What a fantastic month! I finally got a nice raise and I started getting more money in my paycheck since those crazy people in Washington finally did something right for a change. Bring on that 90-inch flat screen!
Do yourself a favor and hold that thought…
The Tax Cuts and Jobs Act was signed into law in December 2017.
The law did two things that really does put more money in your pocket:
The law did two things that really does put more money in your pocket:
- It lowered the corporate tax rate, the amount of taxes that the company you work for pay each year. This is causing some companies to pass along part of this savings to their employees in the form of a bonus; and
- It lowered the amount of taxes that your employer takes out of your paycheck each week.
So, the payroll processing people didn’t make a mistake. You really do get to keep that extra money in your paycheck. The trick is being smart about what you do with that extra money.
1. Complete a home repair project.
Have you been putting off a home repair project like I did? The water was so hard at my house that the elements on my new water heater only lasted for just over a year! Four days in January without hot water is not a good thing. The first purchase I made once my bonus hit my bank account were two new elements and a water softener.
2. Pay off credit card debt.
Does it normally take you until Easter to pay-off the credit card charges you racked up while shopping for Christmas presents? Interest rates on department store credit cards can be outrageous. Use your new-found wealth to pay those cards off as soon as you can. It will save you a ton of money in the long run.
3. Open a retirement account.
It’s never too early to plan for retirement. For some people, thinking about retirement is the only thing that gets them through the workday. Consider stopping by The Friendship State Bank and asking about how to open a Traditional or Roth IRA(Opens in a new Window). Contributing some of that extra cash in your pocket to an IRA now will boost your future nest egg…just be sure to discuss it with your tax adviser. He or she can give your great advice on which IRA is best for your needs and how much you can contribute.
4. Treat yourself in moderation.
Being a responsible adult is hard. If you still have any of that extra money left over after buying that water softener, paying off your credit card balances and starting an IRA, you should treat yourself to that new TV. You may not be able to afford the 92-inch one that you originally had your heart set on, but your favorite Netflix shows will look just as good on a 50-inch flat screen.
By Jaclyn Linkmeyer - Friendship State Bank Trust Administrator, Executive Secretary and IRA Guru. Jaclyn's favorite color is purple and she has a great appreciation for hot water.