The payroll tax cuts have expired. Workers will pay an additional two percent of wages in social security tax. No matter where you fit on the wage scale, you can reduce the payroll tax pain by examining what you spend and where to spend less.
First, how much money will you need to save to make up the difference in the payroll tax increase. Based on the U.S. average hourly wage of $23.50, the two percent tax increase is $0.47 per hour and $3.76 per day. This is $18.80 for a 40-hour week and $977.60 for 52 weeks. For an employee earning $12.00 per hour, the two percent increase is $0.24 per hour, $1.92 per day, $9.60 per week, and $499.20 per year.
Whether you need to cut $3.76 per day or $1.92 per day, breaking it down in this way makes it easier to understand and control. And you can do this without extreme sacrifice.
- The average household spends 6.03% of income on food at home, and 4.11% on food away from home. Compare the cost of food purchased at restaurants to the cost of preparing the same food at home. Picking up spaghetti at Frazolis for a family of four costs $17.96. Making spaghetti at home costs $4.88. This is a 27% savings on dinner.
- Starbucks coffee has more caffeine per cup, and we all love it. You can still enjoy your coffee and save money. Instead of a latte, opt for a coffee tall, and then add splenda, non-fat milk and a shake of cinnamon or chocolate. This saves about $2.00 per cup.
- Keep your eye on the gas prices. If you fill up at $3.15, then notice gas is $3.03 a few days later, fill up again. It is a small savings, but over time adds more cash to your household.
Explore new ways to shop and save money on brands you like and items you need.
Cruise Big Lots once a week:
For example, Secret Clinical Strength deodorant costs $7.98 regular price, but Big Lots will sell the same size and brand for $2.50 about three times a year. If you buy 10 when Big Lots carries these, you will spend $22.50 opposed to $79.80 throughout the year. Stop at your local Big Lots and see what brands you love are for sale there. Ask the store manager what day of the week they stock, and try to get there. Big Lots is not an everyday store, many of the items are priced higher than Wal-Mart or Target, but the savings in the closeouts are phenomenal.
Not all dollar stores are the same
Dollar Tree and Deals also carry name brands closeouts. You can realize real savings on greeting cards, gift bags, wrapping paper and tissue, scented candles, paper goods and some laundry soaps. Gift bags, all sizes, are always $1.00. Greeting cards are normally two for $1.00.
Shop less and plan more
Keep a piece of paper on your refrigerator and write down what you need. Try to limit household shopping to once a week. Divide the list between groceries and household paper goods, cleaners, laundry soap, etc. Household items and personal care products are more expensive at the grocery stores. Buy your household items at Wal-Mart, Target, a dollar store, or Big Lots when available.
Use inexpensive alternatives
Rinse cycle fabric softener costs $0.32 per load. Using white vinegar instead costs $0.10 a load. Vinegar softens, removes soap residue to brighten fabric, and removes odors. Vinegar does not control static cling, however, and inexpensive set of dryer balls helps reduce drying time (saving money on gas/electric), fluff fabrics, and reduce static cling. Dryer balls are reusable in each load.
Get creative about how you spend your cash. It is easy to save $1.50 on a gift bag to use on a coffee tall at Starbucks and still save money.