How Will The 2011 Tax Cut Work For You?

Surprise, everybody! We are getting a tax cut this year. What does that mean? It means that our paychecks will be bigger. Why? There is a 2% cut in the portion of the payroll tax for Social Security. It means that an individual wage earner may enjoy a savings of up to $2,136.00. Households with two wage earners who both make more than $106,800.00 will get $4,272.00.

This article targets ways to use this extra money for our greatest good. Yes, I'd like a huge HD television. I might even like to take on a new car payment. However, I am not going to do either because those are choices that will just get me into debt.

Here is what I propose to do with the savings I receive. I will pay down a debt I already have. This I see as the most financially harmful thing to get rid of. There are other places to put the extra money. How you choose to use it depends on your current situation.

If you are fighting to make monthly payments for necessities like rent, mortgage, utilities or even food, this temporary windfall is your opportunity to get current on such payments.

You may want to pay yourself by putting the extra money into a savings account for real emergencies only. You can have your bank transfer funds automatically every month. That is the simplest way.

You may have been thinking, as I have, that Social Security may not be there for you when you become eligible. So, you will probably choose to save for retirement. Keep in mind that this tax cut has been enacted in the interest of stimulating the economy. Somewhere, down the line, the amounts awarded and age for receiving Social Security will no doubt change to make up for this 2011 tax cut.

There are changes in the reimbursement for non-prescription drugs. Check out your employer's health plan. If you still have a cafeteria health plan, be sure to know how the changes affect you.

Finally, with the job market anyone's guess today, job retraining may be a good way to use the money to help you advance in your career or land a new job.

As a smart consumer you know that this tax cut, thought a pleasant surprise, is only a one-year windfall. Credit counselors for the National Foundation for Credit Counseling warn us to take this opportunity to better enhance our financial situations. Do you wish to be left in the mire, drowning? Or do you wish to stand on solid earth?

Author: Jane Hercules, MS Ed is an expert in the prevention of mail theft and mailbox vandalism. She is a teacher and long-time advocate for children. She believes that in today's world there are measures adults must take to secure the well-being and future of their families. Identity theft is increasing and there are ways to prevent it.