Families Benefit from Tax Plan

I was playing around with some numbers on the new drafted tax forms from the IRS for this coming tax season of 2018.  It is pretty amazing how great Trump's new tax plan from last year is for families.  It is especially great for families with more than 3 kids but those with 2 kids will also find great savings.

For the typical family of 4, that includes 2 children, you actually will pay NO federal tax at all until your household income reaches $60K.  Then, for every $5K after that, you will pay on average $600 or 12% as shown below.  However, if you go into the next tax bracket past $78,950, your tax increases to 22%.

2-dependent child tax credit households making:

$60,000 and below = NO federal income tax owed
$65,000 = $600
$70,000 = $1200
$75,000 = $1800

If you have a 3rd child, you may even qualify for an additional child tax credit, which means the government will actually PAY you for having that child despite you not paying a dime in federal income tax.  Some may say that isn't fair but it is!  By having children, you are helping the government by adding another taxpayer.  It is great the government is finally giving back - oh, thanks to Marco Rubio who added this child tax credit increase at the last minute before the bill passed.

It isn't all roses, even though you may not pay federal income tax, you still must pay about 13% in other taxes:

• Social Security tax - 6.2% of income
• Medicare tax - 1.45% of income
• State Income Tax - Ohio's is 2.6% on most families
• City Income Tax - if you live in a state that taxes the city you work in, you pay up to 2.5% of income
• School Tax - again, if you live in a district that taxes you, you pay average of 1% of income tax

So for a family making close to $60K - you may pay upwards of $7,800 in other income taxes.


*Averages are based upon a typical one income earner, married filing jointly, with W2 wages only and no contributions to HSA, retirement, etc.  Calculation short list: Income - $24,000 standard deduction = taxable income; tax - child tax credits of $4,000 for 2 children = 0 tax owed

How to Evaluate Health Insurance Plans

As a homemaker you manage your home, and I believe this includes the budgeting and researching for what is needed, such as health insurance.  I wanted to help by showing you how I evaluate which plan overall would not only save the most, but in my opinion, be well worth the "risk."

Let's take 4 plans offered by a large employer.  You have the highest plan known as the PPO generally, which has the highest premium but lowest deductible and offers copays along with coinsurance.  Next, is the step-down plan, which costs a bit less in premiums but the deductible is higher.  Then, there is usually a third plan that is the lowest premium but highest deductible.  However, since Obamacare, a lot of employers have started offering high-deductible plans, which is the 4th one I'm going to share.  This plan has a very low premium but a very high deductible.

1. PPO Plan - $9,300/yr premium, $775/month; $2,000 deductible with copays ($30 doctor visit, etc.) and 20% coinsurance.  Yearly family maximum is $12,500.
2. Plan #2 - $6,200/yr premium, $517/month; $4,000 deductible with 20% coinsurance.  Yearly family maximum is $7,000.
3. Plan #3 - $4600/yr premium, $383/month; $6,000 deductible with 30% coinsurance.  Yearly maximum is $9,000
4. HDD Plan - $3,000/yr premium, $250/month; $10,000 deductible with 40% coinsurance.  Yearly family maximum is $12,500.

Let's consider a medical emergency happens of $10,000 total for the year for this family.  Here is what they will pay with each plan.  I include the premiums in the total cost but that is exactly HOW you should calculate your costs - what is it really costing you all year?

1. PPO Plan: $9,300 premium + $3,600 ($2,000 deductible + $1,600 (20% of $8,000)) = $12,900
2. Plan #2:  $6,200 premium + $6,200 ($4,000 deductible + $1,200 (20% of $6,000)) = $11,400
3. Plan #3: $4,600 premium + $7,200 ($6,000 deductible + $1,200 (30% of 4,000)) = $11,800
4. HDD Plan: $3,000 premium + $10K ($10,000 deductible +$0 (Nothing covered))    = $13,000

You can see the cheapest plan for a $10K emergency is Plan #2.  But we aren't done evaluating yet!  Most employers will give you money for medical bills in your HSA and it varies depending upon what plan you go with.  The HDD plan gets the MOST money from your employer of any other plan as you will see here:

1. PPO Plan: $12,900 yearly cost - NO employer HSA donation = $12,900
2. Plan #2: $11,400 yearly cost - $400 Employer HSA donation = $11,000
3. Plan #3: $11,800 yearly cost - $600 Employer HSA donation = $11,200
4. HDD Plan: $13,000 yearly cost - $1,000 Employer HSA donation = $12,000

Those are your true numbers to compare!  If you expect a $10,000 emergency, then go with the cheapest (Plan #2), however if you don't know what you will spend or if you will spend any at all, go with the HDD Plan as it is by far worth the risk.  It won't cost too much more than the other plans in the event of $10,000 medical emergency and it will save you thousands of dollars if you don't end up having any medical costs because you are paying a low premium!!


Here is another comparison - take the yearly premium plus the family maximum for each to see worst-case scenarios:

1. PPO Plan - $9,300 premium + $12,500 maximum = $21,800
2. Plan #2 - $6,200 premium + $7,000 maximum - $400 HSA donation = $12,800
3. Plan #3 - $4,600 premium + $9,000 maximum - $600 HSA donation = $13,000
4. HDD Plan - $3,000 premium + $12,500 maximum - $1,000 HSA donation = $14,500

Clearly, the PPO plan is a joke and takes most of your money, yet it is the most commonly chosen plan - go figure!  Plan #2, is your best worst-case scenario plan if you know surgery or something is coming up.

Take Care of Your 4 Walls

If you have listened to Dave Ramsey for any amount of time, you have heard about the 4 walls.  He recommends you take care of your 4 walls before anything else - always making sure you have your 4 walls!  What are the 4 walls?

1. Food 
2. Shelter
3. Transportation
4. Clothing

I had always put food and clothing on the back burner in place of other things because those were usually the areas that we could save in.  However, after listening to people's stories and those who didn't tend to these things FIRST, I have changed my thoughts on it.  I wanted to go into detail about each to help you all in case you haven't heard of this before.


1.  Food - this includes enough food for your entire family to live on each month.  I believe it also includes things like toilet paper, soap, etc.  The basics - not extras or luxuries.

2.  Shelter - this includes your housing and utilities.   If you have a mortgage, it also includes your property taxes and homeowner's insurance.  If you don't own a home, it includes rent and renter's insurance.  Then, it also includes electric/gas, water/sewer and garbage and non-luxury phone.

3.  Transportation - This is includes gas, car insurance and maintenance of your vehicle.

4.  Clothing - includes basic clothing needs, such as: clothing, shoes, socks, etc.


Dave Ramsey says to make sure you the 4 walls are funded and paid BEFORE paying anything else, such as credit cards or other debts or non-basic expenses.

Just Making It Budget for Family of 4

Times are getting hard for a lot of "former" middle class families, now considered lower class, despite the economy going so well.  I've been reading it and hearing it in various places.  I'm talking about families that are living on one income already without luxuries.  Incomes aren't going up for a lot, though the prices of everything is, especially health care.

I decided to do a no-frills, no government assistance, just-make-it budget for a typical family of 4 on one income to see just what the base salary needs to be.  This family has no debt but the mortgage possibly.  They also have no life insurance, though some say you can get it for $10 a month, which could be easily added in.  

Tithe - $260
Offerings - $50
Housing (rent or mortgage/prop taxes/HO insurance) - $1000
Car Maintenance/Repair Fund - $90
Car Insurance - $50
Gasoline - $150
Home phone - FREE (Google Voice with Obihai)
Cell phone - $25 (Google Project Fi)
Additional Cell phone line - $15
Electric/Gas - $175
Water/Sewer - $30
Garbage - $30
Internet - $50
Food - $350
Necessity items - $50
Clothing - $30

Total:  $2,355/mo - Higher to cover taxes, so $15 an hour needed; $31,200/yr, $2,600/mo

A good wage for a family really needs to be at $15 an hour and no less to just live.  I didn't include health insurance because a lot are already going without.  Families that live at this level, would need to get government assistance for medical if they want to be covered, as it has become too outrageous for almost anyone to afford.

This budget includes no entertainment/fun money, eating out or other things that most of us do.  I suppose you could find a very cheap place to live to lower the housing and provide extra money that way but the norm around the US is about $1K for something decent - whether that is mortgage/taxes/insurance for a home or rent costs.

After seeing this written out, you can see what a lot of people are facing right now.  There are those that will cut out the tithe/offering but they will soon find out that you can't rob God and expect good things to come!  God has never failed in the 19 years I've paid tithe and offerings and never withheld!  It is HIS money to begin with - he lets you have 90%, please don't think your thoughts are higher than what God has established with our finances.

Update - Food Budget and Meals

Food Budget
It has been a very long time since I've shared about our food budget and meal plans.  We spend more money on food here in Ohio than we did in Washington and that isn't due to prices, that is due to my daughter eating a ton of food and my son eating almost as much!  Our current food budget is $350 a month and I would really like to get it below $300 but it works for right now.

We do most of our shopping at Aldi.  We didn't have an Aldi in Washington but I had heard about it over the years from others on the East Coast.  We have several in our area of Ohio and not only are the prices very cheap, but the products are mostly natural, without additives, etc.  I also get a few items at Kroger and a handful of items, like toiletries, at Walmart and Amazon.  I shop once a week and I no longer freezer cook, as I don't believe it is healthy anymore.  My Amazon and Walmart orders are shipped, but once in a while I may actually go into Walmart, but I try and stay away because I will find too much at Walmart that we don't really need.

I pay 98 cents a gallon for milk - yep, it is nice and cheap here!  Eggs are 48 cents a dozen and cheese is cheap too.  Potatoes are more expensive than what we paid in Washington, as are apples, but everything else is cheaper here in Ohio.

Meals
I've been using different meals and trying new ones.  I found several that we like from a mom of 8 kids, that only spends $350 for her family (WOWZER!).  Her meals are delicious so far, you can find a lot on her blog.  My favorites from her are the puffed pancake (I add 1/2t cinnamon, tastes like french toast but SO easy to make!!) and chicken stew.

Some of our recent meals:

Macaroni & Cheese with Hot Dog slices - 5qt dish full lasts 2 days
Tacos - I add a can of refried beans to stretch them
Homemade pizza
Chicken Stew
Beans & Rice in Instapot
Baked "Fried" chicken
Cheeseburger Helper
Manicotti
Kielbasa, Potato and Green Beans
Red Beans & Rice with Sausage
Turkey skillet with Green Beans

Our breakfast, lunches and snacks consist of:

Oatmeal
Eggs or egg sandwiches
Puffed Pancakes
Fruit & veggies/hummus
Boiled eggs
Burritos
Chips & Salsa
Trail Mix
PBJ
Yogurt & Granola
Cereal

Home Ownership is More Than a Mortgage!

We have been homeowners for 1 1/2 years now and I'm learning all the time!  Having rented since I was 17 years old (that's 19 years of renting!), I would have to say that it IS far better to have a home than rent.  You look at things differently and you treat things differently because it is YOURS.  No, it isn't necessarily "yours" until you pay the mortgage off but for this post, I will say "owning" a home.  When you own your home, you have to fix things and that is new for us.  We were so used to someone else taking care of all of that when we rented.  I had no idea how much things cost or what goes in to maintaining a home and property.

We had a list of things that we needed to fix when we bought the home and well, we still have that list.  I really hope we can get it all completed this summer and most of it done ourselves.  However, there a few things we're not willing to kill our backs over, so we are going to pay for those to be done.  This is things like pulling up entire hedges - I'm NOT a hedge/plant person!  I like things very simple and clean and low-maintenance.

The other things we need fixed or replaced are things like:  shower re-caulking, new sink faucet in master bathroom, door seals replaced, sliding door track fixed, holes in siding either patched or replaced, french drain installed on side of house that has standing water next to foundation when it rains, repairing patio concrete cracks, power-washing concrete walkways/patio, etc.  You get the idea - a lot of things but not huge expenses, though the french drain might end up costing a bit.  I really would love to do DIY posts on these as we go through our checklist and get them done.

When you plan on buying a home, don't just plan on money for the mortgage.  Plan on money for insurance, property taxes, a home warranty (American Home Shield is best), maintenance and repairs and even saving for big-ticket expenses like a roof.  If you plan for those things, you will find that owning a home is a joy, instead of a nightmare.  Also, keep up on the maintenance and fix things as they happen.  That way you never have a long list of things to do!

Our home value has gone up $25,000 in just 1 1/2 years!  We already got a letter saying they have a buyer for our home if we want to sell.  Our neighbor sold their house before they even listed it.  The price of homes are some of the highest, if not the highest, they have ever been.  One thing a lot of people don't think about when they buy a home, is when the value goes up, so does the property taxes.  Ours have risen dramatically and we didn't plan for that, so make sure you consider that the property tax is variable from year-to-year.

To summarize, here is a list of what to consider when buying a home, besides the mortgage: 

• Property Taxes - expect they will go up yearly
• Homeowner's Insurance
• Home Warranty - covers appliances, HVAC, plumbing, electric, etc.
• Maintenance costs
• Repairs
• Big-ticket Items Savings