Money Obedience

Washington is working on reforming the American health system, which is in dire need of improvement. US Americans spend almost twice as much on health care per person as do other OECD countries that have what we keep calling “socialized medicine.” Yet, rates of infant mortality and life expectancy are lower here in the US than in these other countries, so people die at younger ages than those of other countries, mostly because more than 15% of the US population does not have health insurance. The uninsured drag the country’s statistics down. As a country we are paying more than others and we are getting less for it than others do. Not such a good thing, is it?

At this stage it looks like some sort of “socialized” medicine will be passed into law later this year. This has many people up in arms who fear that “socialized medicine” will limit access to good health care for the ones who have access to health care now. Why share this excellent access with the less unfortunate by possibly having to give up a little of this supposedly excellent access? Alas, in our experience access to health care for us people with health insurance is actually not as awesome as we would like to believe. Let me tell you a recent experience.

My family is one of the fortunate in the US because we have a health plan, a prescription plan, and a dental plan that covers all of us. Our prescription plan encourages us to use a mail-order company that provides us with cheaper medication. We would still get some refund if we paid retail at our neighborhood pharmacy but we would end up spending three times as much for our prescriptions if we failed to use the mail-order pharmacy.

A couple days ago my wife needed to get a refill on a prescription which had in the past been filled by this insurance-run mail-order pharmacy. The refill would give her one month’s supply for a co-payment of $10. Unfortunately the company is no longer selling this particular medicine. We can get it at a neighborhood pharmacy though. There we would have to pay $30 for the same one month’s supply. So, we can get the medical treatment the doctor prescribed for my wife; it is just a matter of money - $300 more per year in this case.

How is this different from the “socialized” health care system in other countries? Not by much, I suppose. You can always buy yourself better and faster access to health care if you are not happy with the general access – just like we can pay more to get the medication our doctor has prescribed, if our private insurance carrier does not provide this medicine at the cheaper co-payment.

We live in a system in which a private insurance carrier decides access to heath care. I wonder if the system we currently have is really so much better. After all, some company decides on such issues, rather than the government. A private company is driven by profit, and I, the patient, am a drag on that profit. It is therefore natural for the private company to cut back on medical services for me as much as possible. A government program does not have that drawback. If I consider our current situation, I’d rather take my chances with a medical system that is organized along some more “socialized” guidelines. We already know that the private approach has really not worked that well and got us to where we are now. In my immediate case, it means that we “choose” either to have no medication, or pay three times the normal amount for it. I say we may as well make a change – maybe even a radical change - and let’s see what happens, right?

We recently wrote about how we use credit cards for everyday household expenses. Some believe that this is not a good idea, since it is so easy to quickly run up a hefty balance on a credit card. That is indeed true – unless you check your balance frequently. This is not too hard in this day and age when you - who are reading this blog post - obviously have access to the internet. Checking your credit card balances frequently has a few advantages.

1. We are aware of our balance on a timely basis and we know how much money we have to send to the credit card company by the due date. Sure, the most recent purchases do not show up right away, but we still get a pretty good look what our month’s balance is at any time.

2. We see easily on what kind of expenses we spend the most money. Large expenses certainly stick out like a sore thumb.

3. My wife can catch me quickly if I spend frivolously and I can catch her, too. This prevents either of us from spending frivolously in the first place. Who wants to be in trouble with the wife? (I am not so sure how much a wife cares about being in trouble with the husband for overspending, but maybe my wife can shed some light on this from her perspective in a future post.)

4. For some, like for me, cash has a tendency to burn a hole in his or her pocket. If you carry cash, you may as well spend it, right? Besides, there is nobody who will really hold you accountable for spending cash like a wife could do if you spent too much with the credit card.

All these advantages come to nothing if you start carrying a balance on your card, since credit card debt is often one of the most expensive debts one can carry. The interest rates and fees are sometimes so high that it takes a long time to pay off a credit card balance and that any advantage of using the card becomes a disadvantage very quickly. That is why it takes a certain discipline to not let this happen. Some may lack this discipline. In this case it is not advisable to buy everyday items with a credit card – or anything else for that matter. Too many useless or frivolous expenses may sneak into the account which is where the trouble starts.

This post also goes to show one of the most important features of personal finance. We are all individuals. Our money decisions depend so much on who we are. Therefore, there is not one foolproof answer to any personal finance topic that fits all people. Personal finance does have the word “personal” in it for a very good reason….

Let me state right away that we use our credit cards quite often (and that we pay them off every month). Actually, we use only one credit card because we get a cash back bonus on this one card. We have other credit cards, but we never really use them – until we started using another one until very recently.

Apparently one of my unused cards had expired and I was sent a new card, which I had to activate by calling from my home phone. But once my card was activated, I was asked to hold for a customer representative. Somehow I immediately felt guilty thinking that I must have done something wrong with the card or that there were some fraudulent activities on it. That guilty feeling disappeared quickly when the representative informed me that I should use the card since I had some cash-back bonus accumulated on that card, too. I was blissfully unaware of it, but quite happy that I had $45 sitting there. And to boot, this guy also told me that there was a promotion on the card right now that would add 5% of the money I spent on gas with the card to my cash until the end of September. Not bad, eh?

As you can see, we deliberately employ the use of credit cards for our benefit. Now, when we use this “new” old card for buying gas these days, (a) we buy something we have to buy anyway, and (b) we increase the rewards we get for such purchases. Of course, if we did not pay off our credit card balances each month, it would not make a lot of sense to shoot for those rewards, since the rewards will not be enough to make up for the expense you have to pay back to the credit card company for having a balance on the card. So, if you do use credit cards, be sure to use them wisely!

One of the supermarkets in our area sells produce at steep discounts when the produce has reached its shelf life as defined by the supermarket. We usually don't shop at that supermarket since it is one of the more expensive ones in the area, but when we drive by we pop in to see what produce is on super discount. The funny thing is that these sale fruits and veggies are actually ripe, and strangely enough, we like ripe produce rather than "cardboard"-like produce. So, why would we want to pass up 3 ripe avocados for $1 (guacamole anyone?), 5 peeled ears of corn for 89 cents, or 7 ripe bananas for 75 cents (banana bread anyone?)?

On Friday my husband came home with a bag of limes - 12 limes for 89 cents! Nice, big juicy limes. And what a great price. (You should see that man. He is beaming when he finds offers like that!) What do we do with all these limes? Very simple. We love Mexican food (and almost any other ethnic cuisine). There is no better way to spruce up Mexican food than to put a lot of fresh lime juice on top of it. Since we had the limes, we also had a good excuse to enjoy delicious Mexican food. So, we had dinner on the porch Saturday night - a very nice evening to sit outside and to share a good, relaxing time with each other.

Come Sunday night we found another great use for some more limes. After hearing a lot of toddler crying during my stressful day, I was in the mood to have a drink after the kids went to bed. Normally we would open a bottle of wine - usually a crisp white or rose on a warm summer day, but my husband suggested that we should make mojitos! We have lots of mint growing like weeds in the garden and even after the Mexican dinner we still had lots of limes in the fruit basket. What a great idea it was. Sure, I had to do a little bit of work to make the mojitos. (My husband did not even do as much as get the mint from the garden! ;-) He sure switched into relaxed mode way before I could even get the mojitos on the table.) But I found a great mojito recipe online mojito recipe - the secret is making simple syrup first, I'd say - and I really enjoyed making the drinks. I enjoyed sharing the drink with my husband even more. What a nice ending to the weekend!

See, how much unplanned pleasure a cheap bag of limes gave us during the weekend? And the additional cost? - 89 cents!!!