Thursday, November 12, 2009

Money Tricks

Money Tricks:
The general consensus among most parents, but especially sped parents, is that our kid’s medical bills are astronomical. I’m guessing most of us are on a payment plan with the hospitals. That’s our life. Plain and simple. I’m here to tell you that while our money may be counted for every penny, there are ways for you to set some money aside for yourself. Yes, I dared say it. Money just for you….not your children. Here’s a few tricks just for you…..

Did you know you can claim some medical expenses on your taxes? You will need to use an accountant who knows what they are doing with this particular topic! Fact is SPED kids have a lot of medical bills and a lot of extra expenses that you can’t claim on your taxes but that make life livable (like Sami’s toilet platform, clothes that fit, organic food). That’s where the accountant can help you sort through. The only time we were able to use the medical tax deduction was when we built our house. It was very tricky because we had to itemize each special expense compared to a normal house building expense (example: a normal door was $88 and ours were $108 because they were wider – we could use the $20 difference in our figures). Check with your accountant, but as I understand it, anything surpassing 7.5% of your salary spent for out of pocket medical stuff could be used as a tax credit type thingy (hey, I’m not an accountant). So, if you make $50,000, you’d have to spend more than $3750 in out of pocket expenses. Every dollar over the $3750 could be counted – not the first $3750. Check out the IRS website for specifics at . It’s worth it if you are really racking up the hospital visits and living accommodations. Even your mileage counts.

And speaking of IRS regulations: A 401(k), 403(b), and 457 are all retirement plans you can contribute to through payroll deductions (ingeniously named after the codes). Each has limits to the deposit amounts and each has it’s own rules about how long you have to keep the money in the account (and penalties for early withdraws – it’s retirement money, not a savings account). The great thing about these plans is that they are automatically done in payroll so you aren’t writing checks with what’s left at the end of the month and the limits are much higher than personal IRA’s so you can really sock away some funds for yourself! And if you are lucky, your employer will match some of your contributions for a little extra boost.

Knowledge is Power:
For each of these plans, you can choose Mutual Funds or Annuities to invest in. Both are just collections of stocks and bonds in nice little packages.
Stocks = pieces of ownership in a company, higher risk
Bonds = basically IOU’s, low risk, low returns

I like to think of Mutual Funds as pizzas. You have stocks and bonds that are like the toppings all spread out so that everyone gets a little bit, and you are only buying a slice of the pizza. Lots of people can put in their $5 and get a slice too. It’s a way to diversify and obtain many different stocks without having to put all of your nest egg into just one company (Enron anyone?). Mutual Fund companies differ in their hands on approaches. Some let you do most of it, some have more involved advisors.

An Annuity is a contract with an insurance company where they will invest your money for you in the same stocks and bonds as Mutual Funds (some even have Mutual Funds under their Annuity umbrella). It’s not life insurance! It’s just them investing your money. Typically, annuities have more fees involved than straight Mutual Funds because they usually come with some kind of guarantee (for instance: they may guarantee you won’t lose your initial investment) and they are supposedly watching your money for you more than other companies.

With both Mutual Funds and Annuities, you will need to watch out for surrender fees!!! These are fees the company charges you if you decide to move your money before they are willing to give your money up. I’ve heard of some companies having up to seven years before you can freely take your money without penalty. This usually comes into effect if you aren’t happy with your “profit” returns and want to change companies. Again, these are retirement accounts and not savings or emergency accounts. It’s not money for your kid, it’s money for you!

In a general sense, 401(k)’s are for profit businesses, 403(b)’s are for non-profits (like charities and schools) and 457’s are for government employees (police, fire, schools, city government, etc…). Did you notice that schools are listed twice? They are the only people who qualify for two separate plans and they can double up on their retirement savings. Lord knows they deserve a huge retirement after teaching for 30 years!!! The 403(b) and 457 are NOT the state retirement pension plans - these are on top of the state plans - where you control the dollar amount and investment company.

Your age, number of years to retirement, and goals should determine what Mutual Funds or Annuities you invest in. If an advisor asks you first how much money you have, turn around and walk out! They should find out what your life is about and where you want to be first, so they can work backwards to find a plan for you. It’s all about you baby!

A Flex 125 Cafeteria Plan is a “money for today” plan rather than waiting for retirement. This plan allows you to put money away in a special account in order to pay for child/adult care or medical expenses that your insurance doesn’t take care of. I love the medical side of this plan for chiropractic appointments, orthodontic braces, Lasik eye surgery, contacts, mileage to and from hospitals, co-pays, deductibles, prescriptions, Motrin, those great heating pads for your back, just all kinds of things for anyone living in your house that is on the same tax return (not just the employee but everyone)!! Think of it this way = if your local drug store told you that you’d be able to get 25% off most everything in their store if you had a coupon, you’d do it in a heartbeat. With the Flex Plan, the employer’s payroll department puts the money in the Flex account, then after you pick up your items from the drug store or visit the doctor, you turn in your receipt to your employer and they reimburse you.

The child/adult care portion works the same way. Get a receipt from your care provider and turn it in for reimbursement. You are already paying for the daycare, so why not save 25% by just turning in a receipt. That’s a no brainer!
The only thing is that if you put in too much money and don’t spend it within the time frame, you lose it. So be careful how much money you designate. Just don’t let that little thing stop you from participating!

All of these plans (retirement and Flex) are pre-tax which means the money is pulled out of your paycheck before the government taxes are taken out, saving you around 27% (depending on your tax bracket). So, if your normal salary is $1000 and you put $70 into your 401K and $30 into your Flex, the government only sees $900 to tax you on instead of the original $1000.

Another cool thing is that many employers will match some of what you are contributing to your retirement plan and some will even put money into your Flex 125 or a HRA (Health Reimbursement Account – it’s like a Flex account but the employer is putting their own money in for you to use). That’s free money!!

These are fabulous plans! Remember all of those goals you’ve made? Wouldn’t the extra money you are saving here go a long way to bringing those goals to fruition? You are so worth it!!

Thursday, November 5, 2009

Spending Money


“If one asks for success and prepares for failure, he will get the situation he has prepared for.”
-Florence Scovel Shinn

I know, for some money is as exciting as an orgasm, and for others it’s about as fun as digging dirt from under your toe nails. It’s not the money that brings you happiness, but the lack of it sure is stressful. No matter your situation (single, married, one child, 8 foster kids) you need to be in control of your money….rather than it controlling you.

First on the agenda, check out your debt! Do you know where your money is going each month - to the penny? I’ll be honest, I hate penny pinching, but it needs to be done because therapy, wheelchairs and surgeries cost money and I hate debt more than I hate watching nickels. Keep a spending diary for 2 months and see where your money is going. “I don’t remember buying the kids books last week” is a phrase often heard in my house. (of course, with my lack of sleep I’m lucky I remember where I live most days). I should have bought Kleenex and Target stock.

Once you know where your money is going, work on getting your debt eliminated! Dave Ramsey and Suze Orman have great books! Dave’s is more Christian and couple based, and Suze’s latest book is straight talk just for women. Both are easy to understand and follow so you can pick pieces from each that are comfortable to you, as long as you are following a plan to move forward. Both have TV/radio shows you can listen to if you are short on reading time, but we moms who have used them think the books are worth it.
For those with a partner, you’ll need to have some money that is all your own, in your own name only. This means a bank account and credit card. Put your allowance in it, any gift money, and money you get from selling your own stuff (not his prized baseball cards, but YOUR stuff). This is where Dave and I don’t agree, but to each his own. I’m just being practical here and Suze hits it right on. The account doesn’t have to be kept a secret from your partner, but they shouldn’t have access to it either.

Which brings me to “allowance”. Everyone should have spending money of their own to piss away in any way they choose, no questions asked. And it shouldn’t depend on how much money you bring into the budget – as in who has the greater paycheck. Whether its $20 a week, or $20 a month, you need to have some fun money!! This is important to your independence, to visibly show your kids that responsible budgeting includes taking care of one’s self, and it brings some positive “yippee skippies” to your daily duties because you know, in the back of your mind, that you have money and therefore you have options. Put the hospital on a payment plan and carve out some fun money for yourself. Your mental and physical well being are top priority!!

If you need a bit more help (and who doesn’t?) you can get FREE financial planning from the Special Needs Planning Center. They work with parents of SPED kids all over the country, giving clients a nice 3-ring binder full of the essentials of legal and financial advice/accounts/crap to protect you and your kids. They are super at explaining everything in the binder without being snotty know-it-alls. And, if you really don’t want to know that stuff (me!), they’ll just take care of it for you, as their customer service is outstanding. Even if you don’t have SPED kids, you can use their services for a reasonable fee. Contact them at and to read their newsletters you can look at

And what about money for your kids if you aren’t around? Your death isn’t something you want to think about, but who will take care of your children and how will they do it (do they need a new wheelchair equipped van, or house, do they need to move closer to your child’s hospital, do they need to quit their job) are things you need to answer today! If it’s not legally taken care of, you’ve left your kids to the court system. (Did you know that in some states, if you adopt foster kids, then die, they go back to foster care rather than to your family unless you have the legal papers stating otherwise? Scary!)

Do you need a Special Needs Trust? What is your back up plan for getting your child health insurance if you aren’t employed? What if you are in an accident but don’t die? Who will take care of you and the younglings? These questions really suck ass big time, but if you love your kids you’ll be a grown up and face them with confidence.

A non-profit organization is now doing their part to help distribute this information to parents. The Gifted Learning Project has developed an educational DVD, Financial Planning for Special Needs, and has made it available to the public. The DVD was created to help parents gain a basic understanding in how planning for their child with special needs is different.

REMINDER: neither I, nor my friends, are worth suing if you don’t like Ramsey, Orman, The Gifted Learning Project, or the SNPC. We aren’t endorsing here!! You have a brain and can use your own judgment. There are probably some financial advisors and estate planners in your community if you’d rather meet face to face. You’ll just have to do some searching. Get recommendations from family and friends. There are financial planners at all of the investment companies who sell their company’s investment products. There are also some stand alone advisors who are brokers that can invest your money for you with many different companies. The important thing is that it gets done ASAP!!

I know the stock market tanked, and we aren’t in a trusting mood, but that doesn’t take away everything else that needs to be done legally. I personally love the guys at SNPC because, honestly, they take care of me and it’s something I can take off my plate and not worry about. Who can ask for more…..well a winning lottery ticket would be nice.