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Why Our Paychecks Are Smaller This Year

Mark Cussen is a financial analyst and contributor for the website, Money Crashers Personal Finance. He writes about financial education and training and economic policy.

The political uproar over the fiscal cliff issue that permeated the media back in December has faded from the news headlines. However, the effects of the resolution to this matter are just beginning to be felt by millions of American workers who have since discovered that the amount of money they take home has suddenly shrunk.

Social Security Withholding
The reduction in pay is due to the increase in the amount of Social Security tax that is now being withheld. In 2010, President Obama reduced the amount of OASDI withholding by 2%, from the standard 6.2% to 4.2%, as a means of combating the recession by putting more spending money in the pockets of American consumers. However, the reduction was only slated to last for two years, and time has run out on this provision. It was not among the tax breaks that were extended under the American Taxpayer Relief Act, so workers have seen their Social Security withholding revert to the previous level since the beginning of the year.

Of course, while this increase comes as no surprise for those who read the fine print in the original bill that lowered the withholding, it has taken the majority of Americans by surprise. Someone who earns $50,000 a year will see $1,000 less this year than they did last year; a difference that is made more significant by the fact that it reduces net income after taxes and withholding. Financial planners and other professionals need to be able to effectively counsel their clients on how they can stretch their dollars further and trim their personal budgets without materially reducing their lifestyles and savings plans.

Other Tax Hikes
Unfortunately, Social Security withholding is not the only way that taxes are increasing under the new law. The Tax Policy Center in Washington, D.C. has stated that the average tax rate for Americans will rise by as much as 1.5% to nearly 22%, and that more than three-quarters of all Americans will pay higher taxes in 2013. Taxpayers in the $40,000 to $50,000 income range can expect to pay more than $500 more per year on average, and those in the $50,000 to $75,000 range will pay almost $900 more each year.

The wealthy will see the greatest increase in their tax bills in the following respects:
• The top tax bracket will once again rise to 39.6% as it was under the Clinton Administration.
• The income phase-out schedule for both personal exemptions and itemized deductions will also become much more severe for those who earn at least $250,000 a year.
• The rich will also pay higher taxes on dividend income, as well as an additional 3.8% tax on all investment income that will be levied on married taxpayers earning at least $250,000 and single taxpayers making $200,000 or more.

Obamacare
Although it is not a tax, the Patient Protection and Affordable Care Act will have a major impact on the bottom lines of upper- and middle-class America as the costs of healthcare and coverage rise.

Though take-home pay may be unaffected, deductibles and copays are likely to increase. Some full-time workers will see their hours cut back to part-time levels so their employer can avoid providing healthcare coverage. Furthermore, small businesses with near 50 employees may be forced to lay off workers to avoid the added expense of providing coverage.

Final Thoughts
The changes in the United States tax code that have resulted from the fiscal cliff resolution will likely impact us all in one way or another. The majority of Americans will need to adjust to having less money in their paychecks, while the wealthy may need to alter their investment strategies.

For more information on how these changes affect you, consult your trusted financial professional.

February 26, 2013 at 9:09 am, by admin | 1 Comment | Category General

2013 TG Annual Training Conference

For more than 30 years, TG has dedicated itself to providing solutions to help students finance higher education. In recent years, TG has expanded our focus in areas critical to higher education, including financial literacy and default aversion. We offer efficient and innovative resources that broaden college access and promote student access and success.

For financial counselors and nonprofits serving students and families

Providing expert industry training, valuable networking opportunities, and essential professional development, the TG Annual Training Conference helps attendees maximize their knowledge and enhance their student services. This year’s conference theme — Rethink: Strategies. Solutions. Success. — highlights TG’s commitment to making access and success in higher education a reality for students and families. Scheduled for April 23-25, 2013, the conference will take place at the Omni Austin Hotel at Southpark.

The Conference Agenda has been tailored to provide value to all who share TG’s passion for assisting students and families in their educational endeavors, including:
• Financial counselors
• Employees of nonprofit organizations
• Middle school and high school counselors
• Financial aid and student services professionals

TG staff members and industry experts will share useful information over three days within specific learning tracks, including Default Aversion and Financial Literacy Strategies, College Access and Success, and Professional Development.

Sessions of particular interest to financial counselors and nonprofits include those listed below, along with several TG Train-the-Trainer sessions on TG Financial Literacy Program mini-modules, including College Costs and Investing in Undergraduate Education.*

Tuesday Sessions
• Private Loans 101
• Identity Theft and Fraud and An Update from the Consumer Financial Protection Bureau (CFPB)
• Staff Motivation and Today’s Multi-Generational Workplace

Wednesday Sessions
• Financial Literacy Best Practices
• Strategic Approaches for Improving College Completion, Challenges for Undocumented Students and Completing the TASFA Form,
• Social Media Strategies for Student Communication and Stress and Counseling

Thursday Sessions
• College Resources, featuring Mark Kantrowitz, Author and Publisher, Fastweb.com
• Financial Aid Awareness and FAFSA Status Tools
• TG’s College Access and Financial Literacy Resources
• Counseling Students: An Appreciative Inquiry
Learn more and register today at Information and Register

Register before March 22, 2013 to take advantage of early registration fees. To speak with someone directly, contact Judith Cunningham, TG event planning coordinator, at (800) 252-9743, ext. 2905, or send an email message to judith.cunningham@tgslc.org.

*The TG Financial Literacy Program is Texas Essential Knowledge and Skills (TEKS) approved to be used to teach Texas students basic skills and concepts of money management. Graduates of TG Train-the-Trainer classes are eligible to teach these topics and to use free financial literacy materials provided by TG in their classes.

TG Train-the-Trainer session participants who are Accredited Financial Counselors (AFCs) can also qualify for continuing education units (CEUs) from the Association for Financial Counseling and Planning Education (AFCPE).

February 18, 2013 at 7:38 pm, by admin | No Comments | Category General

10 Ways to Save $100 During America Saves Week

By Meg Favreau, Senior Editor of personal finance blog Wise Bread.

Money is like a cake. When you get that delicious dessert, it can be tempting to eat it all at once. But if you do, you’ll end up with a stomachache, that sugarcoated feeling on your teeth, and perhaps most importantly – no cake for later.

Similarly, if you spend all of your money, you’ll probably end up regretting your splurges – and wishing you had some funds sitting in the bank.

Often, savings strategies are obvious – you set a big piece of cake aside, and it’s there waiting for you. But sometimes, it’s the little things that make that cake disappear. I’m reminded of the time my childhood friend Mike held a cake on his lap while we were driving home. He took fingerful after fingerful of frosting – and when we got home, Mike discovered that he had completely defrosted the cake without realizing it.

The following list features both kinds of savings strategies – big ones that work all at once, and little ones that add up over time. All of them can be put into action during America Saves Week, and every single one ensures that you can have your cake and eat it too.

1. Track Your Spending, and Make a Budget
Understanding where your money is going is the best way to start saving, which is why your first step is to make a budget. It might be that, once you make your budget and realize how much you’re spending in certain categories, you can immediately save $100 by making little trims here and there.

2. Pack Your Lunch
One of the keys to saving is developing long-term habits – such as bringing your own lunch to work instead of eating out. If you’re worried you don’t have time, cook something on Sunday and put it in individual Tupperware containers. Start this week, and over the course of a month, you can easily save $100.

3. Check If You’re Being Over-Serviced
It’s easy to “set it and forget it,” paying the same bills every month. This week, take a look at your regular services – are you using all of your cell phone minutes? Do you have more coverage than you need on your car insurance? Are you utilizing any extra cable channels you pay for? If your answer is no to any of these, call your provider, and change your plan.

4. Negotiate Your Bills
Checking for over-servicing isn’t the only way to lower your regular bills. If you’re not paying a promotional rate for services like cable and Internet, you’re paying too much. Call your service provider, and ask if there is any way you can lower your bill. If they don’t automatically say yes, suggest that you’re going to find another provider. Be patient, nice, and firm, and you can get a better rate.

5. Vow to Reuse, Repair, and Repurpose Instead of Buying New
Every time you think about buying something new, ask yourself – do you really need it, or can you make do with something you already have or that you can borrow from a friend?

6. Get to Know Your Credit Card
Visit your credit card company’s website and read the fine print. Many credit cards offer free benefits that are not well publicized. These benefits may include extended warranties, free tickets, price drop protection, extra discounts, concierge services, and cash giveaways. Of course, you should not use a credit card at all if you carry a balance every month. If you can’t control your spending, consider switching over to a cash-only system.

7. Change Your Living Situation
Yes, this is a big change – but it also has big financial rewards. If you have extra space in your house, try renting out a room, either permanently or to travelers using a service like Airbnb. Or, if you live alone, it might be time to get a roommate.

8. Clean Out Your Pantry
Empty your cupboards, see what you have, and plan meals around the ingredients you want to use up. You’ll slash your next grocery bill, and you’ll help ensure that food doesn’t go stale.

9. Create a “Cheap Fun Club” With Friends
If you’re trying to save money, it can be disheartening when friends invite you to things that you don’t want to spend money on. Instead, be proactive, and invite your friends to share in frugal activities with you, such as potlucks, watching movies at home, and board game nights.

10. Sell Your Stuff
Taking the time to declutter your house and sell your extra stuff has multiple benefits. Not only can you make money getting rid of your old items, but you might also discover other useful things you had forgotten about.

How are you planning to save money for America Saves Week?

February 1, 2013 at 1:31 pm, by admin | No Comments | Category General

5 Easy Ways to Get Involved in America Saves Week and Save Successfully

By Katie Bryan, America Saves Communications Manager.

America Saves Week February 25 – March 2, 2013 is chance for individuals to assess their own saving status and take financial action. Studies reveal that having a savings plan with specific goals can have beneficial financial effects, even for lower-income families.

Here are 5 easy ways to get involved in America Saves Week:

1. Take the America Saves Pledge
• Those with a savings plan are twice as likely to save for emergencies and retirement than those without a plan. Join over 310,000 people who have already committed to save. Pledge or re-pledge today!
2. Share Your Savings Goal
• People save more successfully when they have a goal in mind. That’s why we’ve created posters so you can put your savings goal into perspective and share it.
3. Assess Your Savings
• Find out if you are saving in all the right places with this 12 step savings assessment.
4. Test Your Savings Knowledge
• Take this savings quiz to reveal how much you understand about the realities of savings in America.
5. Share Savings Tips and Advice with Family and Friends
• On Twitter and Facebook? Share these social media posts with your friends and followers to encourage them to save.

America Saves Week is coordinated by America Saves and the American Savings Education Council. Started in 2007, the Week is an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status

January 25, 2013 at 1:17 pm, by admin | No Comments | Category General

Survey Finds More than 75% of Americans are at Financial Risk

by Judith Cohart, President Personal Finance Employee Education Foundation (PFEEF)

Just completed research from the non-profit Personal Finance Employee Education Foundation™ reveals that as many as 32% of Americans may be seriously in debt. This severe level of financial stress not only impacts their productivity at work, but also may cause them to develop health concerns.

The new research re-validates the Personal Financial Wellness Scale™. Previously the PFW Scale™ was validated in 2004. The scale, which measures financial well-being determined that the number of those most at risk remains substantial at 32% although only up slightly from 30% previously. However, for those who were just getting by, the numbers increased 16 percentage points from 28% in 2004 to 44% in 2012. In contrast, those Americans with little financial stress decreased by 18 percentage points from 42% in the previous survey to 24% in the recent one.

This research is an example of the commitment of the Personal Finance Employee Education Foundation™ to offering quality tools and resources for the advancement of financial wellness in the workplace. It was developed by a team of national scholars over a period of several years culminating in its validation in 2004.

Completing the easy to use 8 question Personal Financial Wellness Scale™, enables people to determine how they feel about their current financial situation, and whether it needs improvement.

The PFW Scale™ is a simple yet reliable instrument that the Personal Finance Employee Education Foundation™ offers to employers, financial education providers, financial advisors, counselors, and researchers to gauge financial wellness and its impact on worker productivity. Addressing employee financial wellness has shown results that include improvement in workplace productivity, employee morale, and company loyalty while reducing absenteeism, turnover, and workplace distractions across the company. These factors also contribute to the employer’s bottom line.

The Personal Finance Employee Education Foundation™ can also provide customized research that shows how these concerns impact an individual organization. Finally, the foundation has the capability to examine other factors, such as contributions to a 401(k) plan.

According to President Judith Cohart, “Our goal is to demonstrate the value of educating employees and clients about how to handle their finances. When people are financially competent, everyone benefits.”

The foundation is available to work with your organization. The mission of the Personal Finance Employee Education Foundation™ is to promote and facilitate financial education in the workplace. You may contact them at their website.

Contact:
Personal Finance Employee Education Foundation
1940 Duke Street, Suite 200
Alexandria, VA 22314
202-679-1384 (cell)
www.pfeef.org

January 14, 2013 at 10:23 am, by admin | No Comments | Category General