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Open Enrollment Checklist: HSA, HCFSA, DCFSA, Disability Insurance, Life Insurance



We just finished our open enrollment paperwork, and like many other workers we faced a long and confusing list of instructions. They tried to distract me from the increased health insurance premiums by adding a bunch of optional “perks” like universal life insurance and paid identity theft protection. Christine Benz has a thoughtful Checklist for Open Enrollment Season. Here are my own thoughts as I went through the options:

Health Savings Accounts (HSA). Doesn’t “triple tax-free” sound good? HSA contributions are tax-deductible (pre-tax money), they grow tax-free once there, and your withdrawals are tax-free when spent on qualified healthcare expenses. However, you have to be enrolled in a qualified high-deductible health plan (HDHP) to be eligible, which means your higher out-of-pocket costs might not offset the cheaper premium plus upfront tax savings. Depending on your estimated healthcare costs, tax rate, and how much your employer pays, you may be better off with a traditional HMO or PPO plan. A bit of math will be needed.

In order to maximize the HSA’s long-term advantages, you will also want to treat the HSA as an investment account. This means you’ll you need to cover the higher annual out-of-pocket costs yourself and still have money left over to fund the HSA.

Healthcare Flexible Spendings Accounts (HC FSA). I’ve said it before, but these can be a bureaucratic mess. The benefit is “use-it-or-lose it”, but for me it has been “use-it-and-lose-my-mind”. Third-party benefits administrators have given me several bad experiences with submitting my receipts and ensuring they are approved. If it takes me an hour to submit/check/argue/re-submit/check a $50 medical expense, then in my opinion the tax savings of $10 was not worth it at all. But if I don’t follow through, I lose the entire $50. Asymmetric risk in a bad way.

There are also some finer details if you want to have both an HSA and an FSA (look up limited-purpose or post-deductible FSAs).

Dependent Care Flexible Spendings Accounts (DC FSA). These are better. You can have both an HC FSA and a DC FSA as they cover separate things. If you have eligible childcare costs (or adult dependent care), it is quite possible you reach the $5,000 annual maximum. I usually wait until I’ve already paid out $5,000 in preschool tuition, and then I just submit a single receipt for a potential $1,000 tax savings (assuming 20% tax rate on $5,000). Now that’s a good per-hour rate.

Employer-sponsored disability insurance. The best thing about group disability insurance through your employer is that it’s easier to qualify and the cost may be subsidized by your employer. However, if you switch or lose your jobs, you might lose your group disability insurance at the same time. This won’t happen with your own portable plan. Specialized workers can purchase riders that will pay out as long as you can no longer perform your specific occupation (as opposed to any lower-paying job). However, it’s so easy to put this off that getting some employer-sponsored disability insurance can be a good first step.

Life insurance. A common offering is a year of your salary in life insurance. Beyond that, you should always compare with an individual term life insurance plan. That way, if you have a special medical condition that makes your private premium somehow crazy expensive, then you can always fall back on the group plan. For most healthy folks, finding your own portable term life policy will be cheaper and it won’t go away if you lose your job. If you get a 20-year level term policy, your premium also stays fixed for those 20 years. No surprise increases.

Other benefits. The menu seems to expand every year. 401k investment advice. Commuter benefits. Student loan repayment assistance programs. Accidental death and dismemberment (ADD) insurance. Critical illness insurance. Long-term care insurance. Identity theft insurance If it’s free, I’ll take it but in general I decline the ones that require a premium.

“The editorial content here is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

Open Enrollment Checklist: HSA, HCFSA, DCFSA, Disability Insurance, Life Insurance from My Money Blog.

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5 Strategies to Manage Finances During Coronavirus Uncertainty



Writing this post is eerily familiar to one I wrote at the end of 2008, just a few months after I became the host of the Money Girl podcast. The Great Recession, which lasted from the end of 2007 to the summer of 2009, was getting real. The show was a response to many questions I received about how to invest and shore up finances successfully during the crisis.

We should be prepared for significant hardship in the economy every decade. It’s been about 12 years since the last one, so you could say we’re overdue. The coronavirus is a big but invisible challenge that’s causing a host of first-time problems for families, businesses, and the medical community. 

Until we know more about what the specifics of pending legislation mean for your finances, consider what you can do on a micro level to make your financial health as resilient as possible.

In early March, Congress approved an $8.3 million round of funds for various government health agencies dealing with the virus, including Medicare. The response from the federal and state governments is still unfolding. It should be aggressive to preserve public health, help consumers manage living expenses, and help business owners cope with major disruptions.

Until we know more about what the specifics of pending legislation mean for your finances, consider what you can do on a micro level to make your financial health as resilient as possible. In this post, I’ll offer five strategies to manage money in uncertain times and address some questions that have come up from members of my Dominate Your Dollars Facebook group.

5 tips to manage money and investments during coronavirus uncertainty

Follow these tips to make the best decisions possible during a crisis.

1. Check your emotions

When the financial markets are down or extra volatile, the true nature of your risk tolerance gets revealed. Whether you’re a riverboat gambler or a stuff-the-cash-in-the-mattress kind of person, you’ve probably been wondering what changes, if any, you should make to your investments right now.

Before you do anything, remember that being a successful investor and money manager is mostly about managing your emotions. I know that’s easier said than done because there’s no separating money from emotions. However, in general, the fewer rash decisions you make, the better.

Instead of letting your emotions get the best of you, consider imposing a waiting period on yourself before making any large-scale money decisions.

We’ve seen how emotions affect the economy with panic-…

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Coronavirus Megathread: Resources, discussion, and your questions



Given the number of requests we've had to post a megathread along with the volume of similar threads being submitted, we're consolidating future general discussion on this topic here.

We will continue to make updates to this post.

Stimulus checks (Minor updates April 4th)

The CARES Act authorizing relief/stimulus payments directly to individuals has been passed into law.

For non-dependent individuals, you are entitled to $1,200 if your AGI (Adjusted Gross Income) is below $75,000. For married couples filing jointly, it is $2,400 if your joint AGI is below $150,000. Taxpayers with dependent qualifying children will receive $500 per qualifying child (16 or younger, the rules are based on the child tax credit).

If your AGI is above the income threshold of $75,000 or $150,000, you will be entitled $5 less for every additional $100 of income above that threshold until the amount is fully phased out. For example, if you are single and without kids, the potential maximum amount of $1,200 is completely phased out once your income hits $99,000. If you are married with two young children then the maximum payment of $3,400 is completely phased out once your joint income hits $218,000.

Prior years' tax returns are being used to calculate each person's stimulus payment. If you filed your 2019 tax return already, that will be used. If not, then your 2018 tax return will be used. If you have not filed taxes for 2018 or 2019, you should do so as soon as possible to secure your eligibility for a prompt payment. Finally, if your 2020 income and status would allow you to receive you a larger payment, you will have to wait until you file in 2021 for the 2020 tax year, and you will receive the difference as a credit on your 2020 tax return.

Basically, you will get to keep the payment you receive and if you receive a smaller payment than your 2020 income would allow, you'll get a credit when you file your 2020 taxes.

How will I get paid?

If you received your tax refund by direct deposit into a single bank account, your relief payment will be deposited to the same account. If you did not receive your refund by direct deposit, or if it was deposited to more than one account, a physical check will be mailed to you at the address on your tax return. If you have not filed taxes, it is likely that the IRS will attempt to get your address from other agencies, like the Social Security Administration or the Department of Veteran's Affairs.

What if I am a dependent?

Feels bad, man.

It's worth noting that eligibility is based on your dependency status for 2020, so if you were claimed as a dependent in 2019 and can't be claimed as a dependent in 2020, you should get the $1,200 (or the lower amount if your income is high), just not until they file their 2020 return.

Finally, it's important to know that dependency status is not elective. You are either a dependent or you are not a dependent according to IRS rules.

Is this just an "advance" on my tax refund?

No. Assuming you're eligible, the money is a credit and not an advance on money you would have been owed already.

What if I am sent an amount that is higher than my 2020 income would allow?

There were some initial reports that the excess would come out of your future tax refund, but the consensus seems to be that you get to keep the money.

According to this article from CNN:

And those who make more this year than last would not have to pay back any stimulus money they receive if they end up exceeding the thresholds. The payments would not be subject to tax, and those who owe back taxes would still get a check.

The Washington Post has a similar statement.

The IRS does not have my direct deposit information. What can I do?

In the coming weeks, [the US] Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

If you lose your job or are at risk of losing your job

Please read the Job Loss Megathread: unemployment resources, state-specific information, and help.

If you have any questions regarding those resources, feel free to ask here, but please be as specific as possible with your current situation and what steps you have taken so far.

Stock market turbulence

It's very natural to be feel concerned when there's a large drop in the stock market, especially after such a long period of growth, but it's important to keep perspective and avoid making rash decisions.

First, take a deep breath. Market downturns are not uncommon or unusual. Between 1980 and 2017, there were 11 market corrections and 8 bear markets.

Trying to time the market rarely turns out well and most people trying to enter or exit the market based on emotion, gut feelings, and everyone's predictions end up doing far worse than if they had simply continued business as normal. Stick to your plan and stay the course.

To quote Warren Buffett: "to buy or sell on current news is just crazy".

Don't make an emotional decision, don't try to predict where the market is headed in the short run, and make decisions for the long run. You're investing for decades, not trying to predict the Dow Jones or S&P 500 next week, next month, or even next year.

Being financially prepared and practicing sound finances

  1. Budget your money and reduce expenses. Fundamental to a sound financial footing is knowing where your money is going. Budgeting helps you see your sources of income less your expenses. You should minimize your expenses to the extent practical.

  2. Build an emergency fund. An emergency fund should be a relatively liquid sum of money that you don't touch unless something unexpected comes up. For most people, 3 to 6 months of expenses is good. A larger emergency fund may be warranted if your income is variable or uncertain. If you're in credit card debt, aim for one month of expenses and focus the rest of your money on paying down debt.

  3. Don't check out of your finances. Continue following the steps in "How to handle $" as best possible starting at the beginning of the flowchart. If you can't make rent, contact your landlord. If you have trouble paying your mortgage, see below. If there are bills you can't pay, research your options and contact the company. Simply not paying a bill without any communication is almost certainly not your best option.

  4. There's more good stuff you should be doing in this video from Bogleheads and the PF wiki.


If you have travel planned, read Coronavirus & Your Finances: What to Know and Do from Clark Howard.

Also see the megathread on /r/travel for news and updates on the US travel suspension and other impacts the virus is having on travel plans.


If you're in the market for refinancing your mortgage, it may be worth considering, but if you don't have a healthy emergency fund and extra cash, you may not want to refinance right now due to the up-front costs.

Federal student loans (Updated on March 28th)

The CARES Act has some provisions to aid people with federal student loans including:

  • Borrowers will be able to pause payments on federal student loans until September 30th, 2020.
  • There will be no interest charged against your federal student loans until September 30th, 2020.
  • Involuntary collection of defaulted student loans via garnishment of wages, social security, and tax refunds is also being suspended.

Key points:

Federal tax payment deadline, filing deadline, and IRA deadline extended to July 15th (Updated on March 28th)

Key points:

  1. Both the filing deadline and the payment deadline are now being extended to July 15th.

    The IRS has also stated that the deadline for making contributions to your 2019 IRA is now July 15th.

  2. State deadlines are not affected by the extension, but some states are providing extensions (the terms may differ, though). The AICPA is maintaining a summary of states' filing and payment guidance due to Coronavirus.

  3. If you are receiving a refund, you should probably still file earlier.

Many mortgage owners will be eligible to have their mortgage payments reduced or suspended for up to 12 months (New on March 20th)

Key points:

  1. The move covers about half of all home loans in the U.S. — those guaranteed by Fannie and Freddie. But regulators expect that the entire mortgage industry will quickly adopt a similar policy.
  2. You can't just stop paying your mortgage. Contact your servicer to find out if you are eligible for this or if your servicer has adopted a similar policy.

Retirement account changes (Updated on March 29th)

Key points:

  1. The CARES Act provides an additional way for people to access cash by allowing the penalty-free withdrawal of up to $100,000 from qualified retirement accounts including IRA, 401(k), 403(b), 457(b), and several other types of accounts. It is also now easier to borrow money from 401(k) plans and the maximum loan size has increased to $100,000 from $50,000. Any loans due in 2020 are also being extended.

    In addition, some other rules related to retirement plan distributions have been suspended or modified.

    For details and numerous warnings about why you should try to avoid making early withdrawals, read these articles:

  2. All Required Minimum Distributions (RMDs) are suspended for 2020.

Money available for self-employed and small businesses (New April 2nd)

Read Money available to the self-employed and small businesses.

Other megathreads

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Why You Need An Emergency Fund and How To Start One Today



Do you want to learn how to build an emergency fund?

I recently asked you, my readers, what you want to read about right now. The majority of you told me that you’d like to learn more about emergency funds.

In today’s blog post, I answer questions such as:

  • What is an emergency fund?
  • Should you have an emergency fund if you are in debt?
  • How much should be in an emergency fund?
  • Where should you keep your emergency fund?
  • Should I keep my emergency fund in a separate account?
  • Can’t I just use my credit card as my emergency fund?
  • How can I save enough money for my emergency fund?

Thinking about how you would handle certain life situations is exactly why today’s post about emergency funds is so important.

See, an emergency fund is something I believe everyone should have. However, many people skip this important part of managing their finances.

Without an emergency fund, you can take on debt, add to your debt, not be able to afford basic living expenses, and more. It can be very scary to live without some emergency savings.

So, why are emergency funds important overall?

There are many reasons for why you should have a fully-funded emergency fund:

  • An emergency fund can help you if you lose your job. No matter how stable you think your job is, there is always a chance that something could happen where you may need money. What would you do if you lost your job and didn’t have an emergency fund?
  • An emergency fund is wise if you do not have great health insurance. You may have a medical emergency come up, and you can easily spend hundreds or thousands of dollars out of pocket.
  • An emergency fund is a good idea if you have a car. You just never know if it may need a repair.
  • An emergency fund is a need if you own a home. One of the lucky things that homeowners often get to deal with is an unexpected home repair. Having an emergency fund can help you if your basement floods, if a hole in your roof forms, and more.

An emergency fund can protect you in many other areas as well. This can include if you have an unexpected medical expense for your pet, if you have to take time off work for something, you need to go somewhere far to visit someone who is sick, and so on. The list of reasons for why you might need an emergency fund can be a long one.

Emergency funds are always good to have because they give you peace of mind if anything costly were to happen in your life.

Instead of adding to your stress because of whatever has happened, at least you know you can afford to pay your bills and worry about more important things.

Today, I’ll be explaining more about what an emergency fund is, if you should have one if you are in debt, how much money should be in your emergency fund, and where you should keep it.

Related content:

Below is what you need to know about emergency funds.


What is an emergency fund?

An emergency fund is money that you have saved for when something unexpected happens.

This can be something such as paying for bills if you lose your job (or if your hours or pay are cut), paying for a car repair, a medical bill, or something like a broken window.

What’s not an emergency? An emergency is not a birthday present, a new TV, a vacation, and so on. Your emergency savings fund is meant to cover essential spending when something unexpected happens.

An emergency fund is wise to have because it can help prevent unnecessary debt. There are too many people out there who count on their credit cards as their emergency fund, and that is not a good idea. This can lead to spiraling out of control with your debt because of high interest rates.


Should you have an emergency fund if you are in debt?


I definitely still believe that you should have an emergency fund even if you have debt. If you have debt, then the recommended amount is to have at least $1,000 in your emergency fund before you start paying down your debt.

After that amount, you need to determine what you are comfortable with.

The reason you still want to have an emergency fund while you’re in debt is because it protects you from taking on more debt, and it will help you to continue making your debt payments if something happens. 

You have been working so hard to get out of debt, and an emergency fund can help you stay on track.


How much should be in an emergency fund? Emergency fund calculator.

The next question I often hear is “How much should be in an emergency fund?” 

The recommended emergency fund amount is dependent on your specific situation. There’s no average emergency fund amount that will work for everyone. 

If you don’t have debt, then I usually recommend at least three to six months of expenses. And yes, that’s expenses, not income.

However, some people save as much as a full year of expenses in their emergency fund. A 12 month emergency fund might sound like a lot to you, but it all depends on your situation.

Here are some of the things you will want to think about when determining how much you should save in your emergency fund:

  • The stability of your job – If you are self employed, work on contract, or in a changing field, you may need a larger emergency fund.
  • Your income when compared to your expenses – If you have a lot of expenses, you will need more in your emergency fund. But, someone who has no credit card debt, mortgage, student loans, or car loans, will likely need less in their emergency fund.
  • Whether or not you own a house and/or car – You will need more on hand if something were to break, need repaired, etc.
  • Your health – A healthy person is less likely to have expensive medical bills than someone who has preexisting conditions, is a smoker, etc.

Basically, the “riskier” your situation, the larger your emergency fund should be.

You’re the best gauge for determining what is a good or risky financial situation, but you need to be realistic and realize that what may work for one person may not necessarily mean that it will work for you.

For us, I like to have one year of expenses saved since we are self-employed, and for a few other reasons. 

But, I know many people who are comfortable with a 6 month emergency fund. 

While the average person should have three to six months worth of expenses, it’s important to analyze your specific situation and pick the right amount for you.

I think the average person should definitely have some sort of emergency fund. Even if you can only manage $500 to $1,000 right now, that is better than nothing. $500 to $1,000 may not cover the entire cost of your emergency, but it will at least help you a little bit. Plus, you can still put money towards high-interest rate debt after you build up your specific emergency fund amount.

Note: On top of an emergency fund, I also recommend having an emergency binder. I recommend checking out the In Case of Emergency Binder to help you with creating your own emergency binder. This is a 100+ page fillable PDF workbook. There are 14 sections that go over key personal documents, household information, medical information, insurance policies, and more.


Where should you keep your emergency fund?

You may be wondering where you should put your emergency fund.

Your emergency fund is there so that when you need money fast, you can use it.

Due to this, you will want to put your money in a place where you can easily take it out. This means you do not want to be penalized for taking the money out. And, you probably don’t want to invest it in a high risk investment (such as the stock market) as you don’t want to lose what you’ve saved for emergencies.

I prefer keeping an emergency fund in a high yield savings account so that you are still earning a little bit of interest, without any work.

High yield savings accounts are a great way to grow your savings, but most people have their money in accounts with low rates. Unfortunately, that means many of you are losing out on some easy cash!

With Betterment Everyday, you can start earning 0.30% with a balance as low as $0.01.

How does that compare to the national average savings rate? It’s a very sad 0.09%. That is a HUGE difference from what Betterment Everyday is offering. If you are only getting 0.09%, then you are losing out on easy, passive money.

Savings accounts at brick and mortar banks are known for having really low interest rates. That’s because they have a much higher overhead – paying for the building, paying the tellers, etc. Betterment Everyday is an online option, which means they have lower costs, then passing the savings on to you.

To get started and open a Betterment Everyday account:

  1. Signing up is super easy. Simply click here and sign up.

See, super easy!

Read more at How To Earn Over 20x The National Savings Rate.


Should I keep my emergency fund in a separate account?

You don’t want your emergency fund to be too easy to get to.

This is because it would then be too easy to spend it. Due to this, I recommend keeping your emergency fund in a different account from your normal spending bank account.

Some people may simply open up a different account at their same bank, whereas others may go to a completely different bank to keep their emergency fund.

This is another situation when you need to do what’s best for you. You may be the kind of person who needs some barrier to getting into your emergency fund, and that’s okay. I would rather you know that about yourself than risk spending your emergency fund on something it’s not meant for.


Can’t I just use my credit card as my emergency fund?

There’s a growing number of people who are looking to their credit card as their emergency fund. Some are doing it by choice, and others are forced to use their credit card when an emergency comes up because they do not have enough money saved.

This is something that scares me. While credit cards may work for some, I believe that a more traditional emergency savings fund is a better solution for the average person. 

If your situation is quite risky, then using a credit card for your emergency fund may be a bad idea. This is because there is a large chance you may rack up credit card debt that you are unable to pay off whenever an emergency arises.

By relying entirely on a credit card emergency fund, you are going to be taking on a lot of risk.

You never know if something may come up, how big the expense may be, and whether or not you will have a large enough credit limit to fund the expense.

Plus, the interest rate on your credit card may hover somewhere near 20% or more, which can make for an expensive bill if you are unable to pay your credit card balance before interest accrues.

There are situations where using a credit card for your emergency savings fund may not be a completely bad idea. If you know that you can pay off a large expense within one month, then using your credit card as an emergency may not be a bad idea, but you still need to be careful before adding any debt. 

See, the problem with this thinking is what happens if you lose your job? Many people have emergency funds so that they can support themselves if they were to lose their job. What would happen if you relied on credit cards but lost your main source of income?

This could lead to a lot of credit card debt. Unmanageable credit card debt…

My problem with using credit cards as your sole source for an emergency fund is that, in some situations, it may lead to more debt. Sure, some people can use their credit cards to their advantage, but the average person most likely needs a real emergency fund that they can count on.

My point here is to be honest with yourself so that you can prevent yourself from adding any debt and being in an even worse situation.


How can I save enough money to fully fund my emergency fund?

After reading all of the above, I bet you cannot wait to start your own emergency fund 🙂

Building an emergency fund may be hard in the beginning, but everyone has to start somewhere. And even though it’s hard, you will be happy that you’re prepared for when you need money fast.

If you want to start an emergency fund, I recommend that you start by opening up a seperate account to save in. 

Then, here are different ways you can start building an emergency fund:

  • Use your tax refund
  • Set aside a certain amount out of each paycheck – Many employers will help you set up auto deposits into a separate account for your emergency fund. 
  • Find ways to make extra money – Here are over 100 different ways to make extra money
  • Start a savings challenge – The $20 Savings Challenge is a great way to easily save $1,040 this year without noticing! All you have to do is save $20 each week for a year, and then you’ll easily have $1,040. If you start this now and do it just until the holidays, you will have a nice chunk of change as well! You can get the free printable here.
  • Use a micro-savings app like Qapital – You can set triggers for saving, like when you post a status update to Facebook, when the space station flies over your house, etc. You can also set automatic deposits, do round-ups, and more.
  • Cut your expenses and put the extra to your emergency fund


If you are just starting, don’t fret.

If you’re just starting to build your emergency fund, it’s easy to feel like you’re never going to have the recommended emergency fund amount. But, don’t feel like you are being defeated. 

Everyone has to start somewhere. $100 in your emergency fund this month will grow, and soon you will have saved $500, then $1,000. That’s MUCH better than having nothing. Then, once you have that saved, you can continue to add to it.

Most people find that starting is the hardest part, but that it grows faster once they start saving more and more. I think that’s because you see your progress, and do everything possible to keep money saved.

Do you have an emergency fund? Why or why not? How many months of expenses do you have in it?

The post Why You Need An Emergency Fund and How To Start One Today appeared first on Making Sense Of Cents.

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