For the last few years, most of us have been enjoying a payroll tax of 4.2%. Of course, I use the term “enjoying” loosely. Beginning January 1, 2013, this payroll tax will return to its’ prior level of 6.2%. While it may not sound like much, it’s something that will affect almost everyone.
This 2% increase means a loss of $1000 annually to someone making $50,000 per year. Broken down further, this same person will need to make up a difference of $84 each month in order to maintain their current standard of living.
We can sit around and complain about the fact that our government is confiscating hard-earned money that will likely never be returned to us, but that would be a waste of time. The government is only getting bigger and taxes are only going to grow higher. Instead of complaining, let’s figure out a way to save $84 each month so we can maintain our current lifestyle with no problems.
How to Save $84 Each Month
It’s difficult to make a blanket statement to thousands of people – each in a unique financial position. So instead of trying to guess at your various expenses, I’ll tell you how I have cut down my expenses and I’ll hope that you can follow suit.
Stop Automatic Drafts for Unused Services
Automating your savings and payments is a wonderful thing; I recommend everyone does it. But I have also seen too many automatic payments funding unused services that add no value.
In 2012, I had every intention of visiting the gym daily. Embarrassingly, I wasn’t going. Even more embarrassing, I was automatically paying $70 each month for a membership I wasn’t using! Other payments could include unnecessary insurance (accidental death & dismemberment), random rewards programs, credit monitoring services, etc.
Analyze Your Cell Phone Plan
My phone bill has averaged around $100.00 each month for the past year. I’ve always assumed that I could switch carriers and save a few bucks or gain a few perks, but I haven’t faced enough dissatisfaction to warrant a switch. A quick analysis of my usage versus my allowance showed that I’m overpaying for what I’m using. Apparently, I do everything on my phone but talk.
With a click of a few buttons, I was able to reduce my available minutes resulting in a $20 monthly savings.
Shop Insurance Companies
I know A LOT of people who have been successful in saving a few bucks by either switching or bundling. I’ll admit – I have shopped for car insurance but I have yet to find a quote lower than what I have. A family member of mine, however, saved roughly $800 annually. Rich or poor, that’s a significant cut.
Our fearless leaders have been trying desperately to ease the pain of tax hikes on middle-class Americans. But even with their efforts, some things fall through the cracks. You’ll soon see exactly how much of your paycheck will disappear.