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My employer's policy is to automatically withhold 50% of each bonus payment for taxes. They have no idea of what your tax filing situation will be. It is just their policy. When I have gotten those bonuses I have eventually gotten it all back, but that was due to me itemizing my tax filing. So I got it all back anyway.
Any debt that is charging you interest, is only making someone else profit and not you. I would seriously push to get completely out of debt.
We do not know what next year's economy will look like. We do not know if you will be employed next year. We do not know if our nation might fall into a depression. If any of these really bad things were to happen, the more debt you carry, the worse it will be for you.
A mortgage is great as a tool for home buying. However the debt can be called in at any time. The creditors are not stable institutions at this time. Any of them could fold at any time. Home owners with outstanding mortgages can lose their homes and be thrown into the streets. It has happened before.
If we are all walking into a Depression, each of us would look better, if we each had no debt load.
I would recommend that you closely look into itemizing your taxes, and paying off all debts.
My employer's policy is to automatically withhold 50% of each bonus payment for taxes. They have no idea of what your tax filing situation will be. It is just their policy. When I have gotten those bonuses I have eventually gotten it all back, but that was due to me itemizing my tax filing. So I got it all back anyway.
Any debt that is charging you interest, is only making someone else profit and not you. I would seriously push to get completely out of debt.
We do not know what next year's economy will look like. We do not know if you will be employed next year. We do not know if our nation might fall into a depression. If any of these really bad things were to happen, the more debt you carry, the worse it will be for you.
A mortgage is great as a tool for home buying. However the debt can be called in at any time. The creditors are not stable institutions at this time. Any of them could fold at any time. Home owners with outstanding mortgages can lose their homes and be thrown into the streets. It has happened before.
If we are all walking into a Depression, each of us would look better, if we each had no debt load.
I would recommend that you closely look into itemizing your taxes, and paying off all debts.
But that is just my advice.
May God bless you.
Thanks... I agree. My wife and I between all of our debt (excluding our home) comes to around $20K... that includes cars, credit cards, loans, everything. So this is quite achievable, and we were on a good track to eliminate our credit card debt (one car is just 4 payments away from being completely paid off) however the inflation rising this summer threw us off track. If we go through this bailout plan the gov't will print even more money. I have a fear that increased inflation will prevent us from reaching our goals paying down our debt.
I see 2009 coming... and it doesn't look too good.
I pretty much know the answer to this... I'm just interested in hearing some opinions from fellow forumites. My wife and I keep our finances relativesly seperate with the exception of paying our mortgage and most of the utlitities associated. I've found that paying down my personal debtload, while keeping up with the rising costs of gas, food and utilities has left me pretty cash poor each pay period. I'm not contributing nearly enough as I should be into my savings account... and I'm finiding myself drawing off our savings to cover things related to home maintenence that I used to cover in my paycheck. We bought our house in Janurary and I threw out my budget in April.
Just short term planning, I'd like to take more home in my paycheck to cover bills without negatively affecting my tax return for next year. I currently contribute 12% prepay into my 401K. I currently have 0 exemptions for federal and state. So the full enchilada is taken out after my pre-tax. I usually receive a modest tax return (my wife and I are in the 28% bracket) however this will also be the first year we file a return with Mortgage interest and PMI as well as other deductions. Things have gotten very tight over the past several weeks and I need to make immediate decisions regarding my take home pay.
I'm sure changing my tax witholding/exemption status is the way to go... however I wonder about my 401K... it is down 13% since January, and my company matches 30% of the employee contribution up to 8% (or $.30 on the dollar). I'm 35 and have a modest amount invested into retirement.
Which is the best way to go?
I would go ahead and up your exemptions to 2-3.
I would also lower your contribution to 8%.
When your cash position gets better, maybe your next raise, Then bump up your contribution some.
Also, don't rule out looking at some things you can do to save money. ie) Anything you can cut, coupons you can clip etc.
I have been in your exact situation over the years and have done pretty much this.
Continue to pay off the credit cards then forget they exist. Then pay off both cars. Continue taking zero deductions to offset needing the money in April next year. Then live on what you have left over. This is basic financial common sense.
Why shouldn’t you suffer just like the rest of us that are not so fortunate to even be in the 28% bracket? Tighten the belt, cut back on driving, vacations, tennis classes, lattes or what ever you don’t need to keep fed and warm and keep going. Nobody ever promised it would be easy. Or pleasant.
...
Why shouldn’t you suffer just like the rest of us that are not so fortunate to even be in the 28% bracket? Tighten the belt, cut back on driving, vacations, tennis classes, lattes or what ever you don’t need to keep fed and warm and keep going. Nobody ever promised it would be easy. Or pleasant.
Which tax bracket you are in is your individual situation.
I am not in the 28% bracket.
Which bracket you place yourself, is entirely your issue.
Anyone learning to do 'tax-planning' will begin to take control of their taxes on their path toward being tax-exempt.
Being tax-exempt and accumulating financial wealth go hand in hand.
Forest - I think GregW was referring to the original post. He's in the 28% tax bracket.
I find his remark condescending, however. I don'tknow how anyone thinks it's "fortunate" to pay 28%. We pay 33% and seeing all those damn 0's behind our tax liability every year, it's painful to see all your hardwork go to Uncle Sam. Stupid progressive taxes.
Forest - I think GregW was referring to the original post. He's in the 28% tax bracket.
I find his remark condescending, however. I don'tknow how anyone thinks it's "fortunate" to pay 28%. We pay 33% and seeing all those damn 0's behind our tax liability every year, it's painful to see all your hardwork go to Uncle Sam. Stupid progressive taxes.
Of course you are correct. I agree.
I meant to be pointing out to everyone including the OP that each of us deals with our tax with-holding and bracket individuals.
Paying income taxes would be horrible.
It was many years ago for me, but I do recall that I did not like paying income taxes. Which was a strong motive for me to learn more about income taxes, itemizing and ultimately tax-planning.
I repeatedly advise everyone to learn about these topics.
Then I receieved our $1525 heating oil fuel bill. Then a $613 electric bill (both more than 30% increase despite average usage). .
Good god, man. Do you have NO insulation in that place at all? Sink some money into getting more efficient heating/cooling, high-efficiency appliances and better insulation in your house.
Forest Beekeeper - I think avoiding paying income tax, even if legally done, is shirking your civic duty as a citizen. Complain about them, get them changed but not paying them is cheating just as much as a financier off shoring his business. Not something to be proud of or brag about.
I would change the current Federal Income tax to a system much closer to the Depression. I suggest a deductible of at least three times the median income and a progressive rate between 10 and 90 percent. Off shore income would be taxed at 95% and imported good at a rate that removes the labor, environmental and tax incentives from production in china for example. Financial investments would be assessed at a rate inversely proportional to the time retained. Capital gains on securities held under a week – 99%, a month 75%, 6 months 50%, a year 30% and five years 0%.
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