What are you cutting in your budget to absorb the Payroll Tax increase?

[goodfood4ursoul]

Before you run off to your payroll dept and ask to opt out of paying into SS please understand that paying into SS is not an option available to those of us who are public employees. Which also means we can not draw SS benefits. We have to pay into a dedicated retirment plan for public employees (OPERS).

To be honest I was thinking
"I thought you had to be Amish to get out of SS... "
I had no idea that states could make separate arrangements for their employees- good for them

I'd call that a good example of the power of the state government vs. the federal.
And, no I won't be making any requests.
I learned a long time ago that public employees should keep their heads down, work hard, and keep their official opinions to themselves...

 

[dawnball]

If you are not cutting back on anything how are you making up for the lost income?

It isn't lost income from my perspective. It was a windfall. If you got an unexpected christmas bonus one year, and the next year you didn't - would you think of yourself as "cutting back" without the bonus? I see the tax situation as a holistic thing instead of a weekly-paycheck issue, and that's still in a fair amount of flux.

My husband is a consultant, so we've developed the pattern of keeping fixed expenses low and having more variable expenses. When he works a lot, we have more income and more expenses. When he works less, we have less income and our expenditures decrease.

 

[crjack]

I have to say while I certainly was following the news and understood what would be happening, I was definitely surprised when I saw DH's direct deposit amount today. The change was significantly more than I was expecting.

Our health insurance contributions went up and are a contributing factor in the overall difference but I have to review all of the changes to get a full picture.

The added money last year was offset for us by the higher gas prices. I had to commute a lot last year for my job and that combined with higher gas prices hit our budget right away. The additional increases in groceries were certainly felt as well.

I will start by trimming at the supermarket as much as possible and stay out of the stores. I find I do mindless shopping that often isn't necessary so today's review is a good wake up call for sure.

I don't spend frivolously but as soon as I save in one area it seems something else (namely teenagers) offsets in another!

Best of luck to everyone with the changes they are making.

 

[MomToOne]

Frankly, the cut never made sense to me since the social security system is in need of money. I understand they did it to "stimulate" the economy. However, it definitely affects the social security retirement system.

This seems to be a point of mis-information for many people.

Just because the payroll deduction was cut by 2% does not mean that the SS fund was underfunded by 2%. That 2% was still given to the SS fund, it just came from the general fund instead of payroll taxes.

So SS was fully funded, just as if we were all paying 6.2% all this time. What the payroll tax cut did, however, was help increase the federal debt.

 

[donaldlovesdaisy]

I am not sure what/how it will affect my husband’s pay until the end of the month LES comes out but he was getting a 130 dollar increase in BAH and a small raise so I think that will cover whatever extra money we will be taken out for taxes and the decrease in our COLA which we get because of the city we live in. I think it stinks that we get to pay more money on top of what we already do and this year we have to write a check to the IRS when we usually break about even at tax time. I thought the tax increases were not going to affect the middle class but help us and it seems that in fact is not the case at all.

 

[ceemys]

Odd...I never noticed a big change 2 years ago in my paycheck. lol I just calculated the difference of the 4 and 6 %. An extra $50 a paycheck will be taken out. crap. Since I am saving for my house downpayment, I am on a rigid budget. I will just cut out our weekly eating out to twice a month. I think that will be fine.

 

[edk35]

My husband gets paid every other week so 26 pp. I just saw his pending deposit in our checking acct. and it is about 115 bucks less than normal. So I guess that equates to about 3000 less a year. Of course we all know...this would not last forever. He won't get his LES for a week or so. He is a federal employee so he will get small raise, but our healthcare premiums usually go up though. LOL I don't know if the raise kicked in and if so...then our amt. would be more than the 115. I won't get my pay check for another week...so we shall see.

 

[hellow]

I was drawn to this thread just to get some ideas for cutting expenses--thanks OP!

For us, I have been in school for a couple of years and am only starting to work again in 2013, so we won't be negatively affected budget-wise. At least I hope I will be working more than the 2% that will again be withheld from my husband's pay!

 

[HouseMother]

I doubt we'll have to make any cuts. We live fairly simply as it is. We are closing on our mortgage refinance next week and will save roughly $500 a month, so that should more than make up for what we will "lose" with the payroll tax cut expiration. We can easily spend over $100 a month on eating out, so if I had to cut back anywhere it would be there.

 

[eliza61]

I will start by trimming at the supermarket as much as possible and stay out of the stores. I find I do mindless shopping that often isn't necessary so today's review is a good wake up call for sure.

I don't spend frivolously but as soon as I save in one area it seems something else (namely teenagers) offsets in another! Best of luck to everyone with the changes they are making.

Crjack, that is what I call the "murphys law of money". It is almost a certainty in my life. As soon as we save up a pretty comfortable cushion in our savings an appliance will break, a car will break, the dog will get sick and have a 2000 vet bill or a college tuition bill will come due. It's almost as if there is some secret triggering mechanism on my savings account.

 

[danygirl]

after 4 years of furloughs and pay cuts we finally got a pay raise - 2% effective january 1. When HR sent out the memo they basically said - we ARE giving you a raise, but don't call us when you don't see it in your check because the payroll tax holiday is ending.

since the 2% increased my base salary, and the ss tax is coming off the new base, I still have a pay cut, but it is much smaller.

 

[angierae]

I guess what frustrates me (and I don't just mean in this thread, I mean with people I've spoken to) is that everyone sees this as something "taken away" when what was happening was we were being GIVEN another 2% for a little while, and now that's done.

It's like someone said about the bonuses. I got a $2k bonus this year. If I get $1500 next year, they didn't "take away" $500 from me.

 

[LocalTourist]

But the average middle class family earns around 50K per year and therefore is not losing $200 per month. .

2% of 50k is 1000, that is 83 bucks a month not 200 a month. If you are really seeing 200 a month decrease then you are making well over 100k a year

200 * 12 = 2400, = 2% of 120,000 a year! if you have 120k income a year allready and 200 less a month makes your budget go bonkers you have big budgeting problems allready

200 less a month but you make 10,000 a month.....and you have to cut back on cable tv?????? get real

 

[bdcp]

Got DH's paystub and compared it to last years (no raise in 3 years for either of us) and it was $100 less for two weeks. So, for us, it'll be about $300, which is about what I had guessed earlier. DH makes over the max so for about 3 months we pay no fica out of his check. Mine on the other hand never gets a break

 

[dreaming4disney]

We will cut back on dining out. That can really get out of hand with 3 teenagers.

 

[Marionnette]

2% of 50k is 1000, that is 83 bucks a month not 200 a month. If you are really seeing 200 a month decrease then you are making well over 100k a year

200 * 12 = 2400, = 2% of 120,000 a year! if you have 120k income a year allready and 200 less a month makes your budget go bonkers you have big budgeting problems allready

200 less a month but you make 10,000 a month.....and you have to cut back on cable tv?????? get real

I guess we'll have to agree to disagree on this one. I don't see $120K as being a high income. Of course, much depends on where you live. Try to get by on that salary in the NYC or DC metro areas. It's really tight. I can envision someone from those regions, who is in that salary range, feeling the pinch of an additional $200 being taken from their paycheck(s). If they bought a house or a car based on that money being in their hands it can be difficult to swallow. That's why people would have been smart to put the money aside and not consider it a part of their budget.

 

[runwad]

I put the extra 2% in my 401k the past two years. I got a 2 &1/2% raise so I guess I should stay the same or be 1/2% more so we're good.

 

[Mel522]

It won't effect my budget. Since the tax cut was temporary, I never worked it into my budget. The money just went into my bank account and was forgotten. While I will miss the money, my budget remains the same.

 

[NotUrsula]

Nothing. I don't live that close to the edge. I won't end up with quite as much money in the bank, but a pay cut of less than $100/mo isn't going to make any difference at all to my spending habits -- I'm frugal and I'll still be frugal.

IME, increases in my health insurance premiums and my kids' tuitions each year always outstrip my pay increases anyway, so I always budget for a loss.

 

[DizMom11]

I plan on cutting out landscaper and vowing to get gas in NJ in stead of NY. That will more than make up for the $1500 a year less. I have been thinking of doing this anyway, and this just gave me incentive.