Tuesday, April 21, 2009

The tax-man ate my paycheck.

I should be more excited right now. I mean, I am happy… super happy, but WTF! Is it really necessary to take that much money out in taxes??

I need to elaborate.

I just found out that we are finally getting our bonuses at work for 2008. Woooooo hooooo!! I haven’t mentioned it at all because I didn’t want to jinx it. There had been talk around the office for the last few weeks, so right after our last pay period ended, I went into our payroll system and changed my exemptions from 1 to 5, thinking this should help soften the blow from the tax-man. Our finance chick sent me a text message last night saying that my bonus was 17% of my annual salary! I suck at math, but my calculator says it should be about $8200 give or take! Awesome! I’ll be able to pay off at least 2 of my credit-cards!

Wrong.

When I got into work this morning, the finance chick printed out my prelim pay-stub for this week, my gross pay is listed as $10,110.38 (SCORE!)… I scan the printout trying to find what will actually be deposited into my account…

I almost fainted; $6886.44.

Okay, I don’t want to sound ungrateful but this amount not only includes my regular bi-weekly pay, it also includes my expense return from my Dallas trip. This means, that out of my $8200 bonus, I get $4602.91. COME ON! That is ridiculous! That’s effin’ 45% paid in taxes!!!

Don’t get me wrong, I am still very excited, because it is money that I didn’t have. But just the thought, if I would have changed my withholdings to exempt instead of freaking 5 I could have paid off TWO credit cards plus some!! (Okay, I might have been pissed come tax-return time next year... but I still would have made out better!)

No point in dwelling on what ifs.

Now that I have gotten that off my chest, I can focus on the positive.

I do have $4600 to work with, so I will pay off Credit Card #1 ($418.15 from my expense return, so I’ll have to take $735.39 from my bonus.) That leaves me with $3865, so I will put that towards Credit Card #2 bringing my balance down to $3822. Not too shabby! I’ll have to plug in the numbers, but this also means that I will have my credit card debt paid off earlier than I anticipated!! This is really good news!

Okay, I’m happy again! =-)

4 comments:

  1. that's awesome! i work for government... so no bonuses for us!

    can i ask a question? how come you're not paying off your highest interest card sooner? I could see wanting to get the smaller balance one out of the way first (#1) but wouldn't it make more financial sense to pay the one with higher interest off first? just wondering!

    Congrats!!!

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  2. Yes, it does make sense to pay the higher interest card off first (and I have been thinking about switching it around). I guess I have let Dave Ramsey get in my head (yes, I admit, I do listen to him on the way home from work!). He has this thing of working a “debt snowball”… basically paying debts off smallest to largest regardless of the interest rates.

    I think part of it too is the instant gratification I get from seeing a $0 balance. You are right though…. I need to get rid of the 19% credit card. Thanks for making me think about that!

    And thanks for reading!

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  3. Congrats on your bonus!

    It is depressing to see how much money is taken out for taxes. I always tell myself that I want the potholes fixed and that is where my tax money is going. If only IL was not one of the most corrupt states...

    I totally understand your need for insta gratificatiom...I think that it is a trait of our generation. I make list for everything, and crossing something off of my list makes me so happy. I would see why you would want to pay off the small ones first. Just to make u feel like your making progress and getting somewhere. Plus then it is one less payment to make.

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  4. I agree… I think that is a trait of our generation. We want to see results NOW! I guess there isn’t anything wrong with having high hopes!

    Thanks for the comment!

    ReplyDelete

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