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As had been predicted, insurance rates for plans that are attached to the Affordable Care Act participants have gone up anywhere from 8% to 25% depending on which area of the country you live in. The premium for my plan is going up 10% come January.

Health Insurance
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There have been many articles in the news proclaiming that the ACA plans aren’t all that affordable. I’m here to try to allay some fears and point out some truths. I brought up a couple of truths earlier this year with this post on realities of the plan after 4 months and this post on signing up to begin with.

The first truth is that insurance plans almost always go up, no matter if it’s ACA associated or not. In California before ACA, some plans used to go up more than 50%, and that’s after insurance companies requested increases as high as 95%.

In this case there’s at least one extra reason why some plans have gone up. With it being the first year of offering the plans and trying to gain subscribers, it was more of a feeling out process to see how many people would sign up for the plans and whether estimated costs were at least close to what had been expected. There were a number of insurance companies that decided to get out of the program because they had few takers, and others that realized they couldn’t keep up with the demand, which was higher than the government had expected.

The second truth is that in many of the larger cities, the silver plan, which is the standard that all other plans are based on, is actually going down by average. Nashville is decreasing by 8.7%, which is the top discounter.

The third truth is that for people who got subsidies to help pay for their insurance coverage, higher premiums likely mean they’ll get bigger subsidies to help offset the higher costs. No idea on how much this could possibly be, and it seems likely that in areas where costs go down their subsidy would also go down. Whether this means more or less out of pocket… who knows yet.

The fourth truth is that by now, if your income has remained pretty much the same, you should be used to making the payment, so even with an increase it shouldn’t impact you all that much. It’s like working at a large employer that’s paying for a portion of your insurance, where even if they’re covering 80% of your premium there’s more coming out of your pocket for the next year. We always find a way to deal with it; same thing here.

The unknown is always more scary than the reality. This is how things occur; there’s nothing new about a premium increase. Once you accept that you’ll feel a lot better.
 

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When you feel like you can’t pay your bills, the pressure is enormous; yes, I’ve been there. Sometimes the pressure is so great that you don’t know what to do or where to start, so you don’t do anything. Trust me, that’s the worst thing you could ever do.

Bankruptcy
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Maybe you’re thinking about bankruptcy. This can be a way of starting over but bankruptcy of today isn’t like it used to be. You don’t always get everything taken care of; there are still some things you’re liable for, such as student loans and taxes. You also have to deal with that 7-year period, in some cases 10 years, where your life is pretty much on hold if you want to buy something but need credit to help you out.

Sometimes you just have to go that route. But there are many people who go that route way too quickly, and they don’t have to. Thus, I give you 5 things you should do or consider before going the bankruptcy route:

1. Know your expenses versus your liabilities. You’d think this one would be something everyone thinks about but it’s not. That’s because it involves doing something people hate to do, that’s thinking about their financial situation and potentially going on a budget. However, putting together all your liabilities, which means all the money you “have” to pay out on a monthly basis (leave things you “want”, such as cable and clothes, off this list at the start), and calculating how much money you actually bring home monthly, and knowing what the difference is. For at least half of the people, doing this step will be enough for you to learn how to manage your money better.

2. Think about a part time job or a better paying job. If you did the step above and found that you were short anywhere from $100 to $200 a month, a good part time job might help out some. However, you might have to worry about state taxes in some places, in which case maybe thinking about looking for a better paying job is the thing to do.

3. Try getting a consolidated loan or a line of credit on your mortgage. If you’re going to do this you’re still going to need to learn how to budget your money. Both of these, if you qualify, allows you to pay off a lot of your bills and make smaller lump sum payments to one entity, but it also means learning how to control your immediate spending, which some people aren’t capable of.

4. Call some of your creditors to try to make payment deals. Everyone hates this option and yet it’s probably the best option for everyone. Sure, they might cut off your line of credit for a while but that’s to your benefit, especially if they don’t cut it off forever while giving you time to catch up. Sometimes you’ll find out that you’re allowed to skip a payment or two here and there, which many car loan organizations have built in, and this might allow you to pay something else off in a couple of months and then resume paying them.

5. Verify your financial position with an accountant or a free local credit service organization. I acknowledge that budgeting isn’t everyone’s strong suit. Using someone like Consumer Credit Counseling, basically a free service that helps you figure out your financial position (if they advocate for you with creditors there will be a small monthly fee you’ll have to pay them) can be a major benefit, but if you have other considerations such as taxes or you own a small business, it’s probably smarter to go to an accountant. That might cost you more up front, but you’ll save greatly on the back end if you follow their recommendations.

If you do all these things but you’re still in desperate trouble, then at least you’ll head into bankruptcy knowing where you stand. It always works better having a professional helping you come to that decision (I wouldn’t recommend going to a bankruptcy lawyer first, but after the fact that’s your best move so you have representation).
 

Digiprove sealCopyright secured by Digiprove © 2014 Mitch Mitchell
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I have to admit something; I like large spaces. I’m not a small guy but that’s not the reason why.

Jay Shafer's Home Sweet Tiny Home
Todd Lappin
via Compfight

As a military kid we always lived in base housing. That’s literally kind of a 2 or 3 bedroom two-story place, depending on the size of your family, and it’s not very big. Then when I moved out on my own I had a succession of small apartments while living by myself. When I got married we got larger apartments but the rooms were so small that it really didn’t feel like a larger place.

Right now I live in a 1,900 square foot ranch, and you’re think that would be a lot of space, and in reality it is. A five-bedroom house with a 16×20 living room is pretty nice, even if a couple of the bedrooms are small, including my office. Still, it’s a pretty nice house.

What if I had to live smaller though? What if it was you and you had to live smaller than you do now? Could you do it? Would you like it?

Do you see the house in the image above? That’s a trend we’re starting to see more in this country. There are some fairly obvious benefits if you can handle it. Obviously they cost way less and most people have them paid off within 2 years, if that long. This one’s on a trailer hitch, which means they’re easy to move, but most people just locate them somewhere and move on with life. Because they can go almost anywhere but probably wouldn’t pass the zoning laws of many communities, you’ll see a lot of these out in the country, along lakes, in woods, or within their own little communities.

Jay Shafer's Home Sweet Tiny Home
Todd Lappin via Compfight

Some houses aren’t much bigger than 300×300; a few are even smaller. They have everything they need which includes a tiny bathroom, tiny shower, tiny stove, a bed, etc. I have no idea how they get electricity, as few of them have fireplaces (dangerous stuff in a tiny wood house) or how the plumbing actually works but I’m sure it gets worked out somehow.

For someone like me, this would never be an option. However, I’ve wondered, if I needed to or if I was ever single again, if I could downsize willingly and how would I want to live. I’m not sure I’d want another one bedroom apartment, which is what my hotel suite is like. I’m not sure I’d want a studio apartment because I like the idea of being able to just close a bedroom door without always having to keep it clean if visitors stop by.

Yet, economically, for most places in the United States and probably in other countries, living small means living cheaper, not having as much clutter because you have no where to put it. Sometimes we have to do things like this because it’s all we can afford, or maybe because we’d rather save our money for something nicer or to do other things.

Nothing wrong with that; but could you live in a tiny house like this one?
 

Digiprove sealCopyright secured by Digiprove © 2014 Mitch Mitchell

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