Monday, January 14, 2013

Today in the news...our tax dollars at work, or not....

Today in the news we have quite a few headlines that affect all of us: "Payroll Tax Takes A New Bite". "Obama demands quick action to raise debt Limit." Both these headlines dig deeply into the consumers pocket and I wonder how you feel about it. Here is the space to vent and share tips with other frugal minded souls affected by our rising deficit.

"Payroll Tax Takes a New Bite": We all knew it was coming. We all knew that the temporary reduction in payroll taxes to social security was not permament. Nevertheless, the chunk of money taken out of our paychecks, those lucky enough to have paychecks, was a unpleasant surprise. According to the Yahoo news article, the cut reduced from 6.2% to 4.2% gave Americans hundreds of extra dollars in their pockets to spend the last two years. I don't know about you, but I wasn't spending all that more since my paycheck hasn't gone up in three years and I was already cutting back and trying to save more, just in case.

In the first Yahoo article about the Payroll taxes increase, "Roberton Williams, a tax economist and the Sol Price Fellow at the Tax Policy Center in Washington, said the expiration of the payroll-tax cut will leave the average American household with $18 to $20 less to spend each week, or $900 to $1,000 a year.
For the country's consumers as a whole, Mr. Williams said, that is a decline of $120 billion from last year. The total comes to about 0.8% of U.S. gross domestic product and is nearly equivalent to the most recent full-year sales at P&G, J.C. Penney Co. (JCP) and McDonald's Corp. (MCD) combined.
The impact on the economy now is hard to quantify, because it isn't clear how much of the money in consumers' paychecks was spent and how much of it was saved. Still, "it's a significant amount of money that's being pulled out of people's pockets and not being replaced," Mr. Williams said.
The tax hit could affect companies such as consumer-goods makers, clothing retailers, department stores, food producers, grocery stores and restaurants. Some companies said it is too soon to estimate the potential impact of the tax break expiration on their sales and profits, but it nevertheless has been a nagging concern."

You think? Did we really need a financial expert to tell us all of this that we already know. I can answer that question, Mr. williams: I don't know about you but I am spending less already, and I am going to spend even less now. My paycheck at the end of the year was significantly smaller with me having $70.00 to spend than before and that is quite a chunk of money. Thank you, Mr. President. If you want the economy to grow, Americans need money to spend. Americans will only spend if they have more money to spend and feel safe about their jobs and stability. Less money in pocket = less money to spend. Seems logical enough to me. Along this vein, I made a New Year's Resolution that I would boycott spending. As I mentioned on the first post, I am tired of being unappreciated and treated like dirt by businesses when they should value my custom. Unless something is absolutely necessary to purchase, such as groceries or gasoline, I am not going to buy it. Plain and simple. This is my goal. I know it is a lofty goal, but I am determined to follow through. It is fourteen days into the year and I haven't spend any of my money of "luxuries" or "frugalities". Last night, I had to purchase a tax program to do taxes this year and it almost killed me to do so. Yes, I know there are free tax programs at there, but I don't feel secure to do them solely online, plus I also need a state program.
No more using the credit card for "luxuries" of dinner out or impulse purchases for me. Instead, I'm going to stash, stash, stash away my money in the bank where my money can collect the paltry interest I've come to accept.

I'm not a psychic, but in 2002 I knew all of this was going to happen. The housing bubble would burst and the economy would tank, as it has. I saw it. I felt it. Sadly, I was correct. Last year, I told my spouse that it would get worse before it gets better. Personally, I don't see any recovery for another nine years and this year, 2013 is going to be the worst. I hope I am  wrong, but whenever I have a bad feeling about something it always comes true.

Anyway, over those last several years, I've done my best in cutting back. We don't have cable or satellite tv. In fact, where we live we don't even have tv reception and a digital receiver we had to buy was a waste of time, effort and money. We have an extensive video collection and rely on that, or go to the library to borrow some from there. It has come to the point where we don't even miss tv anymore. We also receive Netflix since 2004 to add to the mix. I never ever pay full price for a brand new dvd. I mostly buy used, which saves us quite a bit.

I set up several savings accounts over the years: ie. emergency funds, vacation funds, etc, which work out well. I ensure we contribute to our IRAs, even if it isn't the maximum allowed. Some years we just couldn't afford it and $500.00 in the IRA is better than nothing at all.
We read a lot, but I neve buy a book brand new-NEVER. Books are just way too expensive for me to justify, and you usually only read it once anyway. Amazon and eBay are two of our best friends for purchasing videos and books.

This leads us into the other Yahoo news article," Obama demands quick action to raise debt Limit."
"Obama virtually dared Republicans to let the government shut down rather than renew funding beyond March 27. "It will hurt the economy," he said emphatically."
Whoa, Mr. President, what are you talking about? I thought we should cut back instead of spending more. Don't you think it is time that this country started tightening its belt instead of continually loosening it up? Why aren't you setting an example for Americans to follow instead of the other way around that you continually ignore. Americans can only cut back so far before we are left trying to squeeze blood from a stone, and we all know how unsuccessful that will be. We have to cut back. It is time you did the same thing. Besides, don't you think the economy is already hurt? There isn't a bandage large enough to heal it. Wake up and smell the coffee. The spending has to stop and I'm not talking about cutting programs. Why arent' our servicemen in Afghanistan brought home yet? There is a chunk of money that can be saved. Wars aren't cheap, yet we keep spending. Why are we sending more soldiers out to Africa, etc. When is enough enough?

How does all of this government spending make you feel? Have you cut back on spending? Have you found a successful way or ways to save money? Are you spending more? Are you spending less? Share your experiences here; we'd love to hear. Maybe we can learn from you.

That's all for now. May all your shopping experiences be good ones and may your pockets attract lots of cash instead of losing it.
My best,
SS

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