I have two confessions for you on this fine Monday evening:  

 

#1. Retirement Accounts

I've admitted to this before:  For my entire working career, I've only been making the minimum 5% contribution to my 401k in order to get the employer matching.  I never thought about increasing it.  Yesterday, I finally understood the error in my ways.  And today, I changed it!

 

I'll try to explain my reasoning here in case anyone has the same questions that I had...

 

Since 401k contributions are pre-tax, anything I contribute (up to a $17,500 maximum for 2013) goes straight to the account without being subject to taxes.  Sure, it will be taxed when I start withdrawing from it in my 60s, but hopefully I'll be retired by then and will be in the lowest (or at least lower than now) tax bracket.

 

A great example of how much you'll save in taxes is in this article.  They illustrate that someone making $2k per month deciding to put $200 into their 401k will actually only see their paycheck decrease by $144- which is basically like saving $56/month!  (check their math if you don't believe it)

 

So this morning I spent some time in our HR systems figuring out how to change my contributions (side note: why must there be like 15 systems to do this? And each site has a different username and password? Come on, just put everything in one place!) so that I'll contribute enough to reach the maximum this year.  Personal finance success!

 

 

#2. Life Insurance

While perusing our HR systems, I stumbled across my FEGLI contribution.  What is FEGLI, you may ask?  Federal Employees' Group Life Insurance.

 

Somehow, somewhere, sometime, I elected to contribute to life insurance for $10/paycheck.  $20/month.  $260/year. (26 pay periods in the year)  WHY ON EARTH WOULD I DO THAT?  My take on life insurance at the moment is that I don't need it!  No one is counting on me to provide for them.  If I was no longer in the picture, no one would be any worse for the wear financially. (in fact, Mike would probably be better off financially since he could move back in to a group house with a bunch of guys and revert to living off chicken & quinoa for every meal! ha)

 

So why on earth did I think that I needed life insurance?  Probably because I didn't take any time to research it.  Who knows if I even knew what "FEGLI" stood for at that point!  Anyway, this morning I cancelled my contributions and am now $260 richer each year.  PHEW.

 

Not sure why I never questioned it when I saw my paycheck each month, but seeing it in the HR system really triggered some alarm bells for me.  Thank goodness I was messing around with the 401k stuff, or else I would still be enrolled!

 

(And I don't even want to think about how long it's been set up like this-- and how much I've wasted on it since I started working... bahhh)

 

 

Please learn from me on this stuff, guys!  I know that it's overwhelming when you get your first (or second, third, fifteenth, whatever!) job and they give you all sorts of options with acronyms out the wazoo.

 

Just take some time to understand what you're signing up for!

 

Don't assume that you have to sign up for everything that's offered.  If you have any questions on your benefits package, google around, ask your coworkers,ortalk to your HR rep!

 

 

Have you ever signed up for something that you later regret? 

Or not signed up for something and regretted it?