How many of you have prepared for the social security tax increase you’ll be seeing shortly? If your a citizen of the U.S. and draw a paycheck then you’ve probably already seen a pay cut in your take home pay. If you haven’t, be prepared, You will see a pay cut. When our government passed legislation to avoid the fiscal cliff an extension the payroll tax cut “holiday” was not included.
I find it interesting that there was such immense political posturing towards the end of 2012 on taxing the upper 1%. No mention at all was made of the pending 2% payroll tax increase that was right around the corner. It seems like there was a little sleight of hand going on there to draw our attention away from the fact that everyone was going to see a tax hike and resulting pay cut in 2013. Here’s an interesting article from Investors Business Daily on how the current administration’s supporters got caught with their pants down on this issue, Investors Business Daily.
The bigger and more important question is, Did you prepare for the pay cut and make adjustments to you budget to compensate for it? I partially did. But when I saw my first paycheck this year the reality sunk home. I had already mentally prepared for it by going through the budget and identifying items that I could trim down. After getting my first paycheck I opened up my budgeting spreadsheet and got busy. Actually going through it and putting it on paper (so to speak) was depressing.
I’m not scraping the bottom of the barrel but I felt that way as I went through my budget line by line. I had to cut money across quite a few items. Entertainment, house and car maintenance all took hits. Worse of all was having to cut my “debt paydown” allocation. I think that depressed me more than anything. Which means I’ll have to be more creative, if not slightly more aggressive, in creating other income streams and source of funds to pay down debt.
Heres a few tips to help you close the gap in your existing budget as a result of the 2013 pay cut:
Cable or Satellite TV
- Do you really need 325 channels? Personally, there’s about 10 channels that I view on a regular basis. I have a middle of the road package which suits my needs perfectly and doesn’t cost much.
- Check with a competitor, They’ll quite often give you a better deal then what your paying now for a similar package. Then……
- If your not contractually obligated to stay with your provider, call them and tell them your considering leaving to a competitor. I did this with my satellite service last month and they cut my bill by 30% with no commitment!
Local and Long Distance Phone Provider
- Call your local phone provider, tell them you need to understand why your bill is so high. I do this at least once a year and they always find a “new” package that shaves a few bucks off my bill
- Check your statements carefully! You’d be surprised at how things may creep up on your statement. I use a credit card for gas and monthly recurring items (Gym, etc). After a careful review I found that a gym membership I had canceled a few months ago was still billing me.
- If you carry a balance on a card, call them. Tell them your considering transferring your balance but would like to keep it with them if they can give a better interest rate. I’ve had a 50/50 success rate with that as they’ve gotten tougher (as well as more abusive) over the years. But it’s definitely worth 5 minutes of your time. If your successful this won’t reduce your monthly costs, what it will do is reduce how much interest that debt accumulates every month making it easier for you to tackle it.
- Cut back on to one “premium” coffee a day. These drinks start at almost $2.00 and I’ve seen them as high as $6.00 for the multi-syllable mega drinks. If you have two a day and cut back to one that’s a minimum of $60 a month.
- Take your lunch to work. Nowadays a lunch can cost anywhere from $5.00 to $10.00. If it costs you $2.50 to bring in your lunch you could be saving a minimum of $50 a month.
- Buy Generic! The difference between a gallon of “Brand” Milk and the store brand is about $1 in my area. I really can’t tell the difference and I doubt that most folks would be able too. There’s dozens if not hundreds of generic alternatives to many products that we use in our daily lives. Here’s the interesting part, many generic brands are made by the same folks that make the name brands. This is not true of everything but the one’s I’ve been able to research and find some information on have been interesting.
If you cut your living costs by using one or more if these tips then you’ll be a little bit further along in closing the gap create by the 2013 pay cut. Best of luck in 2013.