Slash Your Bills (page 2 of 5)

College and Health Insurance

2. Education Options
Here's a pop quiz: Who's turned out more current CEOs of S&P 500 corporations -- Harvard or the University of Wisconsin? Pencils up: They're running neck and neck, according to a recent study by Spencer Stuart, an executive recruiting firm. The study reinforces what should be common sense: There's no direct correlation between where a child goes to undergraduate school and later success. In fact, the pricey Ivies trained only ten percent of those CEOs.

So if your family's budget favors State College over Snooty U., don't sweat it. Kids who are motivated will succeed, no matter the color of their cap and gown. Look for quality institutions in your area. Consider a local four-year college and save on room and board.

Or opt for a community college the first two years (tuition is bargain-basement), then finish up at a state school or private university. Don't forget: Once your child moves on to, say, Tufts, he will get a Tufts diploma.

If you'd like a merit-based scholarship, grades are more important than acing SATs, says Jonathan Murray, a financial advisor and former assistant director of admissions at Dickinson College. "Consistently good grades demonstrate commitment and discipline. Excel at one or two extracurricular activities. Better to be a leader in one sport or endeavor than someone who dips a toe into everything."

Financial planners also suggest that parents give priority to their own retirement savings over college funds, since there are no loans, grants or scholarships for surviving your senior years.

3. Taking Care of Health Care
Like education, health care costs have been outpacing inflation, which is one reason why employers are shifting more of the insurance burden to individuals. To control the expense, many people are opting for higher deductibles and lower monthly premiums. What's more, says Pond, "four-fifths of Americans enjoy pretty darn good health and could be safe choosing a policy with fewer bells and whistles. If no one in your family uses expensive pharmaceuticals, why pay for a high-priced drug benefit?"

But what happens if you suddenly need a costly long-term drug? Many policies allow you to upgrade to a plan with better benefits, after a six-month waiting period. You might also check out Wal-Mart. The company recently started a program in 27 states to fill 30-day generic prescriptions for just $4 each. Nearly 300 drugs are covered. Among them are clonidine (blood pressure), metformin (diabetes) and fluoxetine (an antidepressant).

Consider enrolling in one of the new Health Savings Accounts (HSAs) offered by many employers. If your annual family deductible is at least $2,100 ($1,050 for individuals), you can deposit the deductible amount (up to certain limits) in a tax-free account that grows over the years. So if your family plan has a $5,000 deductible, you can put that much into an HSA every year. You'll save $1,650 annually if you're in the 33 percent tax bracket.

HSA deposits roll over year to year, so you don't lose the money if you stay healthy. Withdrawals to pay for medical expenses are never taxed or penalized as long as you live. After age 65, you can withdraw the money for any reason without penalty, but you'll have to pay taxes if the withdrawal is for nonmedical expenses.

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