How the Social Security Tax Affects Your Monthly Budget
Single mom Melissa DeLay already cut her budget to the bare bones in order to launch her own business. Now, she has to save even more to pay the Social Security payroll tax that kicked back in the first of the year.
"My fixed costs are going to stay the same no matter if I have an up month or a down month so all I think about is money all day long," said DeLay.
DeLay's annual income falls in the $75,000 to $100,000 bracket, which means she'll owe another $1,200 a year in taxes - or about $100 a month.
"I really don't know where it will come from," said DeLay. "I'll find a place, because taxes are something you can't get around."
Option one, switching from name-brand groceries to generic.
"If we are going to make it, we're going to buy a brand of orange juice that maybe we don't like as much."
DeLay spends $600 a month on groceries and $400 on gas.
Now add the hundreds of dollars she pays on insurance for her family and business and suddenly, finding places to cut is easier said than done.
"We'll go to the Mall of America instead of the Wisconsin Dells," she said. "I'll bring in more clients. I'll sell more products. I'll work harder. I will find a way to make this money and have it not be an impact for my kids or for my family."
Financial experts we spoke with say it's worth taking a look at monthly expenses like an elaborate cell phone plan or extra cable channels in order to make up for the extra taxes. Cutting back on those two luxuries can actually help save you hundreds of dollars in just a few months.