The Delta Dental non-group insurance plan is insane.
It provides a maximum of $1000 in benefits per year and the premiums cost about $600 per year. So, if I simply save another $400 above the premiums, I can create my own insurance plan that is the equal of the Delta plan. The Delta plan does nothing for me or for anyone else. It does not help in extreme situations when the costs greatly exceed what I can pay which is what I want insurance for.
This is but one example of the insanity of non-group insurance. It simply doesn’t exist at any price.
Not surprisingly, medical costs are the single greatest reason why the middle class declares bankruptcy.
My girlfriend like to say, “The best way to solve a problem is to throw money at it.” Unfortunately, when you are a member of the middle class you don’t have money to throw at problems.
So, then, what is the best way for the middle class to overcome financial emergencies? One answer is to insure against everything.
This weekend I will be driving eight hours. Should I insure against a car accident? Absolutely. Should I insure against having to pay to have my car towed for 200 miles? Absolutely. As a member of the middle class, a $1000 towing expense is devastating so paying $50 to to avoid a $1000 expense is almost certainly worth it even if the $1000 expense is very unlikely.
Some might say that I should self insure. But what happens if the accident happens the first year? Where do I get the $1000? From my food budget??
So, to reduce variance on my trip, I upgraded to AAA Premier which covers a 200 mile tow.
A few weeks ago I mentioned that I had a toilet leak and that fixing it might sink my budget.
Fixing the leak cost $175 which is approximately one quarter of my monthly food budget. I found the plumber through Angie’s List, a wonderful service which, unfortunately, cost me about $9 to access so the total cost of fixing the leak was about $185.
The plumber cost so much in part because I did not have a good strategy for finding one. I asked the building supervisor for recommendations and he gave me the names of three plumbers who had done work in the building but none of them were available when I needed the work done.
So I wound up doing a search on Angie’s List and calling plumbers in order of rating. Fortunately, the third plumber I called was available almost immediately, but, not surprisingly, he charged me for being available on such short notice.
The lesson? To reduce costs, I need to establish relationships with vendors before I have a problem, not after.
The United States has become the land of one dollar, one vote.
The gap between the slightly rich and the middle class is so large that paying heed to the bottom 50% does not make financial sense for politicians. The top 1% make $350K a year or more while the median income is $25K. So the ratio between the top 1% income and the median income is 12:1.
Critically, we are not comparing the super-rich to the poorest of the poor. We are comparing the top 1% — there are over a million people in that category — to the median.
When we focus on the super-rich, the extreme concentration of political and financial power in the United States becomes clear. USA Today is reporting that just five people are responsible for 25% of the money going into super PACs.
The middle class has no representation in Washington D.C. so there is no way out.
Thirty more years of hell: http://jacobinmag.com/blog/2012/02/thirty-more-years-of-hell/
I recently discovered that my toilet is leaking and fixing it may sink my budget.
My budget is so tight that there is no provision for emergencies or unexpected expenses. I suspect that the toilet leak will cost me hundreds of dollars to fix. And if I choose to fix the damage to the floor and ceiling it might cost thousands of dollars. I clearly don’t have the budget to fix the floor and ceiling, and I may not even have the budget to fix the toilet.
Budgeting for emergencies when virtually all income is going to basic necessities is difficult and sometimes impossible. Unexpected medical expenses are the single greatest cause of bankruptcy in the middle class.
Enterprise has sent me a bill for a total of $19.25: $1.25 to pay for a toll and $18.00 to cover an “admin fee.”
Last year, someone smashed into me and totaled my car. I rented from Enterprise. I don’t know how I went through a toll but apparently I did.
This past week I received a bill from Enterprise for the above mentioned total explaining that they “were notified by a toll authority or another agency that your rental vehicle incurred a violation or toll during your rental period.” They go on to say that “Enterprise is assessing a fee as our administrative and processing charge.”
An $18 fee to pay a $1.25 bill? That is how the middle class gets destroyed.
I have added body fat to the list of metrics I am using to track the effect of my middle class vow of poverty.
Body fat will supplement my Zeo sleep scores and my Moodscope scores as ways to determine how the vow of poverty is influencing my health and happiness. Right now I am at 13.4% with the plurality of the fat around my waist. That is consistent with my lifestyle. Fat accumulates around the waist when cortisol levels are high and cortisol levels are high when stress is elevated.
I will track body fat every 1-2 weeks and update the blog with the latest figures.