Here are some other style boxes I missed

Silly Bandz

Well, shoot. In my research for the post on style boxes, I noticed something I had never quite noticed before: there are other style boxes other than the one for mutual funds.

Awkward.

So let’s talk about the style boxes I missed. And then some.

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What does that 3×3 investing square mean?

Cat in box

If you’ve played around with investment websites at all, and ever looked up mutual funds at all, you’ve no doubt noticed a little 3×3 square.

For example, on the Vanguard page for its Total Stock Market Index Fund, you see this:

Style box: large blend

Meanwhile, the Vanguard Growth Index Fund shows this:

Style box: large growth

And the Vanguard Small-Cap Index Fund shows this:

Style box: small blend

It’s not just Vanguard too. Go to Morningstar and look up a random mutual fund and you’ll see the same square in a different form:

Style box: Morningstar mid growth

So what is this mysterious square and what does it mean for you?

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The HSA “testing period”: The Sophie’s Choice of health care costs

Ouija board

Last time, I talked about the maximum contribution you can make to a Health Savings Account (HSA) each year. Contribute any more, and you pay a steep penalty.

We don’t want to do that, but we do want to contribute the maximum we can.

After all, this is pre-tax money, so it goes a lot farther than after-tax money. And since my new insurance plan is so, ahem, underwhelming, every little bit counts.

Normally, your maximum contribution is prorated based on the number of full months you had coverage. But if you gain access to an HSA-eligible plan mid-way through the year and keep it to the end of the year, you can actually contribute as if you had the plan for the full year.

It’s called the “testing period”, and it’s potentially a difference of thousands of dollars!

However, there is, as you might imagine, a catch. In order to not get penalized, you have to, effectively, predict the future. No big deal.

So get out your Ouija boards, it’s time to figure out the “testing period”!

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How much can you contribute to an HSA?

Crayons

I have a pretty uninspiring health care plan.

I guess you don’t appreciate what you have until you no longer have it. My previous job had excellent health care. Both medical and dental were top notch and cost next to nothing. I had a fair copay and almost never needed to pay beyond it.

These days, instead of having the “Cadillac” plan, I have the “Ford Pinto” plan. It covers very little, and requires me to spend thousands of dollars before it will pick up anything. It’s known as a High Deductible Health Plan (HDHP), though this particular deductible is extra-high.

Right now, in the U.S., it’s open enrollment for health care. (Public service announcement: please don’t forget to sign up! Bad insurance is still better than no insurance.) So some of you might be in a similar situation, picking a new plan.

The one thing that makes the HDHP palatable is that it makes one eligible to contribute to an Health Savings Account (HSA).

HSAs are great, or at least better than not having it. But the question of how much one can contribute to an HSA is surprisingly not straight-forward.

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5 things about money that are strange when you start to think about them

Turtle

I typically think about money in terms of what it can do for people, but sometimes, I think about money itself, in the abstract. Kind of like this guy:

Okay, actually not at all like that guy.

But sometimes it is interesting to think about money in the abstract. And the more you think about these things, the stranger they become.

So here are five things about money that get stranger when you think about them. Because chances are, you haven’t thought about them.

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How to know when it’s time to get conservative about investing for retirement

Tarot cards

The conventional wisdom when it comes to investing for retirement, is that you to start out with more risky/lucrative investments when you’re young and can afford to take more risks, and then over time move into more conservative prospects, towards the day when you actually need to tap into what you’ve put away.

But there are a number of unanswered questions in this narrative. Namely, when do you transition from more risky to less risky? And how quickly do you transition?

Or, do you reject the whole transitional period outright?

If you haven’t thought about this, you might want to start.

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Remember who you’re doing it for

We talk so much about getting on track with your finances, making progress, breaking old behaviors and forming new patterns.

We know why we’re doing it, usually. For me, I believe we’re doing all this so that we can feel better. There is a sense of peace that comes with financial security. For me, it’s a visceral relaxation of the muscles, saying “it’s actually going to be okay“. I first felt it strongly when I finally had six months of savings in the bank for emergencies, and that feeling resurfaces whenever I think about it. I could have no income for months and still be okay. I can breathe.

But on this day, it might also be worth thinking about who else you’re doing all this work for.

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Getting rid of PMI (part 5): The moment of truth?

Trophies

Part of a series:

So I had decided that the least risky path in my goal to remove PMI from my mortgage was to skip any shenanigans about getting my property reappraised. Instead, I took the more boring option, and I would just pay my mortgage down to 80%. I would pay a little extra each month, and I would dip into my savings a bit in order to help reduce the principal more quickly, but that was it.

In October of this year, I achieved this goal. Success!

But did it even matter, unless SunTrust was willing to remove PMI from my mortgage?

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Getting rid of PMI (part 4): Hard work vs. a risky shortcut

White Cliffs of Dover

Part of a series:

So I finally learned that I had two options in order to remove Private Mortgage Insurance (PMI) from my SunTrust mortgage.

  • I could get a new appraisal on my property. If the new property value was high enough such that I had a 75% LTV, I could remove PMI (once my mortgage reached 2 years in age).
  • I could pay down the mortgage to 80% LTV based on the original purchase price and remove it right then.

Armed with that knowledge, I could make an informed decision. Here’s what I came up with and why.

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Getting rid of PMI (part 3): The I stands for “I already told you”

Part of a series:

Earlier this year, I talked about my attempt to figure out how to remove Private Mortgage Insurance (PMI) from my mortgage. PMI, you may recall, is insurance that you take out against yourself, because your low equity implies to your mortgage servicer that you are a risk for default. So when you have less than 20% equity (80% Loan To Value, or LTV), you are usually required to take out PMI.

PMI isn’t a lot of money, but, as you can probably tell, it makes me angry that I have to pay any amount at all because some company is betting against my repayment.

So since I got my mortgage, I’ve been scheming for a way to remove PMI.

This is the continuation of the story.

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