Are you ready for your 2012 pay cut?

Unless the Super Committee can agree in time, everyone paying payroll taxes will see a 2% increase in their payroll taxes on their paychecks come 2012. Payroll taxes were cut from 6.2% to 4.2% at the beginning of 2011 to help stem the tide of recession. This put a little bit more into our pockets each month in 2011, but, in my opinion, this is unlikely to continue.

We got a letter from my spouse’s employer informing us that the organization is increasing salaries by 2% in 2012, which will offset the taxes, so his paychecks will stay the same. My employer is increasing salaries by 1%, so I’ll actually see a decrease come January. We will budget with this in mind, which is all we can do. Better to know this now than after our first paychecks of the year and the budget being short.

Tools

I’ve added some links to some helpful tools and calculators. These are tools I’ve used and found helpful, everything from ING’s Retire My Way site, to Michael Bluejay’s Rent vs. Buy calculator, and Baby Center’s cost of raising a child calculator.

I also really appreciate the IRS’s withholding calculator, and Dinkytown’s Section 125 calculator, mainly because I like knowing what my paycheck will be after a raise, and knowing that I’m paying the right amount of federal income taxes helps me sleep at night.

There’s pretty much a calculator for anything, so knowledge of spreadsheets and formulas isn’t necessary to determine all kinds of fun financial stuff.

Debt #2 is gone

At the end of September, we were able to pay off the second to the last student loan. I think the beginning total was something like $9k. I’ll just go ahead and overshare with actual rough totals:

Debt #1 – $6k, paid off in August 2010
Debt #2 – $9k, paid off in September 2011
Debt #3 – $38k, to be paid off in 2013

It doesn’t seem all that long ago that I wrote that we’d paid off Debt #1, and it really wasn’t. How did we pay off $15k in less than 2 years? And how will we pay off $32k by 2014? By being very lucky with our jobs and living well below our means. We’re fairly average according to Dave Ramsey, with being able to get through the Debt Snowball in three years–$53k in three years doesn’t sound too shabby.

I recently heard that students shouldn’t borrow more than they will make in their first year working. After I thought, “that’s impossible,” I realized that this holds true for both my spouse and I. He made more than $15k his first year after he finished with school, and I made more than $38k. And, with not changing our lifestyles from being students to part of the full-time workforce, quickly paying off the debt and saving over $25k in interest payments has been marvelous.