Wednesday, March 19, 2008

Tax Results

We finally got our taxes done tonight. There’s good news and bad news. The good news is that we will be getting a $2500 federal tax refund! The bad news…we will be getting a $2500 tax refund.

This has been a pattern of the past few years, and I’m sick of loaning the government money interest free. I have been afraid to make changes to my federal withholding in the past because I never knew what damage our side business was going to do to our taxable income. But the first thing on my to-do list Monday morning is to fill out a new W9. I would much rather have extra $200 per month!

Speaking of “per month”, let me share with you how we’ve increased our take-home pay by over $400 per month.

1. Changing my federal withholding - $200 per month
2. Pausing Pool Boy’s 403B contribution - $50
3. Pausing 529 contributions - $100
4. Reducing my 401K contribution low enough to make sure I’m getting the match – not sure of exact amount yet

Changing the federal withholding is a no-brainer.

The 403B is just an additional retirement account that Pool Boy has been contributing to for 15 years or so. It’s not his primary retirement account, so I’m not too worried about pausing this.

The 529 contributions were minimal. Once we become debt free, we can really throw money at these. With our plan, we’ll be fine by the time the boys get to college.

Reducing my 401K was not hard for me. Even after we’re debt free I plan on keeping it at this rate, but also will start maxing out a Roth – can’t beat the Roth.

Are there ways you can increase your take home pay? Remember, if you are going to increase your pay, make a point of making that extra money work for you. Otherwise, what’s the point?