MONEY Health Care

The Crazy High Price of Adult Braces

465879363
Jason Todd—Getty Images

The number of adults wearing braces today is 37% higher than in 1989, but insurance rarely covers the bill.

Danielle Faust, 33, is six weeks into wearing braces to fix her crooked teeth and is pretty happy about the process, but not the price. While the $5,000 for Invisalign clear aligners in South Florida where she is a freelance writer is $1,000 less than a friend is paying in New York, she is kicking herself because she missed out on a Groupon that would have saved her even more.

Parents often blanch at the price tag of braces for their children but count it as a known cost of raising offspring. When it comes to their own teeth, however, adults are a lot more cautious about the money involved. Using braces to fix dental problems such as crooked teeth or bite problems can cost between $3,000 and $7,000, depending on the treatment options and where you live.

The number of American adults over 18 sporting some form of a “brace face” is roughly 1.2 million, or 20% of the 5.9 million patients orthodontia patients nationwide, according to the American Association of Orthodontists. That is up from 875,000 adult patients in 1989.

“Adults are very careful. They are making the investment, and they want to make sure they are getting their money’s worth,” says Dr. Morris Poole, president of the AAO and a practicing orthodontist in Logan, Utah.

Shop Around

Most orthodontists charge a flat fee based on the duration and complexity of the case. Retainers and some follow-up care are usually included, says Poole.

As costs vary greatly, it pays to shop around. “Most will do a no-charge consultation,” says Dr. David Bonebreak, who participates in two orthodontic practices near Howard County, Maryland. If you like an expensive doctor more than others with cheaper plans, he suggests asking for price matching.

Katrina Morrison, a 38-year-old mom of three from Atlanta who works as a flight attendant for Delta Airlines, went to three different orthodontists for consultations and ended up going with the mid-priced one.

The more expensive option required a massive down payment of $1,000. The cheaper option was a discount chain that charged $99 a month, but did not offer a dedicated doctor with each visit.

“I really wanted that personalized service,” Morrison says.

Ask for Discounts

One way that Morrison saved money was by working all the breaks – the most significant being a family discount since she used the same orthodontist as her children. She also was able to pay upfront some of the $4,500 total cost and work out a payment plan over 20 months for the rest.

Insurance Varies

Morrison’s dental insurance covered 50% of her costs, but Faust’s insurance would not cover any of her Invisalign because it was considered cosmetic. If she had gone for traditional braces, it would have covered $2,000, but that would have been a lifetime benefit. Slightly less than half of the patients Poole sees have any sort of dental coverage at all, he says.

Rachel Teodoro, a 36-year-old mom and blogger from Seattle, Washington, was able to get some discounts by paying the $6,500 charge upfront and in cash, which she was able to do because her family had socked away money in their Health Savings Account.

“It makes sense to fund it, because it’s not taxed – and it’s a smart financial move,” Teodoro says.

Wear Your Retainer

The biggest cost-saver for braces: Wear your retainer. The best way to avoid future costs is to stick with the maintenance program.

“I would never let my teeth go again,” Morrison says. She just got her braces off in early July and is now facing a long run of wearing top and bottom retainers – replacements cost $250 a pop. “I’m always on the go, I’ve told myself I’ve got to hold onto these things,” she says.

MONEY 401(k)

The Hidden Costs of Borrowing From Your 401(k)

143276829
Peter Dazeley—Getty Images

You can borrow up to half the balance in your employer-sponsored retirement savings account, but that doesn't mean it's a good idea.

All it usually takes to borrow money from your 401(k) are a few clicks on a website, and a check will arrive a few days later.

That is why U.S. retirement industry leaders talk about the prospect of doing away with 401(k) loans before younger workers follow in the footsteps of previous generations and start using their retirement account like an ATM.

Workers who take out 401(k) loans risk not having enough saved for retirement because they miss out on growth while the money is borrowed. Some may also reduce their contributions or stop them altogether, research shows.

Internal Revenue Service rules say you can borrow up to $50,000 or 50% of the account balance, whichever is greater.

This ability to cash out some portion of your retirement account balance is unique to 401(k) plans. You cannot borrow against an Individual Retirement Account or a pension, for instance.

The problem is with middle-aged workers, who are the heaviest loan users, according data from the Employee Benefit Research Institute. The overall average of loans has hovered between 18 and 20% for the last few years; about 27% of participants in their 40s had a loan balance in 2013, the last year of EBRI’s data. Workers can take out money as withdrawals without penalty after age 59 1/2.

“New employees won’t notice, but sure as heck the older ones would notice it,” said EBRI Research Director Jack VanDerhei.

Among developed countries with private retirement systems, the United States is alone in allowing basically unrestricted access to cash without providing proof of a hardship, according to a recent study led by Brigitte Madrian, a professor at Harvard’s Kennedy School of Government.

In fact, loans were used to entice workers dependent on pension plans to enroll in 401(k)s when they were introduced in 1981.

“They thought it would be hard to get people who were living paycheck-to-paycheck to sign up unless they thought they can get their hands on their money in a loan,” VanDerhei said.

A study VanDerhei did in 2001 showed the loan option made a big difference in how much a person was willing to contribute.

But that was before the financial crisis of 2008 and before the age of auto-enrollment.

Today’s under-40 generation does not pay much attention to the details of retirement plans they get at work, and it is unlikely that any change would prompt them to start opting out in huge numbers, VanDerhei says.

Huge Consequences

While it is alarmingly simple to borrow from your 401(k), borrowers may sometimes have to pay set-up fees. The low interest rate charged is actually credited back to your own account as you repay.

The consequences in lost growth, however, can be monumental.

Fidelity Investments estimates that a person who takes one loan out – the average balance they see is $9,000 – is set back about 7.6% from his or her long-term retirement goal.

Half of Fidelity’s borrowers end up with more than one loan. The real-dollar impact is between $180 and $650 a month in retirement, according to the company’s estimates.

It is not just the loan balance that affects the retirement account. Of the 20% who borrow, Fidelity has found that 25% lower their savings rates within five years of taking a loan, and another 15% stop saving altogether while the debt is outstanding.

“We take these calls, millions of calls every year,” said Jeanne Thompson, a Fidelity vice president. “We see they have taken loans, and they don’t have enough to retire.”

A direr problem is with those who have an outstanding balance when they lose or change jobs. They must repay their loans immediately or face tax penalties on top of credit problems.

“The vast majority of money is actually repaid, on the order of 85% of it,” says Harvard’s Madrian. “But for a smaller subset of people, it can be a problem.”

Legislation to change 401(k) loan provisions is unlikely at this point, Madrian said.

“It would be easier if you had some companies get rid of the option and show the employees were better off,” she said. “Absent some more compelling data, it’s going to be hard to shift the policy landscape on that front.”

MONEY Workplace

Ivanka Trump and the Growing Power of Women in Family Businesses

Trump International Hotel Washington, D.C Groundbreaking Ceremony
Kris Connor—Getty Images Ivanka Trump, shown here with her father Donald at the groundbreaking ceremony for the Trump International Hotel in Washington, D.C at Old Post Office on July 23, 2014, is now executive vice president of development and acquisitions at The Trump Organization.

20 years ago there was basically zero preference for women in family businesses.

The Trump Organization is a lot like the thousands of family businesses that dot the land, even though its current leader, Donald Trump, is a U.S. presidential candidate.

The New York-based development company, which was started in 1900 by Donald’s father, Frederick, and grandmother, Elizabeth, is at the forefront of one of the big changes at small companies: Women are increasingly taking over top leadership roles, even in traditionally male-dominated businesses.

Ivanka Trump, 33, is part of a fourth generation working their way up the company’s leadership ranks, waiting for the day when their father hands over the reins. So far, she has made it to become an executive vice president of development and acquisitions.

“I don’t think too much about the role of being a female in terms of my own company,” she said. “I just look at it as growing and learning.”

She said her father never treated her differently from her two brothers at the company, Donald Jr. and Eric.

“There are probably plenty of patriarchs that don’t think their daughters are as capable as the sons,” she said. “That’s not the case in my family.”

These attitudes are increasingly common, said Walter Kuemmerle, president of Boston-based Kuemmerle Research Group, adding that 20 years ago, there was basically zero preference for women in family businesses.

“I see more women interested and more older generations receptive to the idea of the best person taking over, rather than having a gender bias,” Kuemmerle said.

Kuemmerle has run annual meetings for young executives in family businesses for Citi Private Bank for the past few years, but this year’s was the first where more than half of the people in the room were women.

But he cautioned that the evolution was not yet complete. His best advice for women joining family businesses is to get a great education, get outside experience and do more homework than their competitors.

“As unfair as this sounds, you should be better prepared than you’d think a male would be,” he said.

A graduate of the University of Pennsylvania’s Wharton School, Ivanka Trump said she had encountered only subtle forms of gender bias.

“Certainly when people enter a negotiation with my father, they come incredibly well-prepared,” she said. “With me, particularly early in my career, that wasn’t always the case.”

Obstacles to Ascension

When Julie Smolyansky took over as chief executive officer of her family’s Lifeway Foods Inc in 2002 after her father died suddenly, it was his senior advisers who presented the biggest obstacles to her ascension. She had been working for the kefir yogurt maker for years but was only 27.

“His friends and advisers told the family, there’s no way a 27-year-old can run a company,” she said. “We needed some gray hair in the leadership.”

Wayne Rivers, president of the Family Business Institute, based in Raleigh, North Carolina, was not surprised by this viewpoint.

“One dirty little secret is that the advisers don’t like family businesses successors; they perceive that they are spoiled and entitled,” Rivers said. “It’s awful to watch, because they are prized by senior-generation family members as professional and objective. But they are human beings like everyone else, and they sometimes have an agenda.”

In the next generation, the challenges for young women entering family business may come from within themselves.

That is the view of 23-year-old business analyst Leah Klein of Chicago-based Klein Tools, which has been in her family since 1857.

“I think a lot of women think it’s a barrier if it’s a male-dominated business, but I think it’s more about them,” said Klein, who is among the sixth generation working at her company. “If a woman is interested, they have to make their choices about what they want to do for their life.”

MONEY Workplace

Science Games for Girls Can Open Doors to Lucrative Careers

Courtesy Roominate Roominate rPower, available this fall, lets girls control ferris wheels, RVs and other creations using a phone or tablet.

But are they learning the money management and fundraising skills that will allow them to run their own companies?

Pink Legos not being quite enough, a slew of start-ups, many of them founded by women, are attempting to motivate girls into lucrative and satisfying careers in the traditionally male-dominated areas of science, technology, engineering and math (STEM).

But while girls string together HTML instructions and tinker with circuits, are they learning the money management and fundraising skills that will allow them to run their own companies – or even just manage their bank accounts?

Women have traditionally lagged men in financial literacy and investing prowess, according to Annamaria Lusardi, a professor of economics at the George Washington School University of Business in Washington, DC.

“Knowing science is not enough for women,” says Lusardi, an expert in financial literacy. “You need a capacity to make good financial decisions.”

Confidence is the key to unlocking women’s potential in these areas, Lusardi says. She helps run annual studies testing financial literacy, science and math knowledge around the world. When “I don’t know” is included as an option, women pick that much more than men, Lusardi says. Yet in a test case removing that option for some respondents, women answered the questions and mostly got the answers right.

“We have to really show to women that they should take the plunge, because it is very important,” says Lusardi.

Try, Try Again

Debbie Sterling, who founded the building kit GoldieBlox, says her products teach confidence by allowing girls to fail. “It opens their minds to say it’s ok to tackle a problem even if you’re not going to get it perfect the first time,” she says.

Players can fit the toy’s interlocking plastic building pieces in many different ways, so they experience trial and error.

Storybooks accompany the set, featuring positive role models. The main characters, Ruby and Goldie, are purposefully not prodigies, but rather are B+ students who are really open-minded and willing to try, try, try again.

“There’s the boy-genius archetype in media that suggests that unless you have IQ off the charts, you’re not good enough. I think that archetype is really damaging,” says Sterling.

Supply and Demand

The goal of STEM play is to get children’s creativity flowing, and the founders of GoldieBlox and other programs such as Roominate have seen all sorts of inventions come to life.

The best of them identify some sort of need and figure out how to capitalize on it – the basic laws of supply and demand that drive all successful business.

The lesson to learn, says Lusardi: Think of how you can build something you can sell, and then creatively manage your resources.

With Roominate, a modular building system with circuits, players create rooms with functional lights, fans, furniture and other features. While the pastel-colored pieces are designed to fit together into rather domestic configurations, the company’s founders, Alice Brooks and Bettina Chen, have seen customers take off from there. They develop play storefronts, lemonade stands and other businesses, which teach them mini-business lessons as well.

One GoldieBlox user took the kit and some paintbrushes and created a drawing machine, according to Sterling. She made original paintings with it that she sold, and then she donated all the profits to charity.

Another success story: Tampon Run, a free iPhone app designed by two New York city teenagers. It is an old-fashioned arcade game where the heroine uses tampons as weapons to defeat enemies. The app was created by students of Girls Who Code, a national non-profit aiming to teach computer programming to one million girls by 2020.

More wide-reaching is that many girls have graduated from Girls Who Code to paid internships in the community. “I think they are now comfortable making money,” says founder Reshma Saujani.

MONEY

Panic Won’t Pay Your Student Loan Bill After a Layoff

Man in bed with scared look
Williams + Hirakawa

But these 3 smart moves can help.

When Jesse Lambert lost his job last December, he was about a level seven for panic. After paying rent in Arlington, Virginia, the 33-year-old’s student loans for his undergraduate degree and masters in international commerce were the next biggest expense at around $450 per month.

Lambert’s first step was the one experts advise: He called his lender.

After that, his panic quickly subsided. With a game plan in place, the odds were actually in his favor for a short-lived unemployment.

“Having a college degree is a good hedge against unemployment,” said student loan expert Mark Kantrowitz, who publishes the education resource site Edvisors Network (http://edvisors.com).

In fact, the unemployment rate for those in the 16-24 age group with a bachelor’s degree or higher was 15 percent lower than for those without a high school degree – 4.8 percent versus 20.2 percent in May 2015, according to government data. For the 25 and older category, the unemployment rate for those with higher education was only 2.7 percent in May 2015.

The following are steps experts advise taking if you are out of work for a few months while paying off student loans.

1. Call your lender

The default rate for student loans, which total over $1 trillion, was 12.9 percent for public colleges in 2014. In addition to ruining your credit, one reason you do not want to hide from lenders is that they may be able to help.

Federal loans come with set options for deferments, with all payments suspended for a time. There is also the option of forbearance, allowing you to delay payments, although interest will still accrue and be tacked back onto the loan.

Deferments are a better choice because they do not add on to the total loan balance, Kantrowitz notes.

Private lenders will also offer these options, and some will go further to come up with alternative payment plans. Wells Fargo, for instance, has a team trained to craft specific solutions for borrowers after listening extensively to their circumstances, said John Rasmussen, Wells Fargo’s head of Education Financial Services.

2. Rally your network

When Lambert ramped up his job search last winter, he even got help networking from his lender, SoFi, a start-up that has handled $2.5 billion in loans since launching in 2013. (By contrast, Wells Fargo, has a $12 billion current-loan portfolio.)

When Lampert refinanced his loans, he remembered seeing something about career services. After calling SoFi about deferment options, he ended up getting personalized job search coaching.

Lampert a few months later landed a job as a senior analyst for a company that does government consulting. Bob Park, SoFi’s head of career strategy and professional development, helped him negotiate his salary offer.

So far, about 100 borrowers have gone through SoFi’s job search boot camp. Another 45 are currently in the program.

“We haven’t lost anyone yet,” said Park, who has seen everyone go on to land a job. When Park started in 2013, the average time to a new job was over 100 days; now it is 90 days.

3. Lean on your emergency funds

Because your job search is likely to be short, the best way to get through it is to have an emergency fund, advises Jenny Smith, financial services representative for The Principal Financial Group.

Borrowers in financial trouble should avoid expensive options like consolidation, because it will likely result in an overall higher interest rate, Smith says. Nor should they take on credit card debt in order to pay off student loans. “Band-aiding can be bigger problem later,” she said.

If your lender does not offer career services, look to your state government or local chamber of commerce for programs aimed at young professionals.

MONEY

Shark Tank’s Daymond John Blew His First $20 Million Before Wising Up About Money

The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water
Jerritt Clark—WireImage Mark Cuban and Daymond John attends The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water at Lavo on February 14, 2015 in New York City.

The FUBU founder shares what he's learned about investing since then.

On ABC’s “Shark Tank,” Daymond John scrutinizes the business plans of wannabe entrepreneurs, but how does he manage his own finances?

A self-made businessman, John is actually pretty realistic – working his way up many ladders and learning from failures. A native of Queens, New York, John founded FUBU at age 23 in 1992, riding the wave of hip-hop fashion trends.

Now 46, he has been with “Shark Tank” since its debut in 2009. He serves as a consultant, gives motivational speeches, writes books and is a spokesman for other businesses, such as Gillette.

Reuters spoke with John about how his acumen for business translates to managing his own money:

Q: How much of your net worth is locked away for the future, and how much is at your disposal now?

A: I’ve probably put in 50 percent for long-term, and the rest I play with. I have squirreled away enough to not have to worry about it. Hopefully, I’ll never have to touch it, and it will be passed onto my kids or a great organization.

What I play with now, it can fluctuate. I can end up using a good percentage of it on a great acquisition, or I can hold it.

Q: How involved are you in the management of that money?

A: There are several levels of it. I’m involved when I’m doing my day-trading. When we’re talking about asset allocation, I have very different approaches. I’m with Goldman (Sachs) and various other firms. I kind of let three out of five of them do their own thing. For two out of five, I monitor (my account) over the course of every month or so.

Q: Most of what you do on ‘Shark Tank’ can be considered alternate investments, but do you do anything beyond that to diversify your portfolio?

A: My larger investments have been apparel brands. As for real estate, I’m part of a fund, but I’ve never been that great at real estate.

Q: When you do a promotion like for Gillette’s Shave Club, do you have an investment in that, or is it just for promotion?

A: It’s a brand association. It’s just an investment of my time and my face and my integrity. I don’t take it lightly.

Q: You lend your name to a lot of causes as well. How do you decide what charities get your time and money?

A: It’s not really a planned thing. I try to give on various platforms, and not do too much check-book philanthropy. For some, I will try to make more people aware of the plight, and help get more people to give. To some I will dedicate time, such as my desire to get out word about dyslexia.

Q: Do you have planned giving worked into your estate plan?

A: I don’t have that formal plan – some will go to family and certain small organizations. One is animal related, one is dyslexia, one is hip-hop against violence.

Q: Who first taught you about finance and money management?

A: I got the knowledge by blowing about $20 to $30 million the first time I made it. I’m not one of the few who hit lotto or peaked at 25 as an athlete. I have had several other bites at the apple.

Q: You have listed Robert Kiyosaki’s “Rich Dad, Poor Dad” as one of your favorite books. What have you learned from it?

A: The fundamental lesson to it is it’s not how much you make, it’s how much you save. You should go after small opportunities that have the potential to grow into large opportunities. That educated me on the tool of money.

MONEY Workplace

The Dangers of Working for the Family Business

father son business
Getty Images

A sense of entitlement could get you fired.

There is one big advantage 23-year-old Clint Morrison has found joining his family’s business fresh upon graduating from Rider University: he has a job, while most of his friends do not.

“They’re all still sort of scrambling,” Morrison says.

The Morrison family business, Benefit Design Specialists Inc, administers employee benefit plans for small businesses and is based in Mechanicsburg, Pennsylvania. Dad Tim employs not only his youngest son, Clint, but also two older sons, ages 27 and 29, as well as his own sister, a sister-in-law, a cousin and about 10 other non-related employees.

The key to a harmonious office with so many family members? “You have to find a spot for them to be productive or they won’t make it in the family business,” the patriarch says.

Here are some tips on joining the workforce – with your relatives, according to family business experts:

Start Elsewhere

There is no official tally of how many “& Sons” or “& Daughters” are among the 28 million small businesses in the United States, according to the Small Business Association.

Yet one of Clint Morrison’s business professors advised him not to start in the family business. The advice: go elsewhere and garner some knowledge of the industry first. Given the state of the job market and his family’s specialty niche, Morrison decided that was not feasible.

The strategy worked well for Laura Salpeter, who got a law degree and then worked for a few years at a law firm before joining her father Scott Salpeter’s Miami-based investment banking firm. Also working there, after a few years of getting experience with other companies, is Philip Cassel, son of Scott Salpeter’s partner. Both offspring are now 30.

“Working with my father was something I’ve always contemplated. So I dived into the business world and found out more about what it is,” said Cassel.

Work You Way Up

Even if you spent your childhood playing in the family factory, that does not mean you are going to walk into a corner office once you get your diploma.

Robert Spielman, a partner in the tax and business services unit at Marcum LLP, advises clients that it is their job to make sure their kids are exposed to all aspects of the business, especially if they expect to hand it over to them one day.

For example, one of his clients, a fish distributor, hired several family members for its sales force. “But none learned how to manage the business, and eventually, they had financial troubles,” Spielman said.

The best way is to start at the bottom and experience all areas of the enterprise. If the family business is a trucking company, start out in maintenance, then drive for six months, go into sales and then assist in the financing side before managing the fleet and employees, Spielman says.

Manage Expectations

The family business dream – that someday, all of this will be yours – can be a great motivator, but it can also instill an unwieldy sense of entitlement.

This happened to one family business owner client of Steve Faulkner, head of private business advisory for J.P. Morgan Private Bank’s Advice Lab. The son was lording his status over his coworkers and superiors, saying “Someday, I’m going to own all of this, and fire everyone I don’t like.”

When the son’s manager finally had the courage to tattle to the boss, he fired his own son. However, two months later, when the son could not find another job, the boss asked another manager to hire him back.

“That’s a horrible succession plan,” said Faulkner.

It is better, he says, for business owners to get their relatives to work harder than they ever have to be worthy to take over the reins.

Another of Faulkner’s clients does exactly this, down to a formalized training program for the fourth generation that is now joining the business. Newcomers spend up to six years training at international subsidiaries before being brought back to headquarters for management jobs.

The process drills respect into the employees, something Laura Salpeter says she has learned on the job.

Her top advice for those joining the family business? Understand you are working for your parent, not with your parent.

 

MONEY Health Care

Even an Appendectomy Can Hurt Your Credit Rating

150520_EM_AppendectomyCarLoan
Steve Wisbauer—Getty Images

The medical billing error from hell

When Saideh Browne had an emergency appendectomy in the summer of 2012, she had no idea it would raise the cost of a car loan three years later.

The 44-year-old personal trainer from New York recently visited a dealership to buy a new Honda Accord and discovered her credit score had been dinged by two lingering medical bills for $770 that had gone to collection.

Browne says she did not purposefully ignore the bills, nor did she shirk them because she could not pay. Like many other people, she got caught in an endless loop of indecipherable paperwork between the many providers involved in her care and the insurance company. The amounts due and the reasons listed for the charges kept shifting. Browne did not want to pay a wrong bill and never see the money again.

“I’m an astute consumer, but it gets confusing,” Browne laments. “You don’t know what bill is what.”

Almost 50 percent of medical bills have errors, according to government data studied by NerdWallet, which has a medical bill review service.

“It’s quite staggering,” says Christina LaMontagne, a general manager for NerdWallet. “Probably all of us have been mis-billed on a medical service.”

That includes LaMontagne, who recently received a medical bill she did not understand that was due in 30 days. Her first recommendation to consumers: ask for an itemized statement.

Therein lies the dilemma for most consumers.

“There are cobwebs in the system,” LaMontagne says.

So what is a consumer to do? Here are the three steps to keep your credit healthy:

1. Communicate immediately, in writing

You can pick up the phone to call your provider and the insurance company, but you need documentation, says LaMontagne. The doctor and insurance company need to respond back to you in writing, or you have grounds for appeal because you were not properly notified.

Disputing a charge should stop the clock, but there is no guarantee your unpaid bill will not be sent to collection.

The average time a provider will carry a bill is usually 120 days, which is how long Medicare providers are required to wait, says Chad Mulvany, director of healthcare finance policy for the Healthcare Financial Management Association, a trade group for hospitals.

LaMontagne says significant anecdotal evidence exists that more bills are being sent to a collections agency after 90 days, so the transition to collection could be quick.

1. Get outside help

If you are getting nowhere with your provider, turn to your state insurance commission.

You can also hire a bill resolution company, such as NerdWallet Health or Medical Billing Advocates of America, which charge either a flat fee or take a percentage of the savings you achieve.

Some workplace human resources departments also offer assistance, or at least can run interference with insurance companies.

Expert help is important because many collection agencies prey on consumer fear and tend to go away quickly if confronted by somebody who knows the law, says Pat Palmer, president of Medical Billing Advocates.

For instance, collection agencies are not supposed to be familiar with your medical details. So the first thing Palmer does for clients is call and ask about the charges. If the agents know what the bills are for, she tells them they have violated medical privacy laws. “You never hear from them again,” Palmer says.

3. Negotiate a payment plan

Most medical providers want to close out your account. Setting up a payment plan could get the monkey off your back, says Healthcare Financial Management’s Mulvany.

Most of all, paying something allows you to move forward, says credit expert Beverly Harzog, author of “The Debt Escape Plan.”

“If you don’t take care of it, it’s going to drag you down,” Harzog says.

That is exactly what Browne has done, setting up a payment plan for the unexplained bills.

“At this point, I just want it to go away,” she says.

MONEY Kids and Money

The Best Way to Bank Your Kid’s Savings

150403_FF_KidBankAcct
YinYang—Getty Images

After the piggy bank fills up, here's how to launch your child on the path of saving and investing.

When I told my 7-year-old that her wallet was getting full and it was time to open a bank account, her eyes widened. She wanted to know if she would be allowed to carry her own ATM card.

Um, no.

When transitioning from a piggy bank to handling a debit card linked to an active account, financial experts say it is best to start with a trip to a bank, but which one and when? Here are some steps to get started:

1. Bank of Mom and Dad

Don’t be in a rush to move away from the bookshelf bank, says financial literacy expert Susan Beacham. There are lessons to be learned from physical contact with money.

Sticking with a piggy can be especially effective if you teach your kids to divide their money into categories. Beacham’s Money Savvy Pig has four slots: save, spend, donate, invest.

When you cannot stuff one more dime into the slots, it is time to crack it open and seek your next teachable moment.

2. Neighborhood Convenience

Many adults bank online, but kids still benefit from visiting a branch, says Elizabeth Odders-White, an associate dean at the Wisconsin School of Business in Madison.

Do not worry about the interest, Beacham says. “A young child who gets a penny more than they put in thinks it’s magical. You’re not trying to grow their money as much as grow their habits.”

Your second consideration should be fees. Your best bet may be where you bank, where fees would be determined by your overall balance and you could link accounts.

Another option is a community bank, particularly a credit union, which are among the last bastions of free checking accounts.

“The difference between credit unions and banks is that credit unions are not-for-profit and owned by depositors,” says Mike Schenk, a vice president of the Credit Union National Association.

At either type of institution, you could open a joint account, which would be best for older kids because it allows them to have access to funds through an ATM or online, says Nessa Feddis, a senior vice president at the American Bankers Association.

Or you could open a custodial account, for which you would typically need to supply a birth certificate and the child’s Social Security number. Taxes on interest earned would be the child’s responsibility, but likely would not add up to much on a small account. A minor account must be transferred by age 18 to the child’s full control.

3. Big Money

If your child earns taxable income, the money should go into a Roth individual retirement account, experts say. There is usually no minimum age and many brokerage firms have low or no minimums to start an account. You can pick a mix of low-cost ETFs, and let it ride.

Putting away $1,000 at age 15 would turn into nearly $30,000 by age 65, at a moderate growth rate, according to Bankrate.com’s retirement calculator.

Not all kids can bear to part with their earnings, but there are workarounds. One tactic: a parent or grandparent supplies all or part of the funds that go into the Roth, akin to a corporate matching program.

The other is to work with your child to understand long-term and short-term cash needs. That is what certified financial planner Marguerita Cheng of Blue Ocean Global Wealth in Potomac, Maryland, did with her daughter, who is now in her first year of college.

While mom and dad pay for basic things like tuition, the teen decided to pool several thousand dollars from her summer lifeguard earnings, money from her on-campus job and gifts from her grandparents to fund several educational trips.

“She would make money investing, but it’s only appropriate if you have a longer time horizon,” says Cheng. “It’s not even about the money, it’s the pride she gets from paying for it herself.”

MONEY Taxes

3 Tax Loopholes for the Merely Middle Class

You don't have to be super wealthy to find profitable loopholes in the tax code.

Former presidential candidate Mitt Romney’s legendary tax deduction for his horse may sound like the ultimate boondoggle of the super rich.

Ditto for writing off the private jet, stashing money in offshore accounts and paying the nanny as a corporate employee.

Here are some other tax loopholes that might be within your reach:

1. Maximize your 529

The tax benefits of a 529 college savings plan are baked right into the plan—you put in after-tax money and the proceeds grow tax-free, like a Roth individual retirement account. In some 34 states and the District of Columbia, you also get a tax benefit on your state taxes. But there’s more to it than that.

Depending on the state, each parent can make a contribution for each child. That’s why Patrick Beagle, a financial planner at WealthCrest in Springfield, Va., has four accounts for his two children. Beagle and his spouse each contribute the maximum of $4,000 per year for his state’s tax break, for a total of $16,000.

You can also front-load your 529 savings by making several years of contributions at once, something President Barack Obama and his wife Michelle were able to take advantage of for their two daughters, putting $240,000 away all at once in 2007.

Depending on the state, there may be no time limit on how long your contribution has to stay in the 529 account before you get a deduction. If you have a child who is already in college, you can make your yearly contribution, get the tax credit and then withdraw it for use immediately.

2. After-tax Roth conversions

Want to fill up your Roth IRA but either make too much to qualify or find the $5,500 per year limit too low? You can contribute after-tax money to your 401(k) and convert it to a Roth, thanks to a new Internal Revenue Service notice.

Jim McGowan, a certified financial planner with the Marshall Financial Group in Doylestown, Penn., altered his tax-planning strategies for many of his clients because of this change.

For those whose companies allow it, McGowan is having clients put aside $20,000 to $30,000 extra in their 401(k)s after they have maxed out the $18,000 allowed with pre-tax money.

The total an individual can save per year, including any matching funds, is $53,000, so there is plenty of wiggle room.

McGowan’s clients are just starting to utilize Roth conversions, so nobody has rolled over funds yet. “Potentially, it could be an enormous benefit tax-wise,” he says.

Not the least of which is that if you put the same amount in a brokerage account, you’d be paying capital gains every year. But with the extra in a 401(k) and then rolled into a Roth, the funds are sheltered.

Likewise, you can make a “back-door” Roth contribution, even if you are over the income level of $183,000 for singles or $193,000 for married couples.

First, you contribute after-tax dollars to an IRA, which you can do up to the regular limits of $5,500 or $6,500 for those over 55. You can then convert this “non-deductible IRA” at will to a Roth, says Harvey Bezozi, a tax accountant with his own firm in Boca Raton, Fla.

“Some people commingle the funds with a traditional pre-tax IRA, but I like to keep them separate so you can keep track of what you did,” he says.

3. “Business” income

You don’t have to buy a farm, like one of Patrick Beagle’s clients did, just to get some additional expenses to off-set income. Any small business will do.

Beagle has clients who sell products at home-based parties through companies like Thirty-One and Silpada. This opens up a lot of other deductions because they are using part of their home as an office or to store merchandise. There are also phone costs, office supplies, and advertising costs to consider.

And all that guacamole for the handbag party? A legitimate business expense.

Your browser is out of date. Please update your browser at http://update.microsoft.com