Coffee heat rising

Stimulus program makes COBRA affordable

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Affording COBRA, the plan that allows workers to extend their health insurance benefits as much as 18 months after a job loss, is a stretch for most of us and impossible for many. After I’m canned, for example, the cost of my EPO will go from $13 a month to $485—and that’s to insure just one person!

We’ve known that the government’s stimulus plan will pick up a chunk of this for a period of nine months, but the university’s HR department refuses to provide the details. Thanks to the miracle of the Internet, though, an enterprising soon-to-be-bag lady can dig up the story on her own.

It looks like The Kid and I will fall into the eligible category. You have to meet these guidelines:
-Canned between September 1, 2008 and December 31, 2009
-Laid off or involuntarily let go (if you walked or you were canned for misconduct, you don’t qualify)
-Subscribed toyour employer’s health-care plan before you lost your job
-Had an adjusted gross income of less than $125,000 if you’re single or $250,000 if you’re married and file jointly (the subsidy phases out at higher rates as you approach $145,000/$290,000)

If you can make the cut, you get a 65% reduction in COBRA for nine months. For me, that means premiums of $169.75 a month, instead of the present $485. Since I’ve already set aside the money to cover the five months between layoff day and my 65th birthday (Medicare day), that would put a lot more in the proposed survival pool: about $1,575!

Don’t know how this will work for The Kid. She would have to insure herself and her child—until her recent divorce, they were on her (now ex-)husband’s insurance. He just lost his job. The cost of insuring more than one person on the university’s plans is pretty high, and she may not be able to afford it on her grandiose $16,000 salary.

If you’re about to be laid off or if you were laid off after last August and turned down COBRA because you couldn’t afford it, look into this. The government is giving people who rejected COBRA a second chance to sign up. They say it will take most employers a couple of months to send out letters to eligible ex-employees. Obviously, though, if you’ve moved and your employer doesn’t have your current address (is there mail delivery under the Seventh Avenue Overpass?), you’ll need to be proactive.

Layoff: Getting by in unwilling retirement

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There just may be a way to survive post-layoff with little risk and not too much fear and loathing. A drawdown of 4 percent from retirement savings plus early Social Security plus a modest hand-to-mouth income would support my current lifestyle. Here’s how:

If I move my plan to create a large cash-flow pool from savings in 2010 forward to, say, today, I could pay for the Investment House mortgage out of cash flow + non-tax-deferred savings (thereby preserving tax-deferred savings, if the market improves over the rest of 2009). Assuming I pick up two junior-college classes in the fall and thereafter engineer three a semester, I could continue to carry the mortgage with no problem whatsoever. In fact, not only can I continue to pay the mortgage and live in my wonted style, at the end of 2010 I could be some $3,200 ahead of the game.

And that’s not counting revenues from freelancing and not counting whatever little bit Funny about Money might generate once it’s monetized. It also is figuring the highest monthly expenses year-round: utility costs represent summer expenses, twice the winter rates.

This is a function of longstanding frugality. Because I put about $400 a month into casual savings, plus all the after-tax revenues from freelancing, a fair amount of cash has gathered in the credit union’s money market account. So…next time someone tells you frugality is bad for your psyche and bad for the economy, tell them to think again.

Now, I allow as to how I have indeed said I’d rather eat worms than teach one more section of freshman comp. However, when you come right down to it, we’re talking about a grand total of eight months’ labor a year. Around here, you get about a month off over winter break and three months over the summer.

To make a long spreadsheet short, if I gather all the savings now in the credit union and add the coming federal tax refund, I could “grubstake” a “pool” account with $11,448. By December 31, after paying my $800/month share of the mortgage bill, that base amount will have grown to $14,788, assuming I take on two community college courses in the fall.

The point of this “grubstake” or “cushion” would be to keep from overdrawing my checking account in months when expenses outrun revenues.

So, in January, when I have to start drawing Social Security and 4 percent of what little remains of my retirement savings, I would start with $14,788 plus $1,162 of Social Security and $1,333 of investment proceeds, plus net monthly pay from the community colleges, which is about $500 per course.

If I teach two sections, at the end of 2010 I end up $1,276 in the hole.

But three sections produce $3201 worth of black ink.

The fly in the proverbial ointment, however, is income taxes. While the $500/community college course represents net pay, the amounts for Social Security and investment income are gross figures. Assuming just 18 percent (an optimistic guess if ever there was one), taxes on investments and Social Security combined would come to around $5,400. So the truth is, the reward for teaching three courses could be a $2,190 annual deficit. I’d probably have to make around $4,000 in freelance income to pay for that. Impossible to tell, though: taxation in this country is so frigging complicated there’s no way an ordinary taxpayer can make any such projection without professional help.

Well, the taxes come under the heading of “tomorrow’s another day.” Money happens: I’ll find a way to cover it.

Spending big before the layoff

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In a deliciously Kafkaesque moment,yesterday noon I was fêted for my fifteen-year longevity at Our Beloved Employer: lunch out; a fine piece of paper with maroon and gold print on it, suitable for framing; and another cheap maroon-and-gold pin with a chip of a semiprecious stone in it.

LOL! I could hock my whole collection of cheap GDU pins for enough to buy about an ounce of Starbuck’s coffee.

What the heck. I ordered the most expensive meal on the menu: three sea scallops and a spinach salad.
w. 0. 0. t.

Next door to the overpriced restaurant, however, is an overpriced shoe store, the one whose clutches I evaded when Frugal Scholar clued me to Footprints. That outfit carries some very fine purses, none of which I have found for sale on the Web. Of late, I’ve been carrying a canvas shopping bagas a purse(a nice canvas shopping bag…). It’s getting a bit tatty. I really needed a new purse, all my old ones having surpassed the shopping bag’s state of tattiness. Realizing that after I’m laid off, a plasticene-leather tote from Target will be about the best I can afford, I ran in there and grabbed a mighty fine piece of style. Two hundred fifty buckolas! But I’ve got it in savings, set aside for exactly this sort of indulgence. And since the budget is $425 to the good, anyway, I can afford it out of cash flow.

Having that little gem sitting on the floor next to me was a bit of a comfort as I was pretending to be polite while sandwiched between Her Deanship and two of the institution’s most ruthless vice-presidents.

This is one of about a half-dozen items that need to get done or purchased while I still have some money. Videlicet:
-New close-up glasses
-Composter
-Security door for back entrance (or at least a decent screen door)
-Solid-core door for office, with strong deadbolt
-Painting the Investment House
-Resuscitating the yard at the Investment House

Glasses:In August we’ll have an open enrollment. At that time I could sign up for the university’s vision plan (assuming it’s still offered). If I delay getting glasses till fall, this would allow me to pick up a cheap pair before I’m canned in December. They use one of those nationwide chains of optical stores, which has a bad reputation. In Arizona you’re prohibited from buying a pair of glasses without getting an eye exam, which is not covered by health insurance and which I can’t afford just now (read, “because I highly resent that!”). All I need is a back-up pair, so I suppose they don’t have to be the best in the world.

Composter: I dearly miss the wonderful composter drum La Bethulia gave me. Smith & Hawkin has a similar bin, only it’s on wheels. That would be convenient. The one drawback to the deceased was that getting the compost out and hauling it across the yard to the various gardens and gigantic pots could be a chore. Problem: Smith & Hawkin wants more than $200 for this wonder.

Security: The kitchen door is the most vulnerable entrance to the house. To break in, all you need to do is tap out a glass pane, reach in, and unlock the door. The vinyl screen door is a flimsy piece of junk that won’t even keep out the flies. The locksmith suggested that if you use a room as an office, you can keep all your computer gear in there plus a safe with other valuables, and then put a deadbolt on that room’s door. Every time you leave the house, lock the door. Since the Mac is the only thing I own of any real value, that strikes me as a good idea. The interior door, however, is an airy thing that I could punch through myself with one swift kick, and so it will have to be replaced with a sturdier model.

Paint: I probably could paint part of the investment house myself. But I don’t have the physical strength to do the eaves and back patio. Greg the Handyman wants $1,500 to do the job, about $600 more than Bila the Bosnian Painter’s bid. I’m thinking we need to call Bila and get that done while we can afford it.

Yard: With Gerardo’s help, I probably could do a fair amount of upgrade to the Investment House’s wrecked landscaping myself. Gerardo would need to regrade the driveway and lay new gravel. Ideally, we should jackhammer up the pathetic walkway, but I think I can pretty that up simply by laying a bed of river rock next to it. For not very much, Gerardo would till and seed the front lawn, a major improvement. I think some blue fescue or something along those lines would grow under the carob tree, and a second tree strategically planted near the unhappy walkway would cast enough shade on the front window to save a few air-conditioning dollars. In the back, I intend to build another vegetable garden for my use, since I’ve run out of growing space at my own house. As long as I’m gardening back there, I might as well build a couple of brick-on-sand or flag-on-sand patios, too.

Taken together, these will add up to some bucks. But if I string them out over the next few months, I should be able to afford most of it without having to raid savings. Especially if, as hoped, Scottsdale and Paradise Valley community colleges hire me and max out the number of courses I can teach for the district next fall: the net of about five grand will go directly into savings, easing the need for me to pinch pennies between now and the New Year’s Eve layoff.

Stockpiling scheme pays off

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w00t! My plan to stockpile food, thereby limiting trips to grocery and big-box stores, is already paying for itself. Ten days into the current budget cycle, I’m $425 in the black (!!!!!). Last week I spent a grand total of $55 on a few catch-up items. This week, I’ve spent $120, of which $13 went to gasoline. About $40 went to food; the rest covered OTC meds and household goods. There’s plenty of food in the house, and fresh veggies thriving in the garden.

Normally, the first week of a budget cycle would go right straight into the red. In the pre-stockpiling regime, I would regularly run out of food (and everything else) near the end of the month. So, in the first week of each cycle I would have to make a gigantic Costco/Safeway/Target run, because the cupboard would be bare. Last month, before the stockpiling strategy kicked in, I was $75 in the hole against my first week’s microbudget; the preceding month’s first week, 36 cents in the black; in December’s, $270 in the red.

Now what I’m doing is keeping a running record of things that are starting to run low. Because there’s no hurry to restock, I can wait until these items come on sale, or until I have time to drive across the city to a cheaper emporium.

A fresh set of grocery-store and big-box ads came in the mail yesterday evening. Taking advantage of the sales, I expect, will allow me to expand on the hoard without having to devote cash in savings accounts to the project.

Goal: Have six months’ worth of food and household supplies in the house by Layoff Day, December 31, 2009.

Freaking God’s miracle!

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OMG. So my wonderful, talented, and incredibly competent associate editor and I drag over to the Executioner’s office this afternoon. I’m thinking maybe I should’ve gotten a wooden cart to haul her to the guillotine. We could have crowds of right-wing crazies hollering their approbation, and maybe a legislator knitting, knitting, knitting…

We’re sitting there in the waiting area waiting (what else?) for the hatchetwoman to see us. One employee walks past, recognizes us, and barely stops herself from weeping (surely her cat has died?). Another strolls by and looks grim. The word is out, no freaking doubt of it.

We’re called in, and we both think here. it. comes.

The Kid has said that if she gets laid off in June, just as she comes out of a divorce that has led to her ex- losing his job (and her and her child’s health insurance) because of a conviction for harassing and stalking her, she is screwed, screwed, ge-screwed. Her Deanship has told me The Kid is to exit on June 30. I’ve bitten my tongue so hard my ears hurt.

The Executioner starts by handing over The Kid’s notice to her.

And then says “Keep reading past the first paragraph. Don’t panic before you read the rest of it.”

Un. Freaking. Believable. They’re extending her to the end of the year. They’re pretending she’s an exempt service professional (something The Kid is fully, totally, grandly uninformed about) and saying they will renew her nonexistent “contract” to December 31.

The Kid, who has a lot more moxie than I do, eyes the Executioner and says, “Well, are you hiring me back at my current salary?”

This is a question I have been afraid to ask.

“Why, yes,” says E. “You both will continue at your current pay, benefits, and retirement.”

I express my wish to E. that she express our endless gratitude to Her Deanship for this little coup, which must have taken some major machination. She darts out of the office and forthwith returns with Deanship herself, attired in an outfit that looks like it probably cost more than my net worth.

Emboldened, I ask what about our lead research assistant, the one who handles the single most difficult academic journal on the planet and shepherds the darned thing through from beginining to end?

The Kid and I brace, microsecondwise, for the worst.

“Oh, yes. Weren’t you told?”

“Uhmmm…no…”

She’s smiling, so I figure there’s a fifty-fifty chance good news is on its way.

“We’re keeping her on through the fall semester, too.”

Then I say, This Kid needs to get health insurance. She just divorced and her husband just lost his job.

E. says, No problem. Go on over to HR and tell them you’ve had a change of life circumstances, and you can sign up for any of the health insurance programs.

Thank you, Goddess! And trust me, nonbelievers: goddesses have nothing in common with deans.

The Kid and I staggered out of the Executioner’s chamber and headed for the fanciest restaurant in lovely downtown Tempe, where we raised a glass of expensive white wine to the event that we will be canned, but not until New Year’s Eve.

Damnatiõ! Has anyone else out there actually celebrated the sheer unmitigated joy of a layoff?

Our story to date:
Ax Falls, but…uhm…Bounces
Résumés on the Wind
Staying Solvent in Penury
Perfect Retirement Day
How IT Puts Apps into Job Applications
Is This Worse than We Think, Even?
Income Stream Sighted

Microbudgeting: Keep costs under control with a baby-steps budget

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I’ve come up with a name for the week-to-week budgeting plan that I invented to keep discretionary costs (if you call food “discretionary”) under control: microbudgeting.

As readers who follow Funny know, I set aside $840 a month to cover recurring, nonoptional bills: utilities, once-a-month yard care, insurance. These represent the highest possible figures for the utility bills, which occur in three summer months here.

Then I set aside $1,200 a month to pay all other living expenses,including food, household goods, yard goods, gasoline, clothing, repair and maintenance on the house and car, vet bills, insurance copays, and on and on and on. This amount represents the microbudget: I divide the $1200 into four $300 “chunks” roughly corresponding to weeks, and coordinate those with the American Express budget cycle. All of these costs are charged on AMEX, and the bill is paid in full at the end of each cycle.

Some weeks, I’ll run in the red. But if I manage to stay in the black in one or two weeks, it usually evens out.

Here’s how this looked last month:

Week by week
Week by week
Whole month
Whole month

As you can see, even though even though I ran in the red three weeks out of four, over the course of the month I just broke even. Costs were high last month because of the new stockpiling scheme: I’d just bought a freezer and was stuffing it with one to three months’ worth of food. I’d planned to take money out of savings to do this, but as you can see, that wasn’t necessary.

Because I can spot, week-to-week, when I’m running in the red, I know when to cut back. Didn’t do the greatest job of that in February, but things are looking better in March. So far.

Microbudgeting turns out to be an effective tool for helping yourself to stay on budget. Except for extraordinary expenses that needed to be paid out of emergency savings anyway, the week-to-week strategy for staying on budget has worked to keep spending under control pretty well. It breaks a longer period, during which you might be tempted to overspend on this or that activity or impulse buy, into smaller pieces that give you an opportunity to climb out of the red without feeling like you have to pinch pennies the entire. grinding. month. It’s a lot easier to economize for one week than for two, three, or (if you’ve overspent early in the budget cycle) four weeks. Once you’ve got yourself back in the black, you feel a lot more confident that you’re coping.

Notice that I carry forward the red ink into the following week. This prevents “cheating” by pretending to start over with the full amount budgeted for that week, despite having spent more than desired the previous week. I ended up $11.13 to the good at the end of the month, because even though I overspent in three weeks out of four, I managed to stay enough in the black in week 2 to cover the excess spending.

Normally I try to stay in the black at least three weeks out of four (ideally, four weeks out of four!). February was stressed because of the food stockpiling, and because I chose to pay for it out of cash flow instead out out of savings. Had I taken some money out of savings to cover the hoarding scheme, I would have ended deeper in the black, and probably would have stayed in the black at least one extra week.

This scheme requires some OCD tendencies: it demands that you hang onto every receipt and enter it in a spreadsheet or hard-copy account book. But I don’t find this onerous. I stick the receipts in my wallet and then sit down and enter them about once a week. It takes maybe 10 minutes a week to accomplish.

To build habits that keep you in the black without leaving you feeling blue, it’s well worth the time!