Medical Costs and January Dividends

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The new year brings with it some new challenges for me in the form of health issues that bring about some medical costs.

I woke up one day in December with some facial pain that eventually progressed into some pretty serious nerve pain. I had some MRIs/MRAs and other tests that didn’t show much of anything. That meant medical costs in December combined with the house buying led to a pretty expensive month.

That didn’t really change in January. While I’m on some medication now for my nerve pain, it still continues and has now moved into my feet(yay) so now my neurologist is looking for a specialist who can better treat my weird condition and I’ve started seeing a pain specialist as well.

On top of that, I’ve got some referrals out to other specialist to rule out some other issues. So far blood tests and everything look fine so nothing is sending off alarm bells but I’d really like to control this pain better and figure out what’s causing it.

All in all, it’s been pretty crappy month or two here. I think part of it is certainly the stress of buying a house. That can certainly lead to some anxiety that can generate some pain. However, I also want to make sure there’s nothing crazy going on and better control the nerve issues which have been quite a drag on my quality of life.

That means lots of doctor and specialist visits and probably a battery of tests still ahead of me. My doctor already mentioned probably re-doing my MRIs in a few months and trying some other tests that will likely mean I’ll max out my deductible for the second year in a row.

If you’re not familiar with the American healthcare system, it sucks.

Most of us get insurance through our jobs but still have to pay quite a bit in order to do so. It’s relatively rare to have your company pay 100% of insurance costs these days as the cost of healthcare keeps going up.

For me, I have a $3,000 + deductible with a near $6,000 out of pocket max(that’s for myself, my wife has the same).

Having a $3000+ deductible plan means those costs are mine to pay until that is reached and $200+ specialist visits really start to add up if you do a few of them in a month. On top of that, tests can be crazy expensive. My MRI/MRA I did last year was somewhere in the neighborhood of $4,000 so that can really drain savings when combined with a high deductible plan.

Add to that the fact that my insurance costs went up quite a bit this year as well and you’ve got some not so fun times on the expense side.

I do plan to write a post outlining the costs of actual healthcare in America with my experience as an example. When you combine a $3,000+ deductible with a $5,000+ out of pocket max within an insurance that costs me $5,000+ a year(it covers both me and my wife), you’ve got a recipe for an expensive year due to medical costs if you have ANY issues that aren’t easy to diagnose.

Hell, I met my deductible last year with those MRIs and MRAs so these costs can really be high with one quick test.

Add to that that my wife has the same deductible on her end combined with her own health issues and we can spend $5,000+ a year for insurance that will force us to pay $6,000+ out of pocket before any cost-sharing up to a maximum out of pocket in the $13,000+ range as a family.

We’re lucky enough to be able to afford these expenses but it’s clear that the system is ultimately broken for those who find themselves in a similar spot without an emergency fund. It still baffles me that people are against universal healthcare when this is the type of cost most people face when it comes to actual treatment.

I’m also very lucky to be able to work at home on a flexible schedule which makes dealing with all these issues a lot easier.

It’s crazy how many things have to go your way to make medical things work. Tying your insurance to your employment when it’s often hard to stay employed when you actually get sick is another negative of this whole thing.

Yes, there are certainly plans that are better than mine and some people find themselves with great insurance that covers much more than ours but I don’t know if that’s the norm anymore. High deductible plans have swept the nation and cover only certain things at 100% while leaving the rest to be covered out of pocket until a deductible is reached.

On top of that, I’ve already had to deal with my insurance company declining an MRI as not “medically necessary” even though my doctor requested it so that’s great too. I pay $5,000 for insurance and they have a say in what is actually necessary too. What a system!

On the dividend side, January is a pretty slow month especially after the record breaking December I just had. It was great to see an almost $5,000 month in December but now we’re back to the reality of these smaller months.

Since I investing in a lot of ETFs and mutual funds, those payments are concentrated in the quarter ending months leaving these smaller months to lag behind. However, recently, I have invested more in my M1 Finance accounts which hold a variety of individual stocks that pay in various months so that’s started to help growth in these smaller months.

Last year, January brought in $211.48 in dividends so let’s see where I ended up this year.

January Dividends

January comes in at $258.42 which is a nice 22.2% boost over the year before.

I grew my dividends at a lower than expected 7.8% for the full year 2020 due to the pandemic so it’s nice to see January start at a strong clip.

January has been a steady grower since 2017. The odd drop from 2016 was after selling my Disney shares which at the time paid in January.

Since then I’ve grown dividends at a rapid clip and am nearing the day where even these smaller months will be eclipsing $300 on a regular basis. That’ll be nice to see because more dollars each month means more dollars can be thrown back into the market.

January’s dividends will be re-invested and generate an additional $7.49 in forward income. It’s not a huge amount but any growth that doesn’t require additional capital is awesome to have. That’s the power of compound investing and a true testament to continued investing.

My addition of individual stocks via my M1 Finance portfolios has helped these monthly results in a big way. Here’s what those M1 dividends have looked like since I started those portfolios which feature the dividend aristocrats as well.

You can see that these numbers have grown quite a bit year over year and will continue to become a bigger part of the dividend picture in these small months as I put additional money into those accounts.

While not dividends, I’ve also started to test out websites that generate interest of my crypto investments as that’s an interesting way to generate passive income. I’m always looking for ways to generate extra income without having to work and it sounds like crypto might be the next space that sees growth in that area. It’s certainly an interesting time to be an investor right now.

Back to the dividend side, Steve, my dividend employee, had his best January yet. His hourly wage was $1.55 which is nothing special but it’ll get better as the year progresses. Last year Steve ended the year with a $6.97/hr wage and I’m certainly starting January off in a good position to grow that.

I do think my dividend growth will slow a bit as I’ve started to put more money into SPACs in the last few months. That’s been good for portfolio growth but none of those companies pay dividends. However, I also believe that space is getting crowed so I’m sure I’ll be putting a lot of those gains into more regular investments soon enough.

You can see that the best months are still to come here and I’m eager to see how 2021 turns out on the dividend front.

I’ve had some tough spending months and probably have a few of those ahead so my savings rate might be muted for a bit. Hopefully I can start investing more money into the market soon enough. Still, even without that money going in, I’ll keep re-investing these dividends and helping those months grow.

January Total : $258.42
2021 Total : $258.42
Portfolio monthly hourly wage : $1.55/hr
Portfolio annual hourly wage : $1.55/hr

January Savings Rate – Medical Costs

Medical costs continue to be the name of the game in January.

While I had an MRI in December and paid for that in December, I had a variety of doctor visits in January and bills for visits in December that really drove the expense side of things in January.

On top of that, I had some home expenses and had to pay my first of two yearly HOA fee payments as well.

As I said in the intro, medical costs are expensive in the states. It also didn’t help that I had awful timing with this. I met my deductible in December but had it reset in January which meant costs started flowing in pretty quickly after that. There’s usually a bit of a drag on when you have the procedure so I’m still paying for certain things that happened in December this month and will pay for things that happened in January next month.

I also probably have a bunch of tests ahead of me as well. At least this is early in the year so I can hit my deductible sooner than later and not have to deal with it resetting a few weeks after my issues started!

Thankfully, hitting that deductible will limit my overall expenses but it’ll be a bit before that happens.

I do think this year’s savings rate will likely drag behind last year due to the various health and home expenses coming up.

However, that’s a though for another time so let’s actually see where my money went to this month and what savings rate I was able to hit.

I saved -24.6% of my money this month! It’s the second negative month in a row and that’s no fun. That number becomes -17.8% with employer contributions. That’s much better!

A negative savings rate doesn’t mean I didn’t put any money into the market. After all, I did make my regular 401k contributions. However, it does mean I had to tap into my emergency fund cash reserves. I’ll try to replenish that in coming months although I may actually wait to do that since I do think cash has less value these days(inflation is definitely happening if my grocery bills are any indication) and my wife’s cash reserves are probably plenty for both of us right now.

The high expenses were a combination of a few things.

First came the medical costs which are a variety of medical visits, medications and a few supplements recommended by my doctor. So far, the end result is that my doctors are confounded by my issues and will likely recommend seeing other specialists and further testing.

That means more costs to come and a negative impact on my savings rate in future months as well.

I already complained about the medical system in this country but I’ll do it again because medical costs are out of control!

My second biggest expense is the rent/mortgage. We bought a house in December 2020 but we still were still on the hook for a lease that didn’t expire until September 2021.

Luckily, the place we were renting from was able to find someone to take on our lease 2/1 so that meant we had 0 months of double payments as our first mortgage payment started in February.

That’s a huge weight off my back as we were potentially having to pay a ton in rent for a place that was empty. That certainly will make dealing with some of these medical and house expenses a lot easier. We were fully prepared to pay double for a bit but were glad to get out of the lease so quickly.

The expense here is my full payment of our last rent bill. Generally, my wife helps split these bills but she put down a good portion of the down payment so I figured I’d cut her some slack. Speaking of housing expenses, we live in an HOA and our fees are broken into two payments, the first of which came in January. That’s reflected in its own category as well.

Luckily, our HOA fee isn’t huge although having it in two big payments means January and June or July will be negatively impacted from the perspective of the savings rate.

Next month, it’ll be mortgage time and the first month of many of actually paying that sucker down.

Speaking of categories, I added a bunch to the tracking system due to the fact that we’ll have a bunch of new expenses as home owners. I also added a spot for home equity and will likely start to track my savings rate with and without home equity. After all, I’ll be putting additional payments towards my mortgage and to me that seems like savings because it reduces future expenses and increases our net worth.

Our interest rate is 2.75% so there’s no rush to pay it off super early but I’d like to get out of debt faster and it’d be so amazing to not have a home payment for 30 years. I think my goal will be to pay my mortgage off by the time I’m ready to retire and go into retirement without a mortgage payment on the expense side. The goal is to do that 10 years from now but we’ll see how it goes.

It will certainly require a lot of additional mortgage payments through the next few years. Maybe I’ll start next month with a small contribution towards equity!

Speaking of new categories. Home tools and equipment was the third expense and included the purchase of a new snow blower. We got an electric EGO snow blower and that’s been a really useful tool during the four snow storms we’ve already had to deal with as home owners. It’s been really amazing in making digging out much easier. We’ve had a ton of snow already this winter and more is coming so having a snow blower has been a fantastic purchase.

I’d certainly hate my life if I had to shovel out every time it snowed.

On the repairs/maintenance side, we didn’t have to repair anything yet but I’ve throw in the maintenance plan we got for our oil furnace and hot water heater. It covers the yearly maintenance for each and also covers most repairs at 100% if anything goes wrong. I’m not usually a huge fan of warranties or maintenance plans. However, these weren’t too expensive and seemed to make sense and the additional peace of mind of knowing I can call whenever without having to worry about a huge bill is worth it for me.

Groceries were next as we ate at home more often for obvious reasons. After that came health insurance which made up 7% of an already expensive month. I wonder what my taxes would increase by if universal health coverage was implemented? I’d certainly pay at least 7% more to not have to worry about whether this doctor takes my insurance or whether this thing my doctor recommends will be covered by a company that makes money by not covering things. That’s not even including the costs we’ll have to accrue by actually using our mediocre insurance plan.

The first month of utilities gave me an interesting insight to how much more expensive a home will be than living in a small contained 3rd floor apartment. Our electric bill was probably about 2.5x what it normally was in the apartment during winter. I’m not eager to see what it’ll be during the summer when we have the a/c running all day.

However, I think part of that was due to my wife using the washer and dryer near daily for some donated materials that she was using to make bunny toys and treats to sell for the bunny rescue where we volunteer.

Still, with oil and a higher electric bill, I know our utility expenses will be a lot higher than they were last year. That’s the price you pay for having a ton more space.

Beyond that, we had some typical home expenses with some small upgrades here and there and picking up random necessities. The nice thing about owning a home with a large basement is that we can easily stock up on stuff when Costco has things we use all the time on sale. It’s a real long term money saver.

Overall, this is a month where medical costs were a primary driver of expenses but some of these house and house item expenses certainly didn’t help. It’s the first time I’ve had two negative months in a row and that’s no fun.

This will be an interesting year for me as there’s a chance for some more negative months ahead as I still have plenty of bills to pay and will likely need additional expensive testing. We’ll see what happens but in any case, I’m glad to have access to solid doctors and to actually be able to afford the things they recommend. I know many people aren’t in that position and I believe that somehow needs to change.

Being able to deal with these costs is a blessing and I’m hopeful I can start getting better and figure out what’s actually causing these issues. It’s not been a fun two months although I’m certainly starting to feel better. I’m certainly now in a better mental space than I was when this started so that’s a win as well. Chronic pain is so not fun to deal with!

On the home side, I do think a lot of these initial expenses that I saw in December and January are behind us and I don’t plan to have any major expenses until I need to buy a mower in a few months. Of course, something could break but we’ll deal with that when it comes up.

The fact that our rental agreement is over and we don’t have that 7 month rental payment overhang over our heads is amazing. Now, we can focus on just paying down the house and use that money that would have gone towards rent on other things.

I’m hopeful that I can start getting back to saving money in February but we’ll see how that goes.

Hopefully, your January was a bit better than mine and you’re staying safe and healthy. Thanks for reading and let me know how your January went!