I strongly advise you to add substantial Med Pay coverage to your auto insurance policy. It tends to be extremely cheap, and if you’re ever in an accident, it will pay for your related health care and other expenses upfront, (even reimbursing you for lost income, I believe.)

I was in an accident a number of years back, and wished I had a higher amount of Med Pay. I later increased it to the maximum amount available and it only increased the premium a few dollars. If I had done it before the accident, it would have saved me a whole lot of money, grief and stress.

It’s especially important if you don’t have health insurance or if you have a high deductible health insurance plan.

By the way, high deductible health insurance plans combined with Health Savings Accounts are another terrific way to save for your future with great tax benefits and to also have more flexibility in your health related spending. They’re especially great for young and healthy people who don’t use medical services very much.

Pay attention to the maternity coverage and factor that in if it’s a likely consideration. Some high deductible plans don’t cover normal delivery and recovery. (Although you can negotiate much lower fees ahead of time with the doctors and hospitals, and use the money you have accumulated in your HSA for expenses.)

Many times you can find a good plan at about a third of the cost of a normal plan, with the difference being deposited to your HSA by yourself or your employer – whoever is paying your premiums now.

See if you employer offers HSAs or set one up for yourself if you’re self employed.

I’m 25, finished grad school last year, and have a stable job. As of this summer, I finally had a positive net-worth (even including a student loan) and had just started following a reasonable budget, which included saving around $1200/month in addition to 401K contributions.

Then one day, my car was totaled (it wasn’t my fault) when it was rear-ended by a pickup truck. I found myself going from not ever having a car payment (I bought mine used and paid cash) to being forced to buy a car without having too much time to compare models and shop around. In addition, I have to pay my medical bills outright and be reimbursed when I “settle.” (I’m very lucky though that I wasn’t seriously hurt, but man, doctor’s visits, Xrays, and PT are expensive!) The problem is, I’ve used my entire emergency fund to pay for the car!

Has anyone had their lives turned upside down by a situation like this? How do I go on budgeting after this, at least, in the short term when I’m out so much money and every cent is going toward bills? (Wish I could say I didn’t need the car, but my city isn’t public-transportation friendly.)

If nothing else, I hope this comment helps to emphasize that you should NEVER underestimate an emergency fund.

Love the blog…it’s inspiring!

I recently had some women comment on a post saying that they were great at budgeting but ran into trouble when friends and relatives invited them out. They didn’t want to disappoint people by saying no.

And I was just so shocked. Because I’d never assumed it was an either/or. There are so many options out there! Some are less frugal than others, but I always thought of financial smarts as a whole spectrum, from miser to spendthrift and everything in between.

Granted, I’m a total knee-jerk saver and my husband mellows me out (and vice versa) because he’s more inclined to spend. This way, I loosen up a bit and enjoy myself a little, and he learns there’s a life beyond spending in the moment.

1) Jessica needs to get some new friends — people who believe in saving money and living modestly, not in trying to impress others with a BMW. Expand your circle of acquaintances! Comparing yourself to conspicuous consumers when you are a saver will make you miserable any time. I’ll bet at least some of those folks driving flashy cars are already decades deep in debt — not a place Jessica will ever be if she stays on this path. Next time you look at a BMW, Jessica, think, “$500 per month car payment.” It’ll help! And read “The Millionaire Next Door.” It’s an eye-opener.

2) Jessica needs to read some inspirational stories about young people who are savers. Go looking on the internet! This blog is a starting point. Try “An English Major’s Money,” too. And check out stories like this one: http://money.cnn.com/2008/08/15/pf/millionaires.moneymag/index.htm

3) Jessica, if you are 24, you are only one year shy of the lowest age that the online calculators will allow you to enter. Don’t sweat the extra year, just go ahead and use the calculators. The extra year can only work in your favor if you’re already saving!

You also have to be flexible and allow yourself room to breathe. My budget is really tight on 33K a year and for the longest time I wouldn’t allow myself to spend anything or buy the kinds of food I liked to eat. It wasn’t until I rethought my strategy and asked myself what my priorities are did I start to have fun, eat well and live a little.

Some friends spend a lot, but I try not to speculate why or how, instead, I focus on my own goals.

I fully agree that personal finance should not make you miserable. It should be used as a tool to help to accomplish most things you want in life… owning a home, travel, cars, etc.

I actually think your response was better than the “expert’s!”

I’ll take financial peace of mind over a consumer item any day!

Think about whether you want to live “high on the hog” or whether you want to feel secure at night when you sleep – knowing that one big bill is not going to send you over the edge.

It was impossible for me if I obsessed about that way huge, scary number. Now that I don’t think about the 10 MILLION, it’s much more chill.