Get the most from your Paycheck
Since the decline of the market and economy early in 2008, everyone has been trying to cut corners, reduce expenses and eliminate unnecessary purchases. Every tip I have read has influenced me in some way, but there’s more you can do.
If you are still fortunate out there to receive a paycheck regularly and are lucky enough to have someone to call ‘Boss’, then you should start taking a look at how you can maximize your payroll deductions. Take a look at your paycheck stubs. Most of us have direct deposit with salary pay and barely glance at it anymore. If you are looking for a way to save a couple extra bucks, take your state and federal taxes and dump them into a high interest savings account. Freelancers, consultants and others who work privately have been using this method for years and it’s not something limited to their methods of preparing for tax time. Here’s a real world example. Let’s say you make $100,000 GROSS between you and your spouse. Your typical payroll deduction can take out $100-$300 per week between Federal and State taxes. This deduction directly to the government is NOT NECESSARY. Let’s say your deduction is a flat $150 for you and $150 for your spouse. I’m sure everyone is different, but the calculations work the same. Open up a high interest account checking or savings account (Shop around, some still offer 2% - 4.5%). Have your payroll department BLOCK your state and federal taxes and direct deposit that amount to your new bank accounts.
Monthly Contribution Avg.: $1,300 ($150 x 2 people x 52 weeks / 12 months)
Interest Rate: 3%
Length : 1 Year
Your contribution will be $15,600
Your ending balance will be: $15,816.29
Interest Earned: $216.39
To me, this is the simplest thing you can do to save money. There’s also more complex things you can do like putting money in a 6 month CD to take advantage of offers or to move this money to a Traditional IRA that can be used to lower your taxable income. PLEASE keep in mind that you will end up paying the government your tax money that they ‘deserve’, but at least you can earn the interest off of your own money before forking it over on April 15.
** Disclaimer: I am not a CPA, nor a tax consultant. Please check with a certified tax preparer before taking my advice. Not everyone can benefit from this advice.
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