The email sat in my inbox for a few days unopened and unread. From the subject line I knew exactly what it was, but I wanted no part of it because I knew the effect it would have on my family’s budget. It was the email that arrives each November informing me that the information regarding our health care coverage options for the next calendar year was available for review, and the enrollment period would be opening soon. It would provide links to information that outlined the differences in next year’s plan options, as well as the cost. I was sure information could really be summed up with the following three phrases:
- Less coverage
- Higher deductibles
- More expensive
I eventually succumbed to the inevitable and opened the email. I read through the plan choices and details and tentatively confirmed to myself that our best choice was to enroll with the same plan that we’ve had for the last several years. Surprisingly, the details of the plan were almost identical to this year’s plan except for the price. Comparing the 2015 prices with what we pay now, I discovered that if we kept the same health, dental, and vision plans our health care costs would increase about $115 a month.
After coming to this realization, I immediately marched into my boss’s office and demanded a cost of living salary increase to cover the hike in health care costs in the upcoming year. Naturally he happily granted it immediately. Yeah, right.
My wife and I were going to have to discuss a change to our monthly budget.
That night we sat at the kitchen table together and poured over the health care information, as well as our monthly budget. First, we looked at all the health care options available to us, and decided together that the PPO plan, which is what we currently have, would continue to be the right choice for our family. Next, we looked at the complete list of our monthly expenses looking for things that could be trimmed. We decided to make small cuts from several areas to free up the extra funds needed to cover the increase in health care costs starting in January.
Here’s the breakdown of our plan:
Let’s start off with what we didn’t want to change. Decreasing the amount we save and invest each month would be taking the easy way out. We would be sacrificing our long term financial growth in order to make our budget a little more comfortable in the short term. Cutting our monthly investment for the future would be a last resort.
We currently budget $75 a week for gasoline which translates to a tank of gas for our van. With gas prices falling significantly recently, we haven’t been using the full amount. By cutting $10 a week we will save a total of $40 per month.
When I got a raise earlier in 2014, we increased our weekly grocery budget from $125 to $150. Having $150 a week for groceries seems rather “roomy,” and while I like the freedom to get a few extra items each week, we could easily get by with less. By reducing our weekly grocery budget by $10 a week we’ll save another $40 per month but still have a larger grocery budget than we did before the recent income increase.
This is the easiest budget item to cut since it’s not a necessity. We’ll still have the ability to go out occasionally, but $10 a week can easily be cut from this bucket as well.
By cutting $40 a month from three different budget categories, we’ll have reallocated $120 a month, more than enough to cover the increase in health care cost. By talking about it now, we’re prepared for when the increase in cost occurs in January.
But even more importantly, we won’t be cutting the amount we stash away each month for our future. Another salary increase will (hopefully) come along in the near future and allow us to restore our budget back to the current levels. But until then we’ll get by just fine.
How do you handle an increase in monthly expenses like health care?
The following is a contribution from Brock Kernin from Clever Dude where he writes about family, marriage, finances and life.