The 100 by 30 project

I feel sick

I generally spend very little time regretting bad financial decisions (if I did, would I still be spending $150/month on soft drinks?). But recently, a mistake has come to light that I think will be causing me waves of nausea every time I recall it over the next two weeks:

Every year my husband and I dutifully go through most of his (and formerly my) employer's open enrollment package. This package covers all non-PTO benefits, such as health, vision, dental insurance;  life and long-term-disability insurance; and health care and dependent care reimbursement accounts. We've been doing it either as singles or as a couple for six years, so it can be pretty routine.

But, you know, it's a long binder. So after we read through all the changes to the four different available medical plans -- even the ones that aren't ours, just in case the changes make them more attractive to us than they've been in the past -- and once again weigh dental and vision options, which has become more interesting to us after having spent $1200 on a root canal and crown combo of mine that was hardly covered by insurance, we get a little worn out and don't always finish the binder. After all, the very end is just the long-term-disability insurance, which I know is very important for kids our age and we already have maxed out, and life insurance, which we already have through State Farm, which also carries our auto and homeowners' insurance.

But this year, being in no particular rush yesterday afternoon and enjoying our time together doing Adult Things, we decided to continue onto the regions of the binder we usually ignore. The first section was LTD, and we ended up deciding to buy a new option that improves the cost-of-living increases for LTD payouts, because it was $3/month.

Then we got to the life insurance section. (Note that currently I have $125k in life insurance via State Farm, and my husband has $60k via work that he gets for free as some percentage of his salary. The imbalance is mostly due to inertia; if anything, he should have the higher coverage so that I could finish my degree even if I lost him.) The rate, for people under 30 like us, was $.07 per thousand dollars in coverage per month.

7 cents per month per thousand. That seemed really, really low.

"What are you paying for State Farm?" my husband asked. Sadly, I had no idea. So I went to look up my latest bill. Astonishingly enough, for what I'm paying for $125k in coverage, we could instead be buying $721k in coverage through work! And to top it off, the first $50k of coverage is paid with pre-tax dollars!*

Sickening. Just sickening.

So what have we decided to go with? In total, my husband will have $250k in coverage and I will have $92k. Our family will have $160k more in coverage for $40 less per month. And we've learned a hard lesson about always reviewing all the options available to you.

* To be precise, for people who care about these sort of details: technically, the full premium is taken out of pre-tax dollars, and then the premium prorated by (total coverage - $50k)/(total coverage) is counted as imputed income, on which we must pay income taxes.

Zeroth step: redefining what "the little things" are

This Globe story discusses a family that went from debt-free to drowning in it in just a few years. I have to admit that I gasped a bit at this part of the story (bolding mine):

Sometimes the reason you piled up debt is big, obvious and out of your control, such as a medical emergency or a layoff. But often it's a series of smaller expenses that seem like reasonable indulgences at the time but eventually add up to trouble.

The Trejos, for example, charged the furniture for their new home. Then there was the trip they took to Phoenix in 2005. And the takeout food or restaurant meals (nothing fancy, mind you) that they eat a few times a week.

Suddenly they were nearly $20,000 in the hole. "Little things got out of hand," says Jessica. 

I don't know who is responsible for this placement -- who knows if Jessica meant for the "little things" comment to apply to her furniture. It might have been the journalist's decision to place the furniture under the heading of little things. And they almost certainly didn't buy entirely new furniture for their house -- that's probably referring to, say, a couch and new bedroom set.

Nonetheless, it amazes me that someone thought that furniture, even one piece, is a good example of a "little thing".