With barbecue season still going on strong and Labor Day coming up, we do a lot of grilling of hot dogs, hamburgers, chicken, tomatoes and buns.

But let’s depart from tradition for a moment: I thought it would be a good idea to find out how many meals we could squeeze out of one of those staples. When you want to be frugal, it helps to be somewhat creative. So how far can a chicken go? I was amazed by the answer to that question. Do you realize just how many meals you can get out of one bird? I used to get the smallest chicken I could for a roast dinner. But now I go for a larger one and get plenty more from it as a result.

Image from BBC Good Food

5 Frugal Chicken Dishes You Can Make Out of One Chicken

Here are my five tips for meals you can get from a single chicken:

1. Roast dinner. Roast the bird to begin with and serve sliced breast meat with potatoes and steamed vegetables. I usually find I don’t need too much meat because of the range of other things I have with it.

2. Strip the bird and reserve the wings. With one drumstick added –- the end section of the leg as opposed to the whole thing –- this makes a nice meal eaten cold with salad the next day. New potatoes are great with this too: I either have them warm or cook them in advance and serve them cold, chopped up with some sliced spring onions and a dash of mayo.

3. Chop up some of the chicken meat and throw it into a stew. I bulk it up with plenty of vegetables; try grabbing whatever you can find that is in season. I also sometimes add potatoes to make a one pot meal, or even make my own dumplings with suet mix. The point is that there are plenty of different things you can do here.

4. Make a chicken pie. Once again, I take some of the leftover chicken meat (you can strip the legs as well) and mix it in with some mushrooms. Sage and onion stuffing works well too. I then add gravy and put a top on the pie –- I usually do just a pastry top so it keeps down the amount of pastry I am eating. There are lots of ways I vary what is in the pie, so it’s never the same twice!

5. Finally, the piece de resistance…. Chicken soup. And again, I have never turned out the same soup twice. When I strip all the meat off the carcass of the chicken, I throw the bones in a saucepan and cover them with water to boil and then simmer. Around an hour should suffice for this, although I have found a bit longer does it no harm at all. Seasonal vegetables are the best things to throw in with it, and I would encourage you to try different things to see what you like the best when you do this. If I have some actual chicken left over I shred some of that to put in as well, but it isn’t necessary. The great thing is that you can freeze it as well.

And if that wasn’t enough, I’ve got another tip for you as well. When I roast my chicken initially, I make sure I drain off all the fat from the roasting tray into a glass jug. I leave it to sit until the fat separates. I get rid of the fat and keep the rest of the juices to use as stock. I have tried freezing this in ice cube trays so I get separate home made stock cubes.

So you see, there is a lot you can do with a chicken to save money and get more meals out of it than you might think.

Now let’s move on to some great reads around the financial blogosphere!

Personal Finance Articles

• The Simple Dollar: Finding The Rhythm
• LearnVest: What Is The Cost Of Bed Bugs? A Guide, From Bites To Exterminators
• Oblivious Investor: Vanguard Target Retirement 2055’s Minimum Initial Investment
• Monevator: Why do investment trusts trade at a discount or a premium?
• Lazy Man and Money: Save Money Going on Back to School
• Brip Blap: learn one lesson: who is the client?
• Provident Planning: Coupons for Lottery Tickets – Seriously?
• Cash Flow Sherpas: Frugal Fashionista: Trade, Sell, Buy
• Canadian Finance Blog: Thanks to Tom for voting my post on saving money at the movies as an Editor’s Pick at the Festival of Frugality!
• Squirrelers: Carnival of Money Stories
• My Wealth Builder: The Wealth Builder Carnival #3
• Budgeting In The Fun Stuff: Carnival of Personal Finance

5 Frugal Chicken Dishes You Can Make Out of One Chicken

Becoming the Boss

Working as your own boss is one of the pros of owning your own business. You may find that you like going to work every day when you are the one in charge of running the operation. Being the boss is also challenging, no matter what the size or type of business you are working in. You will be the person that has to deal with any problems and will need to multi-task throughout the day to ensure all of the details are taken care of. It does take a lot of commitment to become the owner of a small business.

Business owners are among the busiest of all employees. You are the person that deals with customers, employees, production, and may be in charge or hiring and firing employees. If you are just beginning a small business, it does take a little time to adjust to all of the demands of owning a business. Of course, being your own boss and making all the decisions are also very rewarding, as well.

Work Ethic

Owning your own business can be very time consuming. As the boss, you may find that you need to spend more hours at work than ever before. being able to make most of the decisions does mean that you are responsible for the outcome, but it also means that you are able to enjoy the rewards, too. If you think that owning a business will allow you to just hire someone to do your work, the truth is that you will be disappointed. Working hard is the key to making your business successful.

Once you business has become successful, however, you may find you get to work less and enjoy more time away from work. Having a business that runs smoothly is the ultimate reward, since you have less to worry about and more time to enjoy the profits of your business.Since you are in charge, however, you also get to determine your earnings.

Profits

Along with being your own boss, you also get to decide how important profits are. While you may not get a traditional salary when you own your own business, you do get to determine how much money you make. With a successful business, the profits can quickly become surprisingly high. If you are committed to making your business successful, you can easily meet your goals to earn more profits than you have ever imagined. With the right business plan and some hard work, you can see a small business blossom into a booming enterprise.

The more profits that you earn, the more you have to enjoy. While you do have to pay the overhead for your business establishment and your employees, the profits are all yours to keep. You can decide where your profits go, too, whether you choose to expand your business or you want to begin saving for retirement. All of the responsibility are yours when you own your own business, but so are all the profits. You may decide that running a small business is something that pay off well in long-term rewards, despite the many challenges that you face.

Your Personal Beliefs

Another benefit of owning your own business is that you can meet and exceed your personal expectations for running a business. For example, if you are concerned about the environment you can begin selling eco-friendly alternatives to products that are popular on the market today or you can use Earth friendly manufacturing practices. Owning your own business is a wonderful way to ensure your personal expectations for quality and customer service are met. You also get to decide the type of business you own, with choices that range from service based to manufacturing.

Making all of the decisions takes some time to become accustomed to, but that doesn’t mean that you can’t own your own business. After a few weeks of running your own business, you will find that it becomes much simpler and less time consuming than you may have expected. There are many benefits to owning your own business, so don’t be intimidated by the challenges that you will face along the way. You will eventually be able to relax and enjoy more profits for much less work than you could have ever anticipated.

Miles Walker is a freelance writer and blogger who usually compares car insurance deals over at CarinsuranceComparison.Org.

The Pros and Cons of Being Self-Employed is an original article from the website brip blap.

We had a fantastic time in Seattle, and I was pleased that the American Express SkyMiles card worked well to save on baggage fees.

So here I am on vacation again! I drove down with the boys earlier this week and Scott is flying down with our daughter today to join us for the long weekend.

It was the first long drive that I’ve done by myself with the kids, but we set up BuddyWay GPS tracking so Scott could keep an eye on us during our trip. It was pretty slick!

Of course, before we came down, I looked to see if the vacation home we were considering earlier this summer was still available… and the price was reduced by $10,000!

That makes it really tempting… however, since vacation season is wrapping up, I’m going to keep an eye on it and see if the price drops more over the winter and see how bad the seller need to unload it. Maybe we’ll be able to scoop it up for really cheap in March!

Retirement

• Withdrawing Money During Retirement
• 10 Guiding Principles For The “New Retirement”
• How To Find More Money for Your Retirement Account

Real Estate

• Is Home Ownership Still Part of the American Dream?
• Landlord-Tenant Relationship (A Tenant’s Perspective)
• How Much Mortgage Can I Afford?

By the Numbers

• 6 Strategies for Beating Inflation
• 20 Ways to Untie from Whatever Is Holding You Back
• 18 Great Reads That Changed My Life
• 5 Keys to Retire Overseas

And More!

• Things vs. Experiences
• I Want To Become a Minimalist, But I Could Never Give Up My…
• How to Become a Successful Consultant
• Emergency Preparedness: How Does Your Family Rate?
• MonaVie Blackmailing Me
• How A Second Income Stream Can Give You Some Financial Security
• Carnival of Personal Finance

Click here to leave a comment on this article.
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This is a column by regular contributor Clark.

The earlier parts of the bond series dealt with the basic types of bonds and their risks and suitability. This part will begin a sub-series on corporate bonds.

As mentioned in the first part of the series, corporate bonds are issued by companies to gather funds for their business. With thousands of companies issuing bonds, where does one start to make the list smaller?

Credit Rating Agencies

Similar to credit reporting bureaus that keep track of a consumer’s credit history, there are Nationally (US) Recognized Statistical Rating Organizations such as DBRS (short for Dominion Bond Rating Service), Moody’s, Standard and Poor’s(the S&P Indices fame) and Fitch Ratings that issue credit ratings for companies. These agencies offer a rating system to aid investors in determining the risks associated with investing in any company. Debt could be secured or unsecured and there are specific ratings for short-term debt, long-term debt, preferred stock, etc. A glance at the long-term credit ratings of a company (that also considers assets or collateral needed in case of default) would show the company’s ability to fulfill its debt obligations and credit worthiness. It must be noted that credit ratings are not meant as alerts to buy, hold or sell; they are just a tool to assess a company’s capacity to pay back debt.

Foreign Currency Debt

Companies may borrow from lenders inside and/or outside the country (for example, Canadian companies may make use of US banks and vice versa). As would be obvious, borrowing from foreign lenders comes with currency rate fluctuations. Repaying a local (as in country) lender is straightforward – if the company has the money and willing to repay, then the debt is paid. But, in the case of foreign currency debt, companies would have to consider currency rates and decide if it is lucrative to repay debt at that existing currency rate or watch market forecasts and calculate if they would be in better health by holding off until when they think the exchange rate will be stronger (they may also invest overseas at such a time). Foreign currency debt throws another variable into the mix but thankfully, agencies evaluate an organization’s ability to repay debts in local and foreign currencies. If the organization has foreign currency debt but does not have sufficient foreign currency reserves, then their rating may be lower.

Corporate Credit Rating

Corporate credit ratings range from the highest quality (best) to junk level (worst). Agencies use different designations but in general, long-term ratings are denoted by the letters AAA (triple A), which is the best credit rating (meaning low credit risk) and C or D (based on the agency) is the worst (default level as in failing to meet obligations). There are subsets to the basic category, which might involve a “+” or “-” sign to indicate subclasses (again, varies based on the agency). For example, the Fitch Ratings use AAA, AA, AA, BBB for investment grade and BB, B, CCC, CC, C, D and NR (not rated) for non-investment grade bonds. A good credit rating helps a corporation attract new partners or retail investors, apply for an increase to their line of credit, or sell their business.

Sovereign Credit Rating

A sovereign credit rating provides information about a country’s ability to provide a stable and secure investment market. This rating is contingent on a country’s economic status, market transparency, foreign investments, currency (local and foreign) reserves, and political stability to name a few. Potential investors can analyze the country-level risk associated with the company they are looking at and arrive at their decision. A sovereign rating is critical, since it will boost the country’s prospects in terms of pulling in foreign investments and assisting in the growth of the economy.

In the next part, we’ll look at some metrics worth knowing about when purchasing corporate bonds.

About the Author: Clark is a twenty-something Saskatchewan resident employed in the manufacturing sector. He repaid around $20,000 in student loans and has been working to build his investment portfolio as a DIY investor (not trader) while nurturing plans to retire early. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.

Popular Posts:

• Canadian Discount Brokerage Comparison
• Top 6 ways to Save on Auto Insurance
• High Interest Rate Savings Accounts
• MBNA SPG Credit Card Review
• Questrade Review
• Are Hybrid Vehicles Worth it?
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Copyright 2010 MillionDollarJourney – All Rights Reserved

When we first bought our home we received a ton of advertisements for mortgage protection insurance in our mailbox within the first week. They kept on coming at least one or two letters per week offering mortgage protection insurance, mortgage protection plans, and mortgage cancellation insurance for the first six months of owning our home. It was insane.

I had never heard of mortgage protection insurance so I figured other potential home buyers would be interested in discovering what it’s all about before all those letters start hitting your mailbox.

Private Mortgage Insurance vs Mortgage Protection Insurance

Many of you are probably familiar with private mortgage insurance or PMI. Although the names are similar PMI is completely different than mortgage protection insurance.

Private mortgage insurance is almost always required by banks when you buy a house with less than 20% down payment. (Your only other option is a second mortgage at a higher rate than the first mortgage). PMI protects the bank’s investment, if you default on the mortgage loan the insurance kicks in and pays the bank what you owe them. PMI is basically a premium you pay for having a small down payment and it helps insure the bank’s money.

Mortgage protection insurance is an extra level of insurance you can buy whose purpose is to protect against unforseen life events (becoming disabled, losing your job, or death) that make it difficult or impossible for you to make your mortgage payments.

Mortgage Protection Insurance Coverage

MPI will pay your mortgage for you if your circumstances meet the criteria of your policy. Many policies have a limit on the amount the policy pays or length of time it will pay for you. (Some limit both.)

So when does it kick in?  As I mention it depends on the policy but in general, if you:

• become disabled and unable to work
• lose your job and lack income to make mortgage payments
• die (these policies usually pay off the loan)

Mortgage Protection Insurance Alternatives

Let’s address each of the above issues.

Disability – One option is to buy a disability insurance policy. With this policy you’ll get a monthly check to replace your lost income. That’s income that you can use for anything — not just your mortgage like with MPI.

Unemployment – One common suggestion to guard your finances against losing your job is to build an emergency fund. An emergency fund can be used to fight not only unexpected unemployment but also any big financial issues like a car dying or unplanned medial bills.

Death – A term life insurance policy would be a good alternative to mortgage proection insurance.  The benefit of life insurance is that your family can use the money as they see fit, they wouldn’t have to use it to pay off the house like mortgage protection insurance would do.

Where to Buy Mortgage Protection Insurance

Let’s start with two places to not buy mortgage protection insurance. You should not buy a policy from your bank or anyone your bank recommends simply because it is your bank. I’m not saying you shouldn’t consider these policies, just be sure to watch out for conflicts of interest.

Along the same lines, I would be wary about buying mortgage protection insurance based only on a direct mail advertisement.  Not that you should rule a company out simply because they sent you an ad in the mail but make sure you research the company and the policy they offer.  For example, The Hartford is a reputable insurance company and they sent me information about the product but I wouldn’t automatically use them simply because of their reputation.  I would find out the terms and details of their policy before signing anything or paying any money.

If you’re considering mortgage protection insurance the best thing to do is probably consult with an insurance agent that specializes in the product. An alternative to an in-person meeting with an agent would be to do a lot of research of companies online. (But I wouldn’t buy this type of insurance online unless I was very, very sure of the company and website I was purchasing from.)

Comparing Mortgage Protection Plans

As with any insurance product there are a lot of factors to consider before you make a purchase decision. Here’s a quick run down.

• Cost/Benefit Ratio - How much is the policy going to charge on a monthly basis?
• Policy Cancellations – Are there a lot of “catches”? Do you have to pay a fee to get out of the policy?
• Health Factors - Do health risks increase the chances you might need need this insurance?
• High-Risk Occupations – Do you work in industries that are more likely to lead to death or disability (loggers, oil rig work, etc.)?
• Financial Situation – Can you afford the insurance and have you run the numbers on the alternatives?

The last factor to consider is the actual insurance you are purchasing. You pay a flat fee for a slowly less valuable payoff. If you use the insurance one year into owning your home then the insurance company will be paying you the full amount of the insurance.

The flip side is if you use the insurance with one year left to pay off your mortgage your benefit will be significantly reduced.

Is MPI for you? I prefer having insurance products and savings that cover me in a multitude of financial situations, but some people may find value in mortgage protection insurance.

Just a simple question for you..are you ready for some football? I know I am. And what’s this rumor about extending the NFL season to 18 games? I don’t like it. As much as I love football, I don’t think extending the season would be popular. With 16 games, every game counts. With 18 games, each game counts a little less.

Besides, the season would drag well into the next year. Imagine Superbowl Sunday in March. Just doesn’t seem right.

The Frugal Roundup

It’s Still a Good Idea to Buy a House in this Economy. You should only be looking to buy if you are debt free with a solid emergency fund, and have a decent down payment. Record low interest rates are not enough to make up for poor financial footing. @Free From Broke)

12 Reasons Why You’ll Be Happier in a Smaller Home. One of the biggest early expenses of buying a much larger home is buying more furniture to fill it up. If I had more money to spend on real estate I’d buy more acreage, not more square footage. (@Becoming Minimalist)

My College Savings Plan, Look Out for #1. It’s fairly easy to convince people to save for their own retirement before savings for their kids’ college education. Perhaps other financial goals should come before college savings, too. (@Budgeting in the Fun Stuff)

Finding the Rhythm. I can certainly relate to this one. As soon as I get in a groove with anything (money, diet, etc.) I hit a speed bump and it completely derails me. (@The Simple Dollar)

7 Simple Ways to Say No. The word “No” continues to be one of the more difficult words to say in the English language. If you struggle saying no, to people, to stuff, to whatever, I suggest reading this one. (@Zen Habits)

Best of the Rest

• Making Donations Truly Count
• 10 Lies You Will Hear Before You Pursue Your Dreams
• The Beauty of Handwritten Note
• 20 Ways to Untie from Whatever is Holding You Back
• Do You Have to Pay Taxes on Unemployment?
• Decorating With Photos

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At the heels of a $50 bonus for new TradeKing customers, ETrade has come up with their own sweet offers. I’ve actually been an ETrade customer for ages now and have been with them since they first launched. That’s way over a decade ago. At any rate, I’ve always been happy with their service. They’re one of the earliest and best online brokers in the industry, having received some of the highest ratings from various industry watchers and publications.

ETrade: Free Trades for 60 Days, Get Up To $500 Cash Bonus

E*TRADE is offering a number of promotions for new customers. By opening a new E*TRADE Complete Investment Account, a Power E*TRADE account or an E*TRADE IRA, you’ll be eligible to receive these deals. Here are the details:

#1 Trade for free for 60 days AND receive up to $500 in cash.

To partake of this deal, you’ll need to open a new E*TRADE Complete Investment Account or a Power E*TRADE Account and fund the new account with a minimum of $2,000. You can do this through wire transfer, through the mail or via an ACH transfer, or by switching brokers and moving your account over.

The number of free trades you’ll receive will be based on your trading activity during the first 60 days of opening and funding your new account. When you start trading, the commissions that you’ll typically pay will be credited, up to a maximum of 500 trades. Therefore, you’re eligible to receive up to 500 free trades. You’ll need to fund your account within 60 days of opening it in order to keep it in active standing. Note that you won’t be compensated for any unused trades once the time period expires — you’ll simply get a credit for each trade you make. To keep things in good standing, make sure that you keep your account funded (minus any losses through trading) for a minimum of 6 months.

On top of the free trades, you can also earn up to $500 as a cash bonus based on the amount of your initial deposit, which you’ll need to make within 45 days of opening your new account. The payouts are listed as follows:

• For deposits of at least $250,000, you’ll get $500.
• For deposits between $100,000 and $249,999, expect to receive $250.
• For deposits between $50,000 and $99,999, expect to receive $100.
• For deposits between $25,000 and $49,999, expect to receive $50.

This offer is good for a limited time.

#2 Get up to $500 as a bonus when you open an IRA.

If you establish a new IRA account with E*TRADE, you’ll receive a cash bonus as a deposit into your account. You’ll get the bonus once you create a new Rollover IRA, Traditional IRA or Roth IRA and move new funds or securities into your new account within 45 days of opening it. To keep the cash, you’ll need to keep your account funded for a minimum of 6 months. You can expect to get the deposit within 8 weeks of funding your account. And as usual, this is a limited time offer.

As for how much you’ll receive as a bonus? That will vary based on how much your initial deposit is.

• For deposits of at least $250,000, you’ll get $500.
• For deposits between $100,000 and $249,999, expect to receive $250.
• For deposits between $50,000 and $99,999, expect to receive $100.
• For deposits between $25,000 and $49,999, expect to receive $50.

#3 Get 100 free trades when you open an IRA.

And finally, if you like to trade, then maybe the 100 free stock and options trades will be enticing to you. This will apply to new Rollover, Roth and Traditional IRAs. You’ll be credited for up to a maximum of 100 trades that you make within the span of 30 days from the time you open and fund your new account. You will initially pay for your trades but within 8 weeks of making those trades, you should receive credits for those actions you’ve taken. Again, you won’t be compensated for unused free trades, which will expire after 30 days of account open (and funding). Note also that this offer can’t be used in conjunction with the $500 cash bonus offer for new IRAs. This is also a limited time offer.

ETrade: Free Trades for 60 Days, Get Up To $500 Cash Bonus

Stock analysis across multiple stocks is much simpler if you take advantage of the insight you can glean from a collection of stock market ratios such as earnings per share, price earnings, dividend yield, and debt to asset ratio.  The performance and market conditions for each company behind shares of stock you’re comparing will vary, making it harder to evaluate the companies all on the same criteria.

That’s where financial ratios come into the picture; they can help you understand where companies stand relative to one another in terms of cash flow, debt, earnings, and other important financial metrics. Once you understand what these ratios represent, you can setup stock screens on the various ratios to help you find stocks of companies that meet the specific criteria that are important to your investing strategy.  Most online brokers allow you to setup stock screens to help monitor these ratios.

A while back we ran a series of posts covering some of the most widely used stock analysis ratios, below are links to each of the articles.  Each one describes what the financial ratios represent and how you can use them to analyze a stock.

• Earnings Per Share & Price to Earnings Ratio
• Price to Earnings Growth, Debt to Asset Ratio, & Dividend Yield
• Price to Book Ratio, Beta, & Price to Sales Ratio

Flexible Spending Accounts Provide an Easy Way to Save Money and Pay for Health Care Expenses

One unfortunate result of rising costs associated with health care and health insurance is that employers are now looking for ways to trim employee health benefits. This usually includes increasing co-pays, out-pocket-costs, and deductibles. The good news is that employers are also conscious of the burdens such benefit cutbacks could potentially have and are thus introducing new services to offset the increased costs shouldered by their employees.

Flexible spending account plans are just one such product intended to minimize the strain employees face while their employers transition to a different, more affordable health benefit program for the company. These plans are meant to act as sort of a personal insurance paid for by the employee with the benefit coming in the form of a tax break.

Moreover, in contrast to a health savings account, a flexible spending account is a program through which employees set aside money which they predict will be spent in the upcoming coverage year. Under a flexible spending account plan some predetermined amount of money is automatically deducted from an employee’s pay check and deposited in an account. These funds are then to be spent on a qualifying expense in that same plan year.

More specifically, flexible spending account plans are aimed at partially covering the gap in out of pocket expenses created by higher co-pays and deductibles. The kinds of expenses which may be covered under a flexible spending account plan are limited to health care costs and costs associated with caring for a dependent. Although employees must still assume the responsibility for these increased expenses, under the plan it would be possible for plan members to use pre-tax dollars for some expenses. Generally speaking, the savings when participating in a flexible spending account will be anywhere from about 20-35%.

Joining Your Employer’s FSA

With a flexible spending account employees are given the opportunity each year to opt-in to the plan. Each employee carefully determines how much of his or her salary will be directed to the plan at the beginning of the coverage year. it is It is especially important to estimate your costs wisely because an FSA is a use it or lose it plan and money leftover in the account after the plan year ends will be forfeited.

The funds to be dedicated to the plan are called “benefit elections.” For medical care and dependent fare flexible spending accounts, the coverage period is 12 months, although there may be a brief extension in some plans. Sometimes employers will begin plan benefits at an irregular time of year for the first coverage period with the intent that the first year will be a “short plan year,” and that the next plan year will begin on the normal starting date. In such cases the period of coverage must be the entire short plan year. If employee voluntarily terminates employment during a coverage period they may either forfeit all available funds or discontinue making contributions or they may continue making contributions through the end of the plan year through COBRA. The deadline for qualifying expenses to be used before forfeiture is typically either December 15 or March 15. Employees should seek information from their employers or plan providers to be sure about the correct date. Also, only services which have been performed after the start of the coverage period are reimbursable. Hence, bills or records from before the coverage period are not eligible for reimbursement.

Deductible Expenses

Many, but not all medical expenses are potentially reimbursable from a flexible spending account plan. The expenses which may be excluded from gross pre-tax income according to tax code Section 213 may be reimbursable; however, any expenses reimbursable through any other health care plan of which the employee is a participant may not be reimbursed through a flexible spending account.

Typical reimbursable health care expenses:

• Ambulance services
• Coinsurance
• Contact lenses
• Dentures
• Eye exams
• First aid supplies
• Lab tests
• Physical therapy
• Mental health expenses
• Smoking cessation
• Substance addiction treatment
• X-rays

Health care expenses generally ineligible for reimbursement:

• Cosmetic surgery for appearance only
• Dental bleaching
• Ear piercing
• Health club memberships
• Life, LTC, or disability insurance premiums
• Marriage counseling
• Massage therapy
• Tattoo removal
• Weight loss treatments (unless specifically prescribed by a doctor)

For more information about expenses which may be reimbursed under a flexible spending account plan, see “Medical and Dental Expenses” which is also known as IRS Publication 502. The document provides an exhaustive list of eligible services and expenses. Expenses which are typically not reimbursable under most plans are generally cosmetic or services and products not usually considered to be health care related.

Despite the fact that the decision to participate in a flexible spending account plan is made annually, in certain circumstances it is possible for plan sponsors to permit employees to alter benefit election requirements. For example, an employee who either marries or divorces during the coverage period may be permitted to alter the amount of his or her salary that must be contributed to the flexible spending account. Other conditions under which the terms of a plan may be changed include a change in the number of dependents and a significant change of residence or work location.

Changes for 2011

Starting January 1, 2011, you will need to be careful when planning your FSA deduction amount because there are changes in what can be reimbursed when it comes to over the counter drugs. In most cases, regular OTC drugs will not longer be eligible, but there are exceptions on insulin for diabetics and if your doctor prescribes a specific OTC drug. So, keep that in mind when making your elections for the 2011 plan year.

About the Author: Jeremy is a retirement planning specialist and founder of Generation X Finance and the guide to Financial Planning at About.com. To learn more, follow Jeremy on Twitter.

Flexible Spending Accounts: Is a FSA Right for You?

Given this, you would think that the government would not make you pay income tax on that money as well. However, you would be wrong; you do need to pay taxes on unemployment income. Well, wrong and right, depending on what year you were unemployed.

Unemployment Taxes: Pay Now or Pay Later

During my unemployment, I had failed to fill out a W-4V form indicating that I wanted income taxes withheld from my unemployment benefits. I reasoned that come April I would be making much more money and could afford to pay the tax bill at the end of the year; besides, I could use all the money I could get at the time to cover things like the rent, food, student loan payments, and gas bills that didn’t cease just because my job did. Because of my choice I took a tax jab in April 2007 to the tune of $450 which doesn’t sound like a lot, but was something I had failed to plan for.

When you file for unemployment, I would recommend choosing to withhold taxes on your unemployment compensation as you receive it, which means the government will automatically take out a flat 10% no matter how much your paycheck is.

Some states exempt unemployment compensation from state income tax, but many states, such as Massachusetts, Wisconsin, and New York, take their tax share of your unemployment as well at around 5%. Check with your state’s Department of Revenue for more specific information.  

Those Who Don’t Need to Pay Unemployment Taxes

With the unemployment rate hovering around 10%, the government took action to make the first $2400 of your unemployment compensation you received in 2009 excluded from taxation (if you are married and both spouses were unemployed in 2009, each spouse may exclude $2400 from taxation, totaling $4800). If you were unemployed in 2008, or are unemployed in 2010, you must still pay income tax on your earnings. Also, even if you are exempt from the federal income tax in 2009, be aware that your 2009 earnings may still be liable for state income tax.

To determine if you’ll need to pay taxes on other income you make during the year, you can see the guidelines for minimum income to file taxes.

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