Obama to give paycheck boosts?

I was just reading an article this AM that would mean more money for a lot of Americans in their paychecks. Very interesting, in going forward with his middle class tax cuts, it will be like a $18 for single or $38 per couple per week. For individuals who make under 75K and couples under 150K. They also went on further to explain there may be a way to even jam all your tax savings into the first part of the year. How this would be accomplished I am not sure and the article got muddied at that point. But going to the first explained scenario would be done, by changing your withholding on the W2. This is interesting in the fact that it aligns with my philosophy that you should balance your withholdings so that you neither get a tax refund nor a tax bill every tax season. I encourage everyone to take a look at their 2007 and upcoming 2008 taxes. Did you get a refund? If so take that refund and divide it by the number of paychecks in the year (if you get paid every other week–it is 26 paychecks; if you get paid every week it is 52; and once per month is 12) That is the amount of money that you give the government from each paycheck as an interest free loan for the year. Does that make sense when you have outstanding debt? Absolutely not, that money should be going directly to the highest interest rate debt that you are currently carrying. I will give you an easy example, let’s say you get a $3000 refund, and you get paid every other week. That would be 3000/26 equals $115 per paycheck or $230 per month! I bet that could help put a sizable dent in your debt by paying that every month. Now the next question would be how do I know how much to raise the withholdings? What you want to do is raise it one withholding and see what it does to the amount your paycheck increases, if it is close to your number, in above example it would be $115, than stay, if it is less than half of what you are looking for than add another one for the next paycheck and see where you land and if it is closer to the number you are looking for. Please do not hesitate to call or email if you have questions regarding this, I will be more than happy to help you work the calculations. Now if you owe at the end of the year, this isn’t good either, plan accordingly and do the direct opposite, so you won’t owe anything next year. It will be interesting to see how this stimilus package works out and if it will really boost the economy as they are hoping. I know I will be part of the disappointing portion of our country that will use any sort of stimilus that I get towards my outstanding debt (remember for every 5K I pay down debt I get a $500 splurge so it would technically go back to the economy eventually, just not dollar for dollar). It seems like a win/lose scenario, if I spend my individual check it helps the economy but not me, if I use it to pay down my debt it helps me, but not the economy. Than go to the next step, the government will step in and help the economy and big companies but not my individual debt so who should I be watching out for, the economy or me? Guess what, I will go with me. I am sure there are others out there that would disagree with this but I feel pretty confident at least 65-70% of individuals will go and spend it, so it will essentially work for both the economy and the individuals that decide to be a little bit “selfish”. Question is how would spend the a stimilus the govt would give you? Chime in under comments.

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~ by debt2dreams on December 31, 2008.

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