Does Whole Foods Equal Your Whole Paycheck?

Most consumers today have a very difficult time holding themselves accountable for their discretionary spending. In fact, I have seen more families making $100,000 or even $250,000 who are still managing to live paycheck to paycheck. The largest area of spending waste that I have seen proliferate in the family budget by far are in the categories of grocery shopping and dining out. You would think from all of the television programs that we have today showing us all these cutting edge techniques to cooking that we would actually learn how to cook, but instead all we have learned is how to eat out more. It’s just easier, simpler, and quicker than making a game plan for weekly meals. At least that is what we think. In addition, what’s increased as well is the number of trips families make to the grocery stores with all of the options for gourmet takeout food. I remember going once per week on Sunday’s ...

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Living Paycheck to Paycheck is Not Living At All

Are you one of the many young professionals making good money but have little or nothing to show for it?  It’s ok to fess up because you are not alone.  A matter of fact, based on a study by Reuters 68% of Americans live paycheck to paycheck http://www.reuters.com/article/2012/09/19/us-usa-survey-paycheck-idUSBRE88I1BE20120919.  Yes, you’re reading correctly: over two thirds of people surveyed find it hard to make ends meet each pay period.  So how does this happen? First, let’s start with some simple math. Salary (total compensation) = $80,000 Annual After Tax Take Home Earnings (amount left after  taxes and health care costs are withheld, assuming a 25% tax bracket and $5,000 for healthcare  = $55,000 Paycheck (amount paid bi weekly) = ~$2,100/paycheck or ~$4,200 each month Now that we understand some basic numbers we can begin to realize where your true take home pay begins.  And just like any CFO of a large corporation, it’s equally important to focus on what cash is ...

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4 Tax Law Changes We Need To Make Permanent

With the presidential election beginning to heat up in America over the next several months, we are all going to hear a lot about income taxes.  We all know that with thousands of pages of tax code, it is impossible for the average citizen to really understand all of the different ways they can save money in taxes.  There are many tax law changes set to take effect in 2013.   If I had the opportunity to set the wheels in motion to make some tax law changes that would be permanent and easy to understand, here are four of them that I would recommend we change to become permanent. 1. Social Security Taxation –   From the day you begin working and earning waged income, 6.2% of your paycheck (the last couple of years 4.2%) goes toward your future social security benefits.    This is also known as your Federal Insurance Contributions Act (FICA) tax.     You only see the 6.2% that comes ...

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The Government Likes Annuities Now?

As all of us know, the idea of working for one company for 20 or 30 years is a dream most of won’t ever realize in our lifetimes.   Historically, if you worked for one company for your whole career, you could retire with a pension.   A pension is really another similar term for the word annuity which means that you would receive a consistent stream of income for the rest of your life that you could not outlive.   In many cases, you can also get a spousal option to have the annuity continue upon your death to your spouse even if for a reduced amount of income. As pension plans have largely been replaced over the past 25 years with the 401(k) savings plan, the combination of employee/employer savings rates and overall rates of return have led many people to having a 201(k) at this point in their lives.   With ‘retirement’ lurking in the not too far distant future, many ...

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What will you do with 2% more in your paycheck?

If Santa Clause didn’t come down your chimney with anything good this year, Congress has decided to give you a stocking stuffer for the New Year.   With nearly 160 million workers that will benefit from the extension of the reduced payroll tax that passed just before Christmas, it’s time to figure out whether you’ll be naughty or nice with your gift.   The Temporary Payroll Tax Cut Continuation Act temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of your Social Security withholding rate from 6.2% to 4.2% of wages paid through February 29th, 2012.  (source: www.irs.gov) Of course, this is supposed to have no effect on your future Social Security benefits.  Yeah, right! If you weren’t aware, this payroll tax cut was in effect for all of 2011.   This means that for those who earned W-2 income last year up to your first $106,800 of waged income, you actually got a 2% pay raise in ...

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Personal Finance 101: Generation X Series – Marriage And Medical Insurance

Generation X is classically defined at people born between the years 1965 and 1979.    Pretty much those of you in your early 30’s to the mid 40’s.  However, having given personal financial advice to thousands of people, I can tell you that many of you who were born 1960 to 1964 fit within the Generation X type of financial and personal attitude.   Since I am 42 and have had a good deal of financial success, I’ve noticed some big mistakes that I see my generation making with their money and how they think about money.    This week I wanted to discuss what to do about your medical insurance after you get married. One of the questions I’m getting a lot from Gen X’ers as of late (especially those recently married in their late 30’s/early 40’s) is around what to do with medical insurance after being married.   Since the medical plans and financial contribution from each individual employer may vary, this ...

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