Did I make a good compromise?

[junkstuff1]

Just made a deal with my wife and wanted to see what you guys think. Did I handle this well? What would you have done?

Before my wife and I got married last summer, she signed up to put an excessive amount of money in her FSA. It turned out to be about $1000 over the year, and we decided that we could put the rest of it toward LASIK surgery. She's used about $300 so far, so we've got $700 for the surgery.

Well, turns out it costs a bit more than $500/eye like the ads say; if you want a quality doctor with quality equipment to do it, it comes out to $3000.

She's pretty darn set on it. I've gotten her on board with saving as much as we can, but she doesn't get the idea yet that anything we spend has an opportunity cost, either now or in the future. She also doesn't understand IRAs and thus doesn't want to contribute to one.

I told her I had some reservations about it. After explaining why (and a lot of emotional discussion), I suggested that we pay the remainder with my HSA, making the equivalent after-tax cost about $1900. To justify that cost, I then estimated future eye care costs at $900 (being generous here...), and said I'd be fine with it if she put $1000 of her personal spending money into an IRA over the next few years (she only gets about $2k/year).

I do think there will be *some* savings on eye care (probably not $900). Plus, she hates wearing glasses and I'd rather have her see while she drives than not. And with the $1k contribution to the Roth that she wasn't making before, we're making up a good chunk of it. Plus, starting her on the Roth will hopefully make her more open to future contributions.

Thoughts?

[maat55]

[quote]

Originally Posted by junkstuff1

I told her I had some reservations about it.

What are your reservations?

After explaining why (and a lot of emotional discussion), I suggested that we pay the remainder with my HSA, making the equivalent after-tax cost about $1900.

What taxes?

To justify that cost, I then estimated future eye care costs at $900 (being generous here...), and said I'd be fine with it if she put $1000 of her personal spending money into an IRA over the next few years (she only gets about $2k/year).

I'm assuming you two have allowances of 2k per year and you want her to give up 1k for a Roth. Good luck with that.

I do think there will be *some* savings on eye care (probably not $900). Plus, she hates wearing glasses and I'd rather have her see while she drives than not. And with the $1k contribution to the Roth that she wasn't making before, we're making up a good chunk of it. Plus, starting her on the Roth will hopefully make her more open to future contributions.

I question whether asking her to give up half her possible allowance for an roth is the right approach.

I would favor establishing a reasonable overall financial plan, then figure out the allowances.

[junkstuff1]

Thanks maat. To answer your questions:

- My reservations are about spending the money on something that is entirely voluntary when we have other plans, including purchasing a house within 15 months, saving for retirement, saving for a trip, and having kids in a few years.

- No taxes will be incurred. My intention was to make a comparison with the Roth contribution.

- I'm asking her to give up $1k for the entirely voluntary eye surgery she is pining for. This fits with the purpose of our spending money. We would use the HSA funds for tax efficiency and the fact that she doesn't have $1000 in her spending account right now. The $1000 would essentially be for paying back into our savings.

- We do have an overall plan that I can detail if it would help, and our allowances are essentially what's left over. As I mentioned, the fact that this is entirely voluntary and that it doesn't fit the purpose of our joint funds makes me believe that it's appropriate for her to use her spending money.

Thanks again for the thoughts maat.

[maat55]

My concern is that your plan may not have sufficient retirement planning. I, like you, wanted to get my wife on board with contributing to our Roth accounts.

At some point your wife needs to understand the importance of future planning. I'm suggesting you have this conversation outside of her expected allowance.

Honestly, I did not give my wife the option. Much like your wife, she did not see the importance. My outcome was OK, but I know my limitations. Only you know yours.

[junkstuff1]

Our plan was to use the HSA as additional retirement savings, but I'm seeing now that that was a bad idea because clearly we were too eager to tap that money.

My wife contributes to a pension and I'm still trying to figure out if I should attribute any real value to that - I don't really have any faith that it will be solvent when we start tapping into it in 40 years. However, between her contribution and her employer's match we will have 15% of her gross saved.

That, plus $5k in my IRA and $3k in HSA would put us at 15% gross overall. I'm reconsidering the HSA handling now, though. I do not have a 401k or similar through work.

We're saving another 20% of our gross on top of that for the shorter-term goals I mentioned above.

My wife has generalized anxiety disorder and when I talk to her about our spending she tends to get anxious and say anything she can to stop the conversation, which usually ends up being along the lines of "I don't care you deal with it." I don't like this, but we are making progress. I'm actually very proud of how far we've come in the past 12 months both in financial position and in our communications about finances.

[snafu]

Before marriage DW signed up for $1K FSA fund presuming $500. x 2 to cover LASIK surgery which she apparently finds incredibly important. She would rather jeopardize her life and that of other motorists than wear contacts/glasses and SEE. What does she see as the major 3 benefits? If appearance is a major factor, I hope you will praise and compliment your wife at every opportunity to overcome insecurity.

She doesn't yet understand IRA so you need to do a better job of explaining. Foregoing gratification now for future benefits may not yet be part of her current value system. Why do you feel her pension fund may fold before you might access? There are stringent rules

I'm shocked by your description of LASIK. On the surface at least it sounds like bait and switch advertising. Is DW being "upsold'? A patient choosing the advertised procedure/price would not get a qualified physician who would not use 'quality' equipment - huh? Yikes, I'd be calling the AMA, College of Physicians & Surgeons and every medical board/licensing board I could locate in state. What research, references, conversations with more than 3 people who have had the procedure has DW sought? Eyes are not a body part to mess with, being blind from being over processed is life long. This isn't 'hospitalized' in the general sense...go to another city or another state with better control.

2nd LASIK copies The Gimbel procedure. If a Gimbel trained physician is available in your community, I suggest DW check that out. Generally, it's a 15 minute, painless laser procedure with permanent [longer term] lens. LASIK having to advertise to churn up business gives me pause...do the T & A plastic surgeons run similar ads there?

[junkstuff1]

Snafu, to answer your points:

- She did not sign up for the FSA with the expectation of covering LASIK. She did it because she didn't know what it was but it "sounded like a good thing." She was/is still not very financially literate. We wanted to go with LASIK since she's already commited the money anyway (we thought it would cost less).

- Benefits are appearance, comfort, and the benefit of not having to remember her glasses (she misplaces things very easily), probably in reverse order of priority. Her vision doesn't put her at risk of really harming anybody on the road; maybe missing an exit. But she does *try* to remember them. As I said, she has anxiety disorder, and sometimes this can manifest as her freaking out about finding her glasses when she's late. This may help alleviate that.

- The clinic she's going to does not advertise. Potentially less-reputable clinics do. Quite honestly, neither of us had a strong idea of how much this would cost back in August last year; we had assumed it would be $500 based on hearsay. Yes, this was stupid. The "upsell" here would be an additional $700 for a "custom" procedure that would account for her astigmatism. We are not opting for that. She has multiple coworkers who have had the procedure done at the same clinic who are happy with the results.

- As for the pension, the idea of a defined-benefit plan sounds too good to be true. I'll admit I don't know much about it.

Thanks for your comments, snafu.

[maat55]

[quote]

Originally Posted by junkstuff1

Our plan was to use the HSA as additional retirement savings, but I'm seeing now that that was a bad idea because clearly we were too eager to tap that money.

The purpose of an HSA is for healthcare. But, you should not ignor your availability to a Roth.

My wife contributes to a pension and I'm still trying to figure out if I should attribute any real value to that - I don't really have any faith that it will be solvent when we start tapping into it in 40 years. However, between her contribution and her employer's match we will have 15% of her gross saved.

You are wise not to trust pensions, they are severely underfunded. I invest(what a joke) 12.4% into SS with no expectations of ever seeing it.

That, plus $5k in my IRA and $3k in HSA would put us at 15% gross overall. I'm reconsidering the HSA handling now, though. I do not have a 401k or similar through work.

You should only fund 401k's to the match, fully fund a Roth, then add additional to the 401k.

My wife has generalized anxiety disorder and when I talk to her about our spending she tends to get anxious and say anything she can to stop the conversation, which usually ends up being along the lines of "I don't care you deal with it." I don't like this, but we are making progress. I'm actually very proud of how far we've come in the past 12 months both in financial position and in our communications about finances.

I sense that they appreciate our desire to save, they just do not like it.