New Job Checklist--Making the Most out of Benefits

This post has been included in the Carnival of Personal Finance, Cyber Monday Edition, hosted by Mighty Bargain Hunter. Please have a look at some of the other great financial tips there this week.

As I have mentioned a bunch of times, I started a new job a few weeks ago. (And I am very thankful for it.)

The benefits are good, but I needed to do some planning to make the most of them. I finished the paperwork today:

Flexible Savings Accounts
I have one for dependent care and another for medical expenses. Here's where people who track their expenses with Quicken or MS Money have the advantage--just run a report on your last year's spending on these categories, think ahead to any big known medical procedures or changes in child care arrangements, and you're done. Make sure to look at your plans covered expenses and exclusions as well--you don't want to set aside money and then lose it because the expenses aren't eligible.

I had to do a little homework to see if money paid to high school babysitters (we use them after school) qualify for the dependent care FSA. (They do, but if they are under 19, they can't be related to you. I'm not sure if that's an IRS rule or one for my plan, so make sure to read your own plan carefully.) I think the forms require Social Security numbers and paper backup, which is a little hard to produce with an informal hourly arrangement. Time for better record keeping.

If you can't estimate accurately, be conservative, because whatever money you save and don't use, you lose!

Retirement Plan
I'm not eligible for the 401K program for 6 months, but you bet I'll be taking advantage of that as soon as I'm able. My plan is to start with the percentage I was contributing at my last job plus 1/2 the percentage of my salary increase. Once we get the debt thing under better control, I hope to bump up to the maximum allows, which is currently $15,500 per year for most people. And once the new plan kicks in, I'll also roll over the small amount of money from my previous employer's 401K into the new one so that it's easier to track. (I'm trying not to look at the actual value for the time being.)

COBRA
My previous employer gave me a COBRA form. I have until the first of the year to claim COBRA health coverage from them. I will not need it, but I'm holding on to the forms just in case something catastrophic happens. When you leave a job that provides health insurance, for specific reasons, the company will offer you the option to continue on their health plan (at your expense, of course). The quirk that works to your advantage is that you have a 60 days (or so) to sign up, so if you don't end up needing the insurance during that period, you don't have to spend the money. Anyway, even those who are young and healthy with no dependents should not be without health insurance, so if you are among the (too) many unemployed, hang on to that COBRA paperwork, and if you don't have a prospect of another job by the time the deadline looms, find the money and sign up.

All the Rest
Of course, I also did the the paperwork for the health, dental, disability, and life insurance.

Further Reading
US Department of Labor COBRA information
Maximize Your Employment Benefits from About.comThis

Crunching the Numbers--How to Decide Whether to Take a New Job

I just went through this exercise, so I thought it might help someone else.

I got a new job offer at a little over 10 percent more than my current salary. In economics, we learned "more is better". So far, so good.

Does that mean that if my current employer offers me more than a 10 percent raise to stay, I should?

The answer, as in many things, is "It depends."

I made myself a little spreadsheet. Down the side of the first column I listed income:

Base Salary
Commission (if any)
Bonus
Education Benefit
Any other cash benefit (in my case a subsidy to buy life insurance)
401K Match


Then I listed deductions

Current personal 401K contribution
Current personal 401K contribution percentFamily Medical Coverage
Family Dental Coverage

For my purposes, I didn't include taxes, but you could.

The second column includes the data for all those fields from my current job. The third column includes the data for my job offer.

So then I calculated the net income before taxes (all the income less pretax deductions like medical and 401K contribution.) So far, so good.

Then I figured my commuting expenses. I took the government milage reimbursement rate (currently 58.5 cents per mile, according to the IRS) times the number of miles roundrip, times the approximate number of commuting days. If you commute every day, like I do, that is approximately 220. If you telecommute a couple of days a week, like I will in my new job, you can prorate the amount by the number of days you'll be driving in.

(Note: although I drive a hybrid, and I'm pretty sure my costs are lower than the IRS rate, I went with it anyway.)

I subtracted my current commuting costs from my current net income in column two, and my projected commuting costs from my projected net income in column three.

Then I compared the bottom line between Column 2 (current adjusted income) with Column 3 (prospective adjusted income). Again, I didn't figure in taxes, but you could. (You could also calculate the value of the vacation days and compare the existing job to the new one.)

In my case, I discovered that I'd be better off at the new job even with a 15 percent CUT is salary. When people say to take the benefits into account when evaluating a new job, they aren't kidding.

Of course, in this post I haven't said anything about whether the new job is a good fit for you (or me). Let's assume it is for now.

Tomorrow: a word on salary negotiation.