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January 11, 2011


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It will be going towards paying off my house faster. Don't think the economy will see much from my "windfall." Personally, I think I'd be more likely to blow it if it was a lump sum.

I plan to take that amount and add it to my automatic contributions for my Roth IRA.

Retirement savings. I’ve needed to increase my savings anyhow, so this worked out well. I just have to make sure I get a little remaining debt paid off this year so that I can keep up the same % in 2012.

Besides, it just seems right, since otherwise that money would be helping pay for someone else’s retirement.

Unfortunately, my "extra" will be passed on to the State of Illinois as our legislators are on the verge of passing a bill raising the state income tax from 3% to 5%.

What am I going to do with the extra $40 a pay period? Keep up with the Joneses of course. Who am I kidding? It goes straight to savings. Since my company is not giving any raises, the government has stepped in and did it for them. I am very happy!

"This isn't going to work for me. I plan on saving all of the money I get to keep (which is a very nice amount over the course of the year.) Getting extra won't cause me to spend more since I don't really see it as a "windfall.""

I don't understand this thinking. You are going to save the money, but presumably you aren't going to be storing it in your matress. You're going to put it into the bank (or your home, etc.). The bank will then be able to use that money to lend to someone else who will spend it (or else they wouldn't be borrowing it in the first place). So the same amount is being spent, it's just not being spent by you.

Now tell me where I'm wrong

Texas Wahoo --

"Getting extra won't cause ME to spend more."

Savings to be spent in September when my oldest son goes to college. There will be alot of small stuff to purchase to make his life and ours easier.

I'm not entirely sure that this temporary tax-cut will actually result in my paycheck being larger (or at least not larger than most sources seem to be estimating) since the Making Work Pay tax-credit (which was an up-front credit in the form of more money in our paychecks) expired at the same time that this one enacted. Seems like the new one might just cancel the other one out.

I plan to spend it, need to learn to live it up and not be obsess with money.

Bought a motorcycle (Obama paid for about 30% of it). Loads of fun so far. I'm in my mid-40's and retirement is just about paid for, so I blew the money before I ever even got it.

I don't pay Social Security because I am employed at a university with it's own retirement plan. So my income isn't going up at all.


Sorry. I took your "This isn't going to work with me" statement as saying you disagree with the theory that putting money back in your pocket will higher spending.

I will save every extra bit of it, and focus on retirement. I can't imagine anyone looking it this and trying to justify a vacation or toy. Then again, that's probably what many people would do if they knew about this. Not many here, though:)

Save, save, save....then save some more. When you're old and needing money, you'll be wishing you saved more when younger. One can enjoy life without spending this "windfall".

One addition to my last comment - I'll be increasing spending as it is, due to living in Illinois and dealing with a potential tax increase. Maybe this will help ease the impact for a year. It's not fun to see tax increases, let me tell you!


working pay tax credit was $400 for single and $800 for married. The payroll tax cut is 2%. That means the break even point is $20,000 for single and $40,000 for married.

If you are single and make more than $20k then youll come out ahead this year. If you're married making over $40k then you'll come out ahead.

While normally I would invest it, this year I will probably use some of that money for a trip to Hawaii (or at least that is what I would like to do!)

I have to wonder, did you book your trip already?

We're going to use it to offset the 33% increase in our medical insurance this year.

It is so true when the check are smaller you don't think of saving it so much but spending it. It is a great economic enhancer. But for those that are in tight situation, they need to have the discipline to save each check.

I work for the government and don't pay into SS. But I told 2 of my friends to bump up their 401K comtributions and they did so.

I'm upping my 401k by 2% also (to 12%). Actually had already planned to do this and was pleasantly surprised to learn that it would be offset by the decreased SS. So I may end up upping my 401k to 15% by the end of the year.

I am increasing my 401(k) % to the annual maximum this year due to this 2% decrease in FICA tax!

Same w/us...since we don't pay into SS, so no increase for us. Figures!!!!!!!!!!

I think paying off high interest rate credit cards would be a good start. Reducing all the debt will help me be a lot freer. shouldn't have any outstanding balances on high-interest credit cards anyways! :)

Does it bother anyone that Social Security is running out of money and the government is providing a stimulus plan that will only make it worse?

Well lets see my health insurance just went up by $115 a month for the same plan as last year thanks to ObamaCare. So I guess that will cover that for this year and then I need to go finding a mysterious $200 as my health insurance increases the following year.

@Walter - Yes.

As noted by an earlier comment, this "stimulus" combined with the Making Work Pay tax-credit actually causes lower income people to end up with less money every paycheck.

I won't be getting a raise from paying into SS as I don't pay into it. I am retired. However, I am getting several small raises instead. The first one is SS. Everyone says we got no raise for SS last year and this, but we did. They did not raise Medicare and thus our SS check was not reduced. That is a raise for me.

Also, for the second year running, my health insurance has gone done-$10 a month last year and $20 a month this year. How's that for miracles?

And, when I retired from the State of MO, I lucked out and picked the right retirement out of 2 offered. I am guaranteed a 4% min. or a 5% max. each year until I reach 165% of my first retirement check. That point will be reached in 2016. After that I will get COLA's like every other state retiree of 0-5%.

Not great bunches of money, but each little bit helps, doesn't it? Especially since utility rates have went up some in our town and they have just added a $20 a month surcharge to my $7.87 sewer bill. In our araa most sewer systems are 100 years old or more and must be replaced per DNR. Will cost our small town of @1800 in the area of $7m. Ouch!!!

Our health care premiums skyrocketed so we will see exactly none of the Social Security cut actually come through in my paycheck.

I won't even notice the extra money. The money goes directly into my bank account. I don't spend all of my paycheck now, so this will just be more in savings for me. However I think we will all most likely be paying more for gas this year. I guess this will help pay for that.

Money Reasons --

Not yet. Still doing my research and deciding if we'll go.

Since I figure someday the government is going to hike taxes big time someday to pay for all of their wanton spending, I am going to save the extra dough.

That 2% is not as much as it seems when you consider some of us are going to lose an $800 family "making work pay" tax credit. The total tax benefit for those of us in this situation nets to roughly $1,200 at most.

Instead of just plunking into savings and earning next to nothing (and the government somehow still feels the need to tax me on this "next to nothing") I am going to pay a little extra principal on our mortgage each month, and maybe put a little bit more into our Vanguard investment account.

For us I doubt it will be of any significance. Our insurance premiums when up by about $40/month. Not horrible, but its an increase that will minimize the impact for us. Anything left will roll over to savings.

I'm with Texas Wahoo on this one: I hope that when people say "saving" they really mean "investment." For those increasing the retirement/401(k)/Roth "saving" it is "investment." Money sitting in a checking account is extremely economically inefficient.

Personally, mine will be going to help buy a new (used) car within 3-6 months.

My "extra income" was eaten by a raise in health insurance premiums.

I won’t see any extra cash since my state passed along its 2% retirement contribution onto their employees because of the budget deficit.

I will be saving the extra money by putting it into my cash savings accounts. Actually I am using rewards checking accounts that give 3-4%. I want a larger cushion for emergencies and big purchases. I am already maxing out my TSP (401k for govt employeess) and Roth IRA. I am 5 years away from when I could retire and I am dismayed to learn that federal pensions for newly retired employees are backlogged. It is taking months for federal retirees (like up to 9 mos for some folks) to get OPM to determine and start paying them their full pension (learned this on another finance blog). Meanwhile they get partial payments. So these retirees have to live off other savings and investments before they get their full due. Maybe OPM will have that straightened out by the time I retire, but it is good to increase my cash savings to cover situations like that.

If anyone is interested on the federal govt employee pension problem I mentioned in my above post, here is a link:

Yay! Tax decrease! A reason to celebrate!

I've already increased my auto payment on my mortgage to include the full increase in pay that I will receive. I'm sure though, that the average dumb american will just blow it. Perhapa they should spend more time reading your website & less time at the mall.

I increased my 403b payroll deduction with the tax break.

Well, I already max my Roth IRA at $5,000 per year, and I also put 10% of my gross paycheck into my TSP. I'm 25, and I feel comfortable about my retirement. I'll probably put "extra" money right now into liquid cash savings.

I, for one, am concerned about the huge gap between federal tax revenues and federal spending. We need to increase the former and decrease the latter, or people like me and the next generation will have to pay dearly for it. I would gladly pay another 2% in taxes this year if it meant less financial strain down the road.

$31 per paycheck for me biweekly. Hopefully it will go to savings or debt reduction.

My 2% was quickly sucked into the black hole created by the IL Democrats who are bent on taxing us all into bankruptcy. Thank you Gov. Quinn for promising to quickly sign our 66% increase in state tax, so you and your croney's can expand the government budget yet again, and pay yourselves more money at our expense. That's a great way to remain in last place in the country as a place to do business. I bet the states of Missouri, Indiana, Iowa, Wisconsin, and Kentucky are all looking forward to the new businesses coming their ways.

$80 per month cash back... and weed is $80 for 1/4 oz... coincidence? I think not.

I don't pay social security taxes (work overseas) so no refunds for me :-(


We're not going to get much since my husband works for the school system (elementary school librarian). This means that he never pays into social security, so the other tax credit leaving will make up the difference of the extra I'm getting for this. But, if there is any extra, it'll go towards our second Roth IRA. :-)

How is it that some people don't pay into SS? I thought everyone did now.
Anyway, it's all smoke and mirrors. I guess the government is frantically
looking for ways to cut SS benefits, and now they CUT contributions? I guess
AARP has been right all along, LoL....
And MY 'extra'? Savings. I HAVE to, due to this cut, and skyrocketing health
and insurance costs (how can the government say inflation is 'tame'?) I'll face
all sorts of additional costs in retirement. I at least want to be able to eat
a good brand of cat food when I'm old.

@Harm. Not all government employees are required to pay into Social Security. Some public sector employers decide to go with SS & others don't.

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