now and I have major winter fatigue!  Over 75 inches of snow this winter ALREADY in the Philly suburbs and it is only mid-February.  Visions of daffodils are dancing in my head.  I can’t wait to leave this winter behind and never see a another snowflake.  But when money is tight you really need to plan ahead.  Way ahead.

When living paycheck to paycheck any deviation in your bills can send you scrambling back to using credit cards.  For us, Christmas is one of those cases.  We don’t go crazy at Christmas buying gifts for our three kids and family members, but the cost is definitely greater than our monthly discretionary income at this point.   It would be the perfect set-up for a another failed attempt to get out of debt.

To avoid the squeeze I know is coming this December I decided to start a “Christmas Fund”.   My husband gets paid bi-monthly and we are putting $20 a paycheck away now –  so come Christmas we will not have to resort to credit cards to pay for it.

I’m putting this money in a sub-account at ING Direct .  I have enough faith in my budget for the first time ever that I know I will not need to raid this account.  But if you don’t trust yourself yet, many Credit Unions offer “Holiday Accounts” or “Christmas Club” accounts where they offer “bonus rates” with no penalties on withdrawals IF you don’t touch the money until November.   Even Kmart and Sears got in on the act last year with 3% BONUS rates on gift cards.

I’m hoping this plan will mean a less stressful holiday season.  The alternative is to pretend Christmas isn’t coming this year and AGAIN be faced credit card bills in January.

NOT "brought to you by Chase" this year!

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