Reply to $155K HHI and broke

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Reply to "$155K HHI and broke - any tips?"

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[quote=Anonymous]OP, you should go back to every item in your budget and classify it as "want" or "need".  Be ruthless in how many items you call "needs".  Identify what parts of that "need" might actually be a "want" and cut those parts until you really have an accurate picture.

Grab your most recent tax returns.  Look at your HHI and your tax due.  What % of your HHI is your tax bill, after all your deductions/ exemptions/ etc?  Now look at your paycheck and what is the % being withheld for federal and state taxes?  Assuming you didn't add/lose deductions and exemptions in the past two years, those %'s should be within 1-2 points of each other or you need to adjust your withholdings.  You can give whatever exemption you want in your request (mine says I have 6 kids!) to get the math right and you won't be in trouble with the IRS unless you SERIOUSLY under-withhold and have to write a monster check at year end to catch up.

Is one of you in sales?  You realize commissions are taxed way higher no matter how many exemptions you claim, right?  I think it's between 33%-50%.  That's why I have to claim so many kids on my W-9 or whatever its called to get the total tax withheld by year end to even get close and I STILL got a $6000 refund this year for last year.  And I make $30K less than you and I'm a divorced mom of three.

My take home salary is $4800/mo and my bonus is paid once per year in March.  My mtg is same as yours but I don't have a car expense (company car, gas, ins all paid and personal use is okay) or college loans, but I do have $600 in childcare for my two youngest (county afterschool program), $600/mo in food,  I save 5% in my 401k at work to get the 100% company match, I withhold $200/mo for my medical deductible HSA, $400/mo for childcare pretax.

I was looking at my cash flow wrong until I stopped subtracting childcare costs out of take home since I pre-paid them.  Yes, the cash flow is what it is, but if you're timely with filing for reimbursement, you at least get that money back in your pocket within 2 weeks.  If you don't set aside for childcare pre-tax, you should provided you're both working.[/quote]

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