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Home > The payroll tax hit, and other budget thoughts

The payroll tax hit, and other budget thoughts

January 15th, 2013 at 04:44 pm

Finally, all our paychecks hit and I got to look at our paystubs too. Turns out the decrease due to the tax cut expiring wasn't quite as bad as I thought because other taxes (federal, state, medicare) adjusted ever so slightly lower. So instead of losing $226 per month it's more like $195. Hey, I'll take it! That means $30 more to our big-picture goals, so our budget shortfall's only about $330 (I'll do the exact math in a bit and update my sidebar when the blogs are working again).

I therefore have a small budget surplus over the next two months because I underestimated our take-home pay. But we have a few dental and doctor visits coming up, and I don't want to dip into our medical savings, so I decided to put that windfall aside to cover co-pays.

I also took the opportunity to update a spreadsheet I don't use too often but find helpful for assessing our spending relative to income. I call it "Absolute Budget Breakdown" and I list our gross income and itemize all the taxes and pre-tax paycheck withholdings. I have everything listed by "Need," "Want" and "Savings/extra debt repayment." I like to measure things against the 50/30/20 yardstick (50% to needs, 30% to wants, 20% to savings/debt repayment). Our new numbers look pretty good. Counting tax withholdings as a "need," this is how the budget breaks down:
Needs 56.21%
Wants 20.41%
Debt repayment/savings 23.37%

However, if you remove taxes from the mix and just evaluate the money that is actually mine, here's how it breaks down:
Needs 48.15%
Wants 24.17%
Savings/debt 27.68%

That seems pretty well balanced to me. I also calculate how much of our gross income is going toward retirement, and right now it's at 9.29%. So, that's a bit low, but considering how many other debt and savings priorities we have, I'm fairly comfortable with that. As we knock other goals out of the way, I see us upping that percentage gradually. (We are saving 10.19% of our regular income, but if you count our two property rental incomes, we're not quite there.)

Other financial news, briefly:

We went over our grocery budget by about $46. This is the least behind we've been in months. Part of it has been smart grocery shopping, but also we each donated $50 of our Xmas gifts from family to the groceries, so that helped wipe out the deficit caused by Thanksgiving and Xmas food expenses. AA is down to just three or four pull-ups per day, so that expense is a bit smaller. I have high hopes that we're going to stay within our grocery budget from the 16th to the 31st (even without the $46 we took as an advance this past week), and if we can manage that, I think it'll be even more doable from now on. In late March SL won't need formula anymore, and in early June we'll start getting our CSA veggies again.

Other creative budget tidbits: We had some winter gear and some school book purchases that weren't budgeted anywhere. I just put them in the spreadsheet as something we had to reimburse somehow. NT sold a pile of DVDs we'd been meaning to get rid of, and that made up for about half the expenses. We still have $68 that we need to make up somehow, but we have a bunch of books as well as a thermal stroller cover, so if we can sell some of that, we may be able to pay for the winter clothes and textbooks without disrupting our regular budget!

I guess that's it for now. I look forward to reading everyone else's blogs when the site is back up and running!

1 Responses to “The payroll tax hit, and other budget thoughts”

  1. FrugalTexan75 Says:
    1358313345

    If you look at paying down debt/putting money in savings/putting money in retirement vehicles all as increasing your net worth value ... then paying down debt is in a sense saving money - especially when you are doing it aggressively since that is saving you on interest costs. Smile

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