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Archive for September, 2007

Tax sheltering bonuses...

September 26th, 2007 at 06:22 pm

I think we all know that we can adjust our W-4s anytime we really need to with our payroll depts. But has anyone ever thought about adjusting the 401k type deductions at the time of bonuses and such? I haven't. But, it's occurred to me now that when you know you'll be getting a bonus check, that's the perfect time to play with your deduction amount so that most, if not all, of the gross earned will be tax-deferred into a retirement account. And, then of course, adjust your deduction back to the level it normally is right after the bonus check is cut. So for example, if you'll be getting a $2000 bonus at Christmas time, go in and take out whatever amount you can as a pre-tax deduction into your 401k, 403b, 457 plan and you'll be able to save so much in taxes and so forth. In our system, we have folks retiring that get a final paycheck "payout" consisting of leave balances that total up in the thousands - what a great way to tax shelter those dollars! We had financial advisors in here yesterday explaining how all this works throughout our system and how people really have benefited from it... I just never thought about it this way before -

thinking out loud

September 7th, 2007 at 02:35 pm

My boss is going to request my raise before the board on Monday. Cross your fingers and toes that they値l approve it. It would be so nice to get that additional money right now. You know, it isn稚 like we are hard up for cash, but it sure does feel like it sometimes. We need to save $7k by Dec 1 to payoff the BT we had done for our landscaping work. I don稚 think it値l be too much of a stretch to do this but it sure would give us a bit more breathing room to receive an additional $360 or so each month with the raise. If they backdate it to be effective July 1, that would mean roughly, $1800 that I could designate to the $7k. And in Nov, DH and I both get our yearly bonuses that will add about $2635 after taxes so we値l really only need to save $2565 from our normal budgetvery doable.

I知 thinking ahead to Jan 2008. Once the wall is paid off in Dec, I知 going to really focus on building up our efund. We only owe $3k on our last car loan which should be a breeze to pay off as well. So, I知 really looking forward to getting back on a normal savings schedule in 2008. I知 going to set our efund goal savings in 2008 to $10k breaking it down, it痴 only $833 per month. With our $373 car payment savings redirected to the efund, that痴 really just $460 that we壇 have to save monthly. That gets me excited. And at least for a little while, we値l be completely debt-free (except for the mortgage). I say for a little while because my dear DH has been waiting for 2 years to get a 渡ew car (we always buy used). Since we致e moved back to the mountains, we need a 4WD vehicle so it痴 not something I致e disputed but have put off because I only want one car loan at a time. Although Dave Ramsey and others might argue that we need to save for a car to avoid car loans, I feel that it痴 okay to get a loan for vehicles when one is smart about it. We never over extend or buy the newest models or borrow for like 6 years or anything. We try to find good quality used values and our credit union gives unheard of low interest rates so we maximize what we can. I知 just hoping that we won稚 need to find something prior to next winter though but we値l just have to see.