How I tricked myself into spending money March 13, 2011

Usually I’m pretty good about not spending a lot of money.  I try to stay out of malls and clothing stores.  I try to only spend money on groceries, gas, utilities, rent, and the occasional dinner out.  But then I end up tricking myself, and it all goes out the window.

I’m a big fan of Flexible Spending Accounts (FSAs).  They enable you to stash away pre-tax money for use on medical expenses.  Doctor and prescription copays.  Behavioral health counseling.  Hospital fees.  Eyeglasses and contacts.  First aid supplies.  And until this year, you could get reimbursed for over-the-counter medication.  Now I guess you can still get reimbursed, you just need a prescription for it.  Very confusing.

A few years ago, I had put $300 in the account.  And between getting new glasses and contacts, and going to a few appointments that were only partially covered by insurance (silly me, I know), I ran out halfway through the year.  I vowed not to do THAT again.  So for 2010, I put $500 in.  But even though I got my wisdom teeth out, I didn’t really have a lot of medical expenses.  Turns out I spent around $300 in 2010.  Should have just stuck with what works.

But luckily, my company allows me to use up the rest of the previous year’s money up until March 15th.  So, armed with that knowledge, and the fact that I wouldn’t feel right buying $200 in bandaids, I decided to make an appointment with my eye doctor.  I was up for a new pair of glasses in my insurance plan, anyway! So I went to the eye doctors.  My eyes are healthy, and my prescription hasn’t changed.  I didn’t need to buy a new pair of glasses.  So, if I was trying to save money, I would have stopped at that point. But I didn’t.

Knowing I had money that had to be used up within a week or so made me a lot more willing to spend the money.  And I knew I had to “use it or lose it”; that money would be gone if I didn’t use it.  So, if I wanted to use up that money, I could get a new pair of glasses or get a pair of prescription sunglasses.  I could also have bought some new contacts.

So, if I was trying to save money, I’d only get one of those.  And I’d worry more about the price.  But I couldn’t help it.  Knowing I had money to burn, I ended up getting both new glasses and prescription sunglasses.  Frugality fail.  Even when I found out the prices, I kept with it.  I could have opted for cheaper frames.  But I trusted the opinion of the optician that helped me pick out glasses (from past experiences at the eye doctors), so I figured if he thought I looked good, and I was good with them, I might as well buy them.

After adding up eye exam copays, and lens and frame costs, minus the discounts and insurance coverage?  $434.  I know.  I’m a little ashamed.  Had I not had that money, I probably wouldn’t have spent it.  Maybe that’s the good part about an FSA?  You spend money on your health that you might not have otherwise spent?

I’m still getting used to my new look.  When I picked up my frames, I was a little unsure if I still liked the way they looked on me.  They’re definitely different.  But I got my sister’s approval (she was in town visiting), so that was enough for me.

And did you want to see them?  I tried taking pictures of me wearing them, but the pictures looked really weird.  My regular glasses look like this, and my sunglasses are like these but with sunglass lenses.

So, what do you think?  Was I a big idiot, letting the “extra money” dictate my spending?  Or was I just being forced into spending money on myself that I otherwise wouldn’t have?  How much do you usually put in a Flexible Spending Account?  And does it ever make you spend more than you otherwise would have?

A quick update on my post-layoff transitions June 23, 2008

First up, I have clarification on what happens to your FSA account after a layoff.  I called the company that was in charge of my FSA and they straightened me out on the matter.  So here’s the deal.  I have to submit my claims for any that occurred on or before the date of departure.  And according to the person I talked to, you are allowed to use up to the total amount you initially elected to contribute, even if you haven’t contributed all of it.  It’s apparently an official rule from the IRS.  I guess they figure if you have an expense, you don’t plan on getting laid off before you contribute all of the money towards that expense.

So, that makes me feel slightly better.

Also, I have rolled over my 401(k) to an IRA at the same company that I have my Roth IRA.  I’ve used about half of the rollover money to purchase a target date fund for around the year I retire, and am going to let it just chill there for a while, and half the other half sit in the core money market account.  Yes, I should be investing all of it.  But buying that much of one fund freaked me out.  So, hopefully down the line, I’ll invest a little bit more in something more aggressive than the money market.

As unemployment is concerned, I’m having the taxes taken out prior to the money getting to me, so that I won’t have to deal with estimated taxes.  I’m not even sure if I have to pay estimated taxes for the money I’m getting, but it seemed too complicated, and I figured that they take out taxes in the lowest bracket, so it shouldn’t be too bad.

As I’ve been going through my job search, I’ve been slowly getting a better idea of what I actually want to be doing.  I started out with an enormous list of companies, both big and small, that might have positions for me, and slowly whittled them down to companies with jobs that actually fit my experience, background, and career goals.  I don’t want to go into too much detail here about my job search, but if you have any specific questions, ideas, or anything for me regarding the job search process, please let me know in the comments or via email.

I enrolled in my company’s Flexible Spending Account December 19, 2007

So, I did it.  So many other people have been talking about using up their spending accounts, since every year you start over.  I wasn’t really sure how much to put in my account.  I found at least one calculator online for it, but I just basically sat down and tried to figure out what sort of medical, dental, and vision expenses I might have.  Since this is the first year I’m doing it, I put in a relatively low amount, $300.  I figure with prescriptions, contacts, office visit co-pays, and general medical supplies, that would be okay.  I haven’t gone to the dentist yet on my new health plan (I know, I really should!) so I don’t know how much that will end up costing me, but I figure I’ll just use up the money in one way or another.  And if all else fails, I can buy up a bunch of bandages and pain medicine to round out the total.

We’ll see what happens!