The Forecast for Today – Partly Cloudy

Yep, I’m officially sick now too. My head hurts so I don’t feel like looking at numbers to discuss plans for our 2007 spending. As soon as I can think a little better I will. But, there have been some interesting updates to quickly report:

1.) My employer has decided to MATCH the 401(k) 50% up to 6% of pay. While happy about the change, I am not happy about switching from what they originally had stated and now I only have a few days to make a decision. The employer match changes EVERYTHING.

2.) My health insurance does have a grace period, so we’ll be fine with the cash crunch. I’ll pay the bill a little late.

3.) Bad news…my son will not be added to our health insurance policy until March 1. He lost his state-sponsored insurance at the end of 2006. I’m wondering if I should get some short-term health insurance for him in the meantime. Kids are kids, after all.

4.) We spent a bit of money with my son being sick. I sent my husband out to get a Vicks Vaporizor, rent a few videos (I originally told him to buy one but he stopped me) and lots of fruit. I didn’t even think about our bank account or how much things would come to. I didn’t care. All I want is my little guy feeling better.

5.) I’m happy to report that he is feeling better today. His fever broke and his coughing has subsided. He’s home from school again today, but I’m sure he’ll be able to go back tomorrow. Since his sickness only lasted a couple days, I’m hoping mine will too.

Posted by Tricia on January 17, 2007 at 9:57 AM in Misc | 9 Comments »
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NCN responded:
Posted: January 17th, 2007 at 10:58 am
Take the match! When will you ever get an automatic 50% gain on your contributions? Do it, even if slows down your debt repayment. For every dollar you contribute, you get 50 cents. That’s a great, great, great deal…
NCN
MOMM responded:
Posted: January 17th, 2007 at 12:11 pm
I say definitely take the match!

We don’t get a match and thus stopped contributing to use that money toward debt repayment. We are going to start up again in a few months – after funding our Roth IRA’s. We have a lot to learn about saving and investing as our debt (and our lifestyle) caused us to not save that much and pick poor investment strategies.

So yes, take the match.
Jen responded:
Posted: January 17th, 2007 at 12:39 pm
Ditto on taking the match!!! It’s free money! If you’re still worried about cash flow, then contribute only 6%. If your monthly contribution is $100, then that means you get an extra $50… for nothing! Plus, your taxable income is then reduced $100 each month, which means you don’t get taxed on $1200 for the year.
EMF responded:
Posted: January 17th, 2007 at 1:24 pm
One factor you should consider is vesting. Typically, the employer contribution is not vested until you’ve worked with the company for a few years.

IIRC correctly, the company can choose one of two schemes
either (1) 100% vested if you’ve worked there 5 years
or (2) gradual vesting 20% per year starting with 3 years service leading to 100% vesting with 7 years service.
Check the Summary Plan Description to find out which one. Also check to see if you’re vested earlier if involuntarily separated before that.

If you have a reasonable expectation of having the employer match vested, it’s kind of hard to walk away from free money. A 6% contribution would not be a 6% reduction in take home pay, but I imagine you’ll be looking at the numbers Vs your situation closely.
Jen responded:
Posted: January 17th, 2007 at 4:54 pm
EMF: You raise a good point about vesting that Tricia should consider. Also, the vesting schemes you listed aren’t the only ones. With my current employer I was fully vested in the company match after 1 year of employment.

However, another way to look at it is: Do you really want to turn down a match just because you might not be vested in it? If you don’t contribute, and you end up working for them long enough to have been vested, then you lost the opportunity to have that extra money. If you end up leaving the company before you’re vested, then you haven’t really lost anything since it was a gimme anyway. I made that mistake with an employer – I didn’t like that I had to wait 3 years to be vested. Guess what happened? I ended up working for them for 3 years, but I didn’t contribute to the 401(k) because I wasn’t sure I’d be there for three years.
T responded:
Posted: January 18th, 2007 at 7:38 am
Thank you everyone for commenting and giving me more to think about. I’ve made a decision (well, I have to – the deadline is today to decide!) and I will be blogging about it shortly.
Matt responded:
Posted: January 18th, 2007 at 10:17 am
I hope you’re feeling better soon! being sick sucks
Oh My…It’s March, We Made It! : Blogging Away Debt responded:
Posted: March 2nd, 2007 at 10:29 pm
[...] I couldn’t do that. The earliest I could add him to our plan was March. I had thought about getting some short term health insurance for him because he is 5 years old and [...]
raj responded:
Posted: August 1st, 2008 at 6:58 pm
check your PAL score.

http://www.decisioncare.org/general/know-your-personalized-astro-alert-pal-score/