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Well, things have slowed down a bit here at Max Out of Pocket. We are about a month out from meeting little Max or Maxine and we have reallocated our time accordingly. After closing out a large project at work in early March, we took one last weeklong trip to New York and Michigan to see family. Now, we will sit tight for the next thirty days.

The lead-up to this has been surprisingly calm. We painted the nursery, set up the crib, installed the car seats, and toured the birthing center. We even packed the hospital bag. Mrs. Max OOP has been working a light teaching schedule and keeping herself healthy. It’s been fun, and everything from here on out is just gravy. To top it off, I closed out a 10-week ski racing series. My last race was this past Wednesday and I put up my best time of the season.

Some people will call this period “the calm before the storm.” I don’t buy that. That’s just another one of those things you are supposed to say.

We are excited to meet the baby but also want to enjoy the final month of pregnancy. It will be a fun summer in New England, and we are looking forward to working this multi-year joint venture into our routine. And routine will likely be the hallmark of our parenting strategy from day one.

Out-of-Pocket Costs

The up-front capital costs for this baby project have also been surprisingly low.

We picked up a gently used crib (pictured above) from Mrs. Max OOP’s sister while we were in New York. We insisted on trading two bottles of wine for it (~$30). I spent about $35 on a can of paint to spruce up the nursery. We dropped approximately $50 on a new cozy bassinet and another $50 on blankets. We also purchased a new car seat for around $100. I already installed a base into each of our cars, and we may even get that inspected by the nursing staff or police department. The baby will likely come home in Mrs. Max OOP’s 2007 Honda Civic, purchased way back in 2007. The Civic will celebrate her 14th birthday this year.

I will round way up here and say we are at about $300 out-of-pocket for standard baby stuff. We are hoping nature will provide baby food for free for about 6 months or so. We ordered a breast pump today for $0.00 out-of-pocket.

Friends and family have been extremely generous as well. They have helped with several other items not on the list above. One of my favorite blogging friends gave us a gift card to Amazon! Thanks, Dragon Guy! I love how engaged you all are with our confusing healthcare system.

What About Medical Costs?

As you might expect, medical expenses related to the pregnancy make up the brunt of our baby-making costs so far. It’s an easy thing to complain about. Our max out-of-pocket for services provided from January – December 2021 is $6,600. We will easily hit that figure. Once we do, all additional medical costs in 2021 will be paid in full by my insurance. This means I can flat out ignore complicated things like family deductibles and coinsurance. My max-out-pocket trumps all of that and $6,600 is the most I will pay for medically necessary services.

Maybe I should get my bunion fixed in 2021 while we are at it? I also have a pin in my elbow I should consider removing. It was put there in 2017 after a nasty fall during a trail run. Perhaps 2021 is the year to get this hardware taken out? Yes, timing healthcare services should be a consideration, but only when it makes sense.

Total Cost to Date

Since our max out-of-pocket bucket reset in January 2021, we saved some serious money with Mrs. Max OOP in Canada during the first 3-4 months of pregnancy. Likely in the neighborhood of $2,500 or more.

Since she returned to the States, we have hit $2,853 of our $6,600 max out-of-pocket in 2021. My insurance has a nice little bar graph showing our progress to the promised land.

I will very briefly cover this below.

• 1/05/2021 – Covid test: Paid in full
• 1/15/2021 – Hospital ultrasound and interpretation: $1,252.64 (that’s paying too much)
• 1/26/2021 – Routine preganacy lab work: $117.38
• 1/26/2021 – Routine vaccines: $74.72
• 2/22/2021 – Gestational diabetes test: Paid in full, likely an error on the insurance side
• 2/26/2021 – Hospital ultrasound and interpretation: $786.96
• 3/12/2021 – Non-routine labs to check for a minor issue that came back negative: $621.30

Total Out-of-Pocket Costs so far in 2021: $2,853

I have not set up any of these bills on the payment plan yet; I will look into that this week. The reason you don’t see doctor fees here is because all of those appointments will be included in the baby delivery charge. We call that a “global fee” in healthcare finance.

Let’s make a mental note here for later.

In 2020, we paid cash in Canada for three clinic visits, one telehealth visit, two ultrasounds, lab work, and a nuchal translucency ultrasound. All that came in at only 794 USD. 

Our very first ultrasound in the hospital setting here in the States after my insurance discount came in at $1,253. Is this a sign of inefficiency, or just cost-shifting at its finest? Keep in mind, it was my decision to have these services at a hospital instead of an imaging center; no one forced my hand. It was also our decision to have a baby in the first place. Yes, I am purposely playing both sides of the argument.

Downsizing Project

The Max Out of Pocket crew has made a multi-year effort at downsizing. I have been leading this push to the point where I might actually be annoying myself. Mrs. Max OOP has been a good sport, though.

We sold our 2,200 square foot house (+large basement) down in North Carolina back in May 2017. We landed in a 900 square foot $1,000/month rental here in New England. It was a bold move and something I don’t regret for a second.

I still remember getting a quote from the moving company my new employer recommended. The move from North Carolina to New England happened to be the exact amount of my new company’s moving allowance. I found that suspicious.

Instead of hiring an overpriced moving company to move all the possessions that come with an oversized house, we moved everything ourselves. This decision left us with almost $7,500 cash, which will cover our entire out-of-pocket costs for the baby delivery. It could also cover 15% of our annual expenses. I flew a friend down from Michigan to help with the move and we turned it into an awesome road trip. We got a presidential suite at one of the Marriotts along the way.

Since self-storage units are for suckers, we initially crammed everything into the rental and put our overflow items into the crawl space under the house. It was ugly, but we made it work.

Since then, we have completely emptied the crawl space. We went through boxes and boxes of stuff, getting rid of things we did not use. What’s left is slowly getting as organized as it can be in our tiny attic.

I can finally say I feel nimble now, and it’s a good feeling. We still have some work to do here, though.

Future Plans

All of this downsizing has led Mrs. Max OOP and I to talk about “what’s next”. Having our first baby almost completely financially independent is likely a unique situation that must be carefully respected.

We will definitely be staying put for at least the next 6 months. My wife will take the summer off teaching and concentrate on the baby and routine. I will take my four-week parental to focus on the Baby, Bonding, and Benjamins. I have plenty of PTO, which is my favorite benefit. After that, the sky is the limit.

We have toyed with the idea of moving to Canada or Australia. My wife’s triple (US/Canadian/Australian) citizenship makes those moves easy, and she could start generating income quickly. She is anxious to get started with her new skill, butchery, and even went as far as applying for a position in Ontario a few months back, but nothing came of it. We have a $100,000 opportunity fund dedicated to this concept. I moved that money into corporate bonds, which remains questionable, but I am holding steady for now.

If we did move, I would consider taking some time off work since my skillset likely does not transfer quickly to those countries. In contrast, I am also considering another stint in a new hospital system here in the States, a sure sign of ‘one more year syndrome‘. We would then pad our growing retirement balances for another year or two. Since I still enjoy the work, that wouldn’t be the worst plan in the world.

Time will tell here, but I sometimes feel like I am in the last semester of college.

Personal Finance

I am making a ton of progress in implementing my 2021 investor policy statement. I have not written about this yet, but I completely fumbled a $38,000 health savings account consolidation in late 2020. The custodian transfer took way longer than I expected after selling my position in the total stock market. Meanwhile, the total stock market continued to rise. Lesson learned, I suppose. I have been dollar-cost averaging the funds back into the market to correct everything. Yes, I know lump-sum investing normally wins.

I put a little rant up about it over on David’s blog.

It is also natural for humans to complicate things that don’t need to be complicated. I have been touting my tilt by making some small purchases into small-cap funds. Dr. Medimetary shared a great podcast in the comments of that post that made me think about the strategy some more. I listened to it on my way to Michigan.

Although I am looking to simplify the medical office building portfolio, I am having difficulty selling off the positions in my retirement accounts. It’s in my head, and I am unsure what my deal is, but it needs to happen soon. It is one of the last things on my list to simplify. It is not the worst thing in the world, though. We cleared another $1,066 in passive rental income in the first quarter of 2021 bringing the total to just over $6,000, not including capital gains.

I do need to be careful here. My state will start taxing me 5% at $4,800 in dividend income, and we were not too far off that in 2020. The tax would be immaterial initially, but it’s the tax return paperwork I don’t want to deal with.

Speaking of taxes, I am close to finalizing our 2020 taxes. It’s weird seeing so much ROTH contribution this year. I maxed out my traditional 403(b) and IRA for over 8 years.

Final Thoughts

Things have been surprisingly calm ahead of having this baby. At the risk of sounding naïve, we plan to keep it that way. I know our routine will change dramatically, but there will be a routine from day one. We are already building it.

Out-of-pocket medical costs will come in at $6,600 for 2021. That’s a lot. But it will be heavily subsidized through a tax shelter when I pay it out of my health savings account. I will also get a $3,000 tax credit for this child in 2021 to help with the cost. That’s on top of the $2,800 we already got from the government this year. Perhaps we are seeing a round-about way of subsidizing our healthcare expenses? As I said, Max loves playing both sides of the argument to get people fired up.

My investor policy statement is close to being implemented, and Mrs. Max OOP and I are carefully considering future plans while staying grounded and focused on what’s right in front of us.  

It’s been a fun few months, and we are really looking forward to meeting our baby.