Dec 3 2012

How Much Does Invisalign Cost? For Me, $1,050

By |December 3rd, 2012|Blog, Personal Finance Tips|6 Comments|

Ever since I left college and started working full time, I’ve wanted to get Invisalign.

I want straighter teeth, but I don’t want to have ugly braces on my mouth. Invisalign is really my only option. There’s one big problem with Invisalign that has made me not get it for the last three and a half years.

It’s EXPENSIVE!

According to the Invisalign website, cost of treatment ranges from $3,500 to $8,000, with an average of just about $5,000. I want straighter teeth, but not that badly.

I actually had two free consultations hoping to get a price I could afford, and both times I was told it would be about $6,000 (of which my dental insurance would pay about $3,000). That’s too much for me.

That is, until I found a deal.

I Found Invisalign for $2,800

A local dentist’s office here in Irving was offering full Invisalign treatment for just $2,800. I thought it was too good to be true. I called them to check, and they confirmed the special.

$2,800 is pretty good, but still out of my price range. The next question would make or break the deal: can I use my insurance on this offer?

To be honest, I was fully expecting the answer to be “no”. I had found an Invisalign Groupon before and they said they wouldn’t take insurance.

Good news! This time they were happy to accept my insurance (with some provisions) and I was on my way to getting my teeth straightened.

It Only Cost Me $1,050. Here’s How

Now that I found Invisalign for $2,800, I had to reduce those costs even further to make it fit my price range. Right off the bat I was able to chop it in half thanks to my dental insurance.

Invisalign TraysThere was just one little problem with the insurance. The dentist wanted me to pay in full up front, and have the insurance company reimburse me over the 18 months of treatment.

While I would rather just pay the $1,400 and let the dentist’s office deal with the insurance payments, this was still too good of a deal to pass up. My insurance company will be reimbursing me $233 every three months during the treatment, for a total reimbursement of $1,400. Booyah!

So that brings the cost down to $1,400. I reduced my costs further by using my Health Savings Account. Thanks to my HSA, I have a bunch of savings that have not been taxed. Considering the fact that I’m in the 25% tax bracket, I get 25% more money in my HSA than I would get if I were to let that income be taxed.

That means when I spend $1,400 out of my HSA, it’s the same as spending 25% less, or $1,050 of non-HSA money.

My Cheap Invisalign

Promotional Price: $2,800
Dental Insurance Benefit: $1,400
HSA Savings: $350
Total Cost to Me: $1,050

Now that’s what I call a good deal! I’m like an orthodontic services price hacker!

My Review of Invisalign

I’ve actually had Invisalign for a little over half a year now and I’m not as excited about it as I was when I first ordered it.

First: I hate is stinky breath. I am cleaning these stupid trays constantly but they still smell. I hate it and my fiancee hates it.

Second: I hate removing them for meals. It sounds like a benefit because I can eat whatever I want. Unfortunately, removing them can be difficult and painful (especially in the first few days of a new tray).

Third: It takes so much longer than braces. I was told braces would only take a few months. My full Invisalign treatment is going to last well over a year.

Fourth: It’s not just the trays. To make Invisalign work they will have to put some composite on the outside of your teeth. It’s not noticeable from far away but it looks weird up close and feels very weird for the first week or two.

Overall: If I could do it all over again I would consider regular braces because of the shorter time frame. However, I’m sure there are lots of downsides of braces that I would hate as well. The bottom line: straightening teeth is not a pleasant experience no matter how you do it.

Readers: Have you ever gotten orthodontic treatment? If so, what did you do to reduce your costs as much as possible?

Nov 29 2012

Is Your 401k Safe From the Government?

By |November 29th, 2012|Blog, Economics / Politics|23 Comments|

I recently took a loan from my 401k to buy my first house (which is closing next week and I’m super excited about) and one of the reasons I’m comfortable using 401k money now is because I have no idea what the government is going to do with retirement funds in the future.

The other day I read an article suggesting that President Obama wants to nationalize all 401k, 401b, and IRA accounts, force people to invest in government bonds, and institute a 100% early withdrawal penalty and eliminate the option of taking a loan from your account.

That would mean the government would take your retirement savings, spend it on whatever it wants, and give you an IOU that is redeemable when you are at the retirement age.

Before you get too worried about “Now Obama Wants Your 401k” it should be noted that as far as I know Obama never said any of this.

The author of the article is trying to paint a very scary picture, but the only proposal that has come from Obama and the democrats is automatically enrolling employees without an employer-sponsored retirement plan into a direct-deposit IRA. Employees would be given the opportunity to opt out of this (if it ever were to become law).

The other stuff in the article talks about how certain unions and organizations would like retirement income to become a government entitlement, as opposed to a privilege for those who make responsible financial decisions before reaching retirement age. While these organizations do support Obama and the democrats, I’ve found nothing yet that suggests Obama would adopt these proposals and try to pass them.

But what if he did?

Your 401k and/or IRA Might Not Really Be Yours

The current laws of the United States say that the money in your 401k is yours. That’s a fact.

You can take loans against your 401k or withdraw the money early if you are willing to pay taxes plus a 10% penalty.

But tomorrow those laws could be different. What if popular opinion says that it’s not fair for some people to have 401ks when others don’t have any retirement money? What if the government decides that they are too far in debt and they need money, so they pass a law that says all retirement savings must be invested in US government bonds and early withdrawals are not allowed?

You wouldn’t be able to stop it.

The government does what it wants.

All of us responsible savers who use 401ks and/or IRAs (myself included) are using these financial vehicles simply hoping the laws that govern these accounts will remain favorable to the individual saver.

I honestly don’t know if that is a safe assumption.

What to Do if You Don’t Trust Retirement Accounts

If 401ks and IRAs aren’t safe, then what is? Again, we have no idea.

Illegal to Own Gold

photo credit: wikipedia

Gold probably isn’t safe either.

In 1933 the government made it illegal to own gold; specifically more than $100 ($7,800 in today’s dollars) worth of gold coins. Anything more than that had to be sold to the Federal Reserve at $20.67 ($371 today) per ounce. Violators could be fined up to $10,000 ($178,000 today) and/or be placed in prison for up to 10 years.

If they did it once, they could do it again.

Unfortunately, we can only live according to the laws that are on the books right now and keep a watchful eye out for any new legislation that is proposed in the future.

Personally I will continue to use my 401k and my Roth IRA, but if I ever read something that even suggests the government is actually considering legislation to restrict access to retirement funds, I will pull my money out immediately; long before anything is ever put to a vote.

Paying taxes and penalties on getting my money now is MUCH better than having that money locked into an account I can’t touch for decades.

Readers: Do you think the government will come after retirement savings? How would you feel if they did?

Nov 26 2012

How We Saved 30-50% on Brand New Appliances

By |November 26th, 2012|Blog, Personal Finance Tips|8 Comments|

My fiancee and I close on our new house in a little over a week and we had one big problem to solve this weekend: the house doesn’t have a refrigerator. The current owners are taking the fridge to their new house so we needed to get some appliances and we needed to get them cheap.

We also wanted to make sure to get something nice because we know this won’t be our “forever” house. We expect to live her for about 5 years or so and then hope to sell for a nice profit.

Everyone knows an updated kitchen (including updated appliances) is the key to raising the value of your home and selling it quickly. We didn’t want to spend money on a temporary fridge when we knew we’d just spend more money for the stainless steel version later.

But we also don’t have a lot of money and couldn’t spend $2,000-$3,000 on a brand new stainless steel fridge.

When you don’t have a lot of money but you want nice things, there’s only one place to go: an outlet store.

50% Off a New Refrigerator

Tag and I ended up buying a brand new $2,100 refrigerator for $1,050 all because there was one dent in the refrigerator door.

stainless steel appliances

photo credit: justthatgoodguyjim

I will admit that the dent is big. It’s pretty noticeable even from a few feet away. Luckily once the refrigerator is in our home and covered in magnets for delicious pizza delivery then the dent becomes invisible.

The fridge is literally brand new. Someone paid $2,100 for it, it was delivered to their house, and they sent it back because of the dent. Then I bought it for 50% off. What a deal!

We found this deal at Sears Outlet because it was the easiest place for us to find lots of outlet appliances, but there are probably lots of other different stores that sell appliances that either have cosmetic damage or were floor models and can’t be sold as “new”.

You might even be able to go to your local hardware store and ask the manager for a discount on a floor model. It doesn’t matter where you get it, just don’t pay full price when you can get it cheaper for some small cosmetic damage!

38% Off a New Range

We needed a fridge because we didn’t have one. We wanted a new range because the one in the house is from 1990 and looks like it’s from 1970. While we were at the Sears Outlet we found a Black Friday deal on an $800 range for $500.

This range is brand new in the box; no dents or anything. It is probably either overstock or last year’s model. Regardless, it’s a brand new stainless steel electric range that is selling for $800 at Home Depot and Lowes, and I got it for $500 because I was at an outlet store.

Our Kitchen Renovation is Already Half Done

The first three jobs of moving into our house are the scrape off the popcorn ceilings, paint, and replace all the 22-year-old carpet with brand new bamboo floors. The kitchen renovation probably won’t happen for at least six months or more.

And yet we’re already halfway done just by getting new appliances. The microwave and dishwasher are already upgraded, so we haven’t even moved in yet and the kitchen appliance upgrades are complete. Now we just have to stain the cabinets and get a new countertop and backsplash and we’ll have a lovely updated kitchen!

And it’s all because we found some great deals at an outlet store.

Readers: Have you ever purchased appliances from an outlet store?

Nov 24 2012

Getting the Best Mortgage Rates in Australia

By |November 24th, 2012|General Personal Finance|Comments Off|

Your mortgage rate is probably your biggest monthly expense. Whether you are already a homeowner or are thinking about buying property in Australia for the first time, it’s worth taking the time to research your mortgage options. Consumers can borrow from large banks, small banks, or private lenders, all of which will offer different fees, features, and rates. Just as you would shop around to find Sydney real estate, it’s a good idea to shop around to find the best mortgage lender. Overall, Australia’s mortgage rates are relatively low, making it a good time to jump into the market and invest or try to refinance.

Look for Online Deals

Some of the best Australian low-interest mortgage rates can be found online. Online lenders spend less on advertising and the cost of running a brick and mortar operation. They are then able to pass these savings down to their customers. State Custodians is a small mortgage company that operates online, with their Standard Variable Offset Loan winning an award from Your Loan Magazine. This loan offers an interest rate of 6.09%, making it ideal for first-time home buyers. Other online loans with notably low interest rates include the MyRate Advantage Loan at 6.15%, and the Ratebusters Ultimate Loan at 6.04%.

Compare Offers

Securing a mortgage online can be ideal for investors or those looking to refinance, but many home buyers prefer to speak to someone in person. The key to dealing with bigger banks is to shop around and arrange meetings with several representatives. You can certainly find a good deal at a large bank. National Australia Bank has been recognized for its competitive rates, offering a three-year fixed loan at 6.79% and a standard variable loan at 6.5%. Smaller credit unions can also offer competitive rates, so it’s worth looking at them in addition to the major name lenders

When you’re comparing deals at different banks, think not only about the interest rates but also the terms and conditions of each mortgage loan. Find out whether you can split your loans into part variable and part fixed rates, and if you can consolidate multiple debts for a lower overall interest rate. Investors may be in search of interest only loans, while residential owners may need fast cash to close on a deal.

Negotiate Fees

Bank fees can range from hundreds to even thousands of dollars. If you find one lender that offers you a great deal on interest rates but makes up for it with high fees, you might be able to talk them down. Consumers with excellent credit will have better bargaining power, as will those negotiating a mortgage with their existing bank. If you’re on the fence between two lenders, try asking about the possibility of waiving fees. Some banks will also lower fees and interest rates when you agree to set up automatic payments.

If you already have a home loan with one bank, ask about the possibility of special offers for switching to another bank. Citibank and National Australia Bank both offered $1,000 in cash for switching accounts last year. It’s important to remember that banks want your home loan business, as competition for customers is fierce and home lending involves far less risk than business lending. Discounts are available for those who take the time to research options and
ask about special offers.

Nov 19 2012

How I Plan to Retire

By |November 19th, 2012|Blog, Life|7 Comments|

Last week I wrote about how I took a loan from my 401k to help me pay for my 20% down payment on a house.

Some people thought it was a great idea. I even got an email from a good friend telling me that the information was incredibly useful for him and he thanked me profusely.

Other readers thought my 401k loan was such a terrible idea that they have decided to stop following my blog.

Who knew taking a low interest loan from yourself was so controversial?

My 401k is Retirement Play Money

I understand why some people were offended by me taking a loan from my 401k. For many people, their 401k is their retirement lifeblood. Their hopes and dreams of reaching retirement are resting on the balance in their 401k.

My 401k is different. I consider my 401k as spending money for retirement. Nothing more.

Here are a few problems with the idea that someone can save up enough money to retire

  • No one knows how many years they are going to live (so you can’t know how many years of expenses need to be saved)
  • No one knows how bad inflation will be over the course of the next 30-60 years
  • No one knows what the stock and bond markets will do over the next 30-60 years (which is where most 401k investments are held)
  • No one knows when they will want to retire, which might be much earlier than a 401k allows you to access your money without penalty
  • No one knows what the government will do that could change 401k laws in the future and restrict access to money
  • No one even knows if the US dollar is going to survive the coming debt crisis

Given all these unknowns, I find it rather foolish to try to retire by saving up a huge pile of money.

I have a better solution.

Retire At Any Time By Generating Income

Imagine I want to have $50,000 a year (in 2012 dollars) in spending money when I retire. I can try to save up some amount (probably millions of dollars) to be able to pull out $50k a year, but I really can’t answer any of the unknowns I just mentioned.

Another option is to start generating passive income streams.

couple on the beach

photo credit: mallorysimon

I could buy a house (maybe with the help of a 401k loan) and live in it for a few years. When I buy a new house, I can keep the old one and rent it out. I might make $800 a month from renting my old house. That’s $9,600 of income every year.

Maybe I work on building some internet business where I am the owner and I pay other people to run it. Pretend this generates $1,500 a month with minimal effort on my part. That’s another $18,000 a year.

Let’s say I’m old fashioned and want to get involved in a business that exists in the physical world instead of just on the internet. Maybe  I find some partners and start a restaurant. We hire high school kids as employees and pay a few responsible adults to be the managers. Let’s say this real world business makes $1,900 a month. That’s yet another $22,800 a year.

Between my rental property, my online business, and my restaurant I’m making $4,200 a month. That comes to $50,400 a year. Every year. And I don’t have to do any of the work myself.

I’m ready to retire.

I might have $4,200 a month in passive income by the time I’m 65 years old and I can retire with the 401k folks. But what if I get that much at 35 years old? Looks like my way worked a little better than the saver’s route.

What if medical advancements mean that people my age are going to live until they are 120 years old? Those 401k-saver retirees are gonna be living off government assistance and charity when they run out of savings. As long as my businesses are still going, then I’ll have all the money I need no matter how long I live.

If inflation gets bad, my business just raises prices to keep up with inflation and as long as I can keep them profitable then my retirement is safe. A 401k doesn’t get an automatic inflation adjustment.

If the stock market crashes then it doesn’t directly affect my businesses (although the indirect implications could be that one or more go out of business). People relying on their 401k to retire might lose decades of savings.

If I want to retire early there’s no law saying I can’t get to my business income before I’m 60 years old. The 401k savers are stuck until the law allows them to get their money.

Saving Is NOT The Only Way to Retire

Some people are going to work until they are in the late 60′s, save as much as they can their whole young lives, and then retire with a big lump sum of money. Then they just have to hope they die before the money runs out.

When I’m retired I don’t want to live my life hoping my heart gives out before my bank account. I want to have multiple, diversified streams of income that will allow to retire as early as I can and to stay retired as long as I live.

Why Do I Even Have a 401k?

Despite everything I just said, I will keep saving money in my 401k.

First of all, my employer matches 100% of my contributions, so I can’t pass up a 100% instant return. Even if I decide to pull the money out early and pay the penalties I’ll still come out ahead because of the match.

Second of all, when I need to access the money I can just take out another 401k loan. This will probably happen again when I’m looking to start some kind of business and need start-up capital.

If I have anything in my 401k when I retire (which I probably will) then I’ll use it for play money. I can take killer vacations or buy sweet presents for my grandkids. I will not use it to plan for my retirement.

There’s only one path to retirement for me, and that’s generating income.

Readers: How are you planning to get to retirement?

Nov 19 2012

How to Remodel Your Bathroom on a Budget

By |November 19th, 2012|General Personal Finance|1 Comment|

Sometimes remodeling your bathroom takes the backseat to other renovation projects because of the misconception that it has to be expensive. Although the national average for a bathroom remodeling project is around $10,000 according to Consumer Reports, there are a plethora of ways to remodel your bathroom affordably. If you want to undertake a total redesign however, there are home remodel loans available to help you finance the remodel over an extended period of time. To get the most from your money, you may want to consider:

  • Separate wants and needs: Designating which projects in your bathroom are necessary and which aren’t can help you save time and money. Keep in mind, not everything on your list has to be done at once. If there are things on your list of wants that don’t fit in your current budget, create a plan to space them out over time.
  • Plan a budget: This seems like a no-brainer, but it’s easy to get carried away in home improvement stores. First, decide how you’ll be financing your remodel. Do you have money saved up, or will you be drawing on home equity financing? Finally, plan out how much you are willing to spend right now and stick to it.
  • DIY: Completing major home improvements yourself can save you money and give you a sense of satisfaction when you’re done. However, if you’re not a handyman on the side, it might be better to hire a contractor so you don’t end up spending more money fixing mistakes.

Use a home remodel loan to finance your remodel

After you have determined how much you can spend, talk to your lender to decide which home equity financing method is best for you. A home equity line of credit allows you to borrow what you need when you need it. A home equity loan on the other hand, can be helpful when you need a large up-front sum to cover a more in-depth remodel. Once you can finance the remodel, the next step is deciding what type of renovation project is best for you.

  • Skim the surface: If you’re pleased with the way that your bathroom is set up, but think it needs a little something extra, small tweaks to your current decor could do the trick. Consider updated fixtures, paint, artwork and decorative tile to spruce things up a bit.
  • Bring out the blueprints: If the structural elements including insulation, foundation, plumbing and support beams are sound, consider upgrading your current cabinetry, countertops and accessories.
  • Start from scratch: If you’re interested in a whole new look and set up, consider tearing out the entire bathroom and completely start over. Add a bathtub or change the size of your shower, retile the floor or expand it into a master bath. While this is the most expensive route, it may increase your home appraisal value, making this renovation pay for itself in the end.

How to get started on your bathroom remodeling project

Check out home improvement books and magazines at the library or read home renovation blogs online to find your inspiration. Depending on your need, you may be able to keep cost to a minimum and do the project yourself, or you may need to call in professionals. Either way, there are home equity financing options available for you.