My Paycheck

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I always look forward to payday hitting my account every other week. I know I’m not the only one here who gets excited regardless if they have plans for it or not. However, this should not be the norm generally speaking.

Living paycheck to paycheck is not a way of life. This is a sign you’re living above your needs and you need to come up with more stream of income. In my situation, I’ve been aggressively paying my debts.

I remember reading this article early last year when I started my journey to financial independence and seeing 78% of workers are living paycheck to paycheck, including myself, was painful.

PAYCHECK DEDUCTION & CONTRIBUTION

That’s when I decided to dig into my finances and paycheck to have a better understanding where my money’s going. For every $100 I make here’s what’s being deducted:

– Federal Withholding $19.57
– NY Withholding $13.29
– Medicare $3.36 [family rate]
– Social Security $14.38
– 457b $6.64
– Union $2.08
– After Tax Health $24.38

The only deduction that’s not somehow mandatory and I have full control over is the additional $2.5 per $100 I chose to contribute. 

– Additional NY State $2.5

Over the years living in the city I had no understanding on how taxes really work. No matter how confident I was when filling my taxes, Uncle Sam continued knocking at my door at the end; if not, my return will be in the two-digit… Yes, that’s correct two-digit.

Ever since I was suggested to contribute that amount the visits from Uncle Sam stopped, even after changing employers I continue my $25 contribution. I was able to get a hang of my costly mistake after consulting a different CPA. I know many will ask why continue the handout when I can do something else with it.

Well, I’m okay living with the bare minimum and get it all back at the end of the year.

My $6.64 retirement contribution is small for now as I’m working toward my yearly goal as mentioned on MYJY1 report on being debt free. This requires me to sacrifice my investment accounts.

Resulting in 40.47% of my paycheck makes it on paper but not my bank account.

The gross amount always looks attractive. I will suggest taking a look at your pay at least once a year, adjust to your needs and learn to live frugally with what’s left.

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