Paper Poverty

I first looked into the Medical Security Program (see last week’s post) right after Anne was laid off. Our income during their six-month lookback was too high then. Now it’s eight months later. Our COBRA subsidy is expiring, I’ve ruled out Commonwealth Care as a lifeline, and Anne’s January employment income no longer counts. The MSP is nearly out of money; I need to try for a piece of it before it dries up.

It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.

While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).

In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?

Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.

Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.

You Can Go Crazy Being Public Spirited

I needed to write a Whisky Stones ad for Google AdWords. I came up with:

“Chill your wine or spirits without
ruining the flavor with melting ice”

The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:

“Whiskey Stones are soapstone cubes
To cool your spirits without water”

Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.

I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".

Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.


Health Insurance: The Topic That Makes Me Sick

Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.

Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:

The health insurance program, which is funded solely by a tax on employers, helps middle-income people who make too much money to qualify for Medicaid and other state-subsidized health care programs designed for the poor. Since January, enrollment in the program has doubled, the state said, to roughly 34,000 people.

Traditionally, the state program has paid 80 percent of a laid-off worker’s monthly health insurance premium for as long as the worker is collecting unemployment benefits. But the federal government designated stimulus money earlier this year to reimburse some of the health insurance costs of the unemployed, so most recipients are now paying about 9 percent of their monthly premiums.

Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:

The unrelenting rise in unemployment will also trigger an automatic 40 percent increase in the tax businesses are required to contribute for unemployment benefits. In January, the tax will increase from an average of $594 per employee to $832.

Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!

At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.

Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.

OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.

Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.

Christmas in October

I blew off the health insurance quest this week. Business is booming and I couldn’t waste time on a pointless pursuit. Maybe I’ll come back to it next week if the pace dies down.

After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.

I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.

Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….

First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.

Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.

Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!