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Posts tagged with: withholdings

Paycheck Blunder

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I was oh-so-excited for my very first 2-week paycheck that was direct deposited into my account on Friday. I was giddy as a child on Christmas morning opening up my bank account information online only to discover…

I got paid nearly the same for my TWO weeks of work as I did on my last check for ONE week of work (in full honesty, this check was about $80 more than last time’s check…but for a full extra WEEK of work!!!)

My jaw dropped when I saw the deposit.

IMMEDIATELY I logged into my school account to view my paycheck and find out what happened.

And, as it turns out, it’s a combination of things.

First, I hadn’t elected my benefits yet in time to have them withdrawn from my last check. The only withholding it contained was the mandatory 401(a) contribution and my taxes. In contrast, this check had OVER A THOUSAND DOLLARS of deductions (not even including taxes)!!! Ouch! I elected for a LOT of things to be withheld, including: my mandatory 7% 401(a) contribution plus an additional contribution to bring me up to 10% withheld; all our medical, dental, and vision insurances, taxes, and the BIG one is the FSA for dependent child care to the tune of $500/paycheck. That one will serve me in the long-run because it allows me to pay for childcare with pre-tax money. But it still hurts to have that all added up to be over half my paycheck!!! (also, side note: the max I can contribute to the FSA is $5,000/year. So this level of withholding allows me to use $5,000 pre-tax toward childcare in 2015, then I’ll start over again in 2016. Once I hit the $5,000 max limit these withholdings will disappear and I’ll have to pay remaining childcare costs with after-tax money)

Only…those deductions shouldn’t equate to half my paycheck!

After a more careful inspection of my paycheck I realized I’m getting paid the wrong amount!!!

I’d been hired at ($X) over a 9-month contract. That way I can either take summers off or, if there’s additional work, I can get paid extra to work over the summer (essentially securing a 25% “raise” by working over the summer). When I was hired the business manager said that most faculty members prefer to have their pay spread over a full 12 months so they don’t go without pay over the summer. She could show me how to do that. I said thanks, but never pursued it. In my own mind, I’d rather get my money up front within the 9 months. Hubs still gets paid over summer, we could set up some type of “savings” to set aside some money for summer, or I could just hustle and try to teach over the summer for additional income. But, no, I was not a huge fan of just letting them keep my money and divvy it up over 12 months. I want as much as I can get now, thank you very much.

So when I calculated what was going on it was easy to see. Apparently I’d somehow been opted into the 12-month pay cycle instead of getting paid over 9 months as I’d intended. That essentially makes my income drop 25% (since it’s being spread over an additional 3 months).

Soooo, what would you do?

My knee-jerk reaction is to go to the business office and ask them to correct it. I want to get paid over 9 months, not 12. But are there any great reasons to keep my pay over 12 months? Anything I’m overlooking?

One additional piece of information is that if I opt for 9 months of pay, then I get double-dinged for insurance payments in the Spring semester (in order to cover the unpaid summer months). If I stick with the 12-month cycle then the payments stay the same year-round.

Thoughts?


2012 Taxes

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I have heard from my CPA friend and I am smiling big with gratitude!  Thanks to his guidance upon my ex’s move out, I made major withholding adjustments for the last four months of 2012.   As a result, I will owe less than $500.  I cannot begin to tell you what a relief this is!  And there’s more great news:  I can re-adjust my current withholdings because I was on track to get a refund for 2013!   Answered prayers my friends…answered prayers!  I was having near $900 PER PAYCHECK withheld!  I know I make a good income but losing $1800 per month hurts!  AND, let me just throw my shoulder out here patting myself on the back…I was STILL able to make payments toward debt and not incur any new debt.

I am a new person!  Truly!  I never thought I could do this.  Just a year ago I was spiraling out of control.  Bouncing checks!  Yes, seriously.  Only making minimum payments and sometimes scrounging to do even that!  I didn’t have money left after pay day and could not figure out why!  My debit card was flaming hot with the constant use!  And then I started blogging.  I slowly, SLOWLY started keeping track of every dime I spent and started downsizing my life in every possible way I could think of.  Remember when I went to the hair salon every 6-8 weeks for a $200 cut/color/style?!  My last salon visit was in December and I don’t plan to go back until June.  The examples are many and for those of you who have been reading since the beginning, you’ll surely remember the changes.  Have I hit major bumps in the road?  Uh, yea.  Like a surprise divorce!  And other smaller hiccups too.

I want people who are in debt to see my story!  I want to motivate others and, in turn, be motivated!  It has not and will not be easy but each of us can make changes to turn our sinking financial ship around.  Don’t be afraid and don’t wait another day to start this process.  You will find freedom like you’ve never known.