David Bach-- Save First,Pay Taxes Later

**bee9984** · 02-02-2006, 09:28 AM

The first time I even knew about being allowed to deduct a certain amount of money right off the top of you paycheck before taxes to put into retirement was when I read his book "Start Late Finish Rich" just last year.

dh and I started this past oct 2005 taking $250 every payday pretaxed and putting it into our retirement fund . I remember being so scared but thought well we can try it and wait a couple or few pays and if it doesn't work for us then we can change it back but at least we should try it.

I was surprised that when we saw his first paycheck and saw that even though we put the $250 (Pretaxed) off to put into retirement his actual take home pay was only $168 less not the actual $250 thus, the extra $82 would normally be going to the gov't for taxes but instead now goes to us in our retirement fund. This is because dh is being taxed on what the balance of his pay is after they take the $250 out . For me it was a "have to see it to believe it and understand it" even though I had read it in his book.

Just thought I would share our experience with you all

Anyhow, here is a link for the information regarding this.

http://finance.yahoo.com/columnist/a...llionaire/2058

**pammy** · 02-02-2006, 10:04 AM

I was JUST thinking about that this morning, wanting to learn more. Now I'm wondering what else we can take of pre-tax to help us out. Thanks for sharing!!

**alabamagirl** · 02-02-2006, 10:45 AM

FYI: It may not be available with your employer, but mine offers a "cafeteria plan" where health insurance and other qualifying expenses are on a pre-tax basis. It really helps.

Congrats on starting your retirement fund!

**Nath.** · 02-02-2006, 01:59 PM

Is this for canadian or us residents?

**bee9984** · 02-02-2006, 02:55 PM

I am Canadian . The link that I had copied and pasted above is for Americans. David Bach did a Canadian and an American version of his book which I read.

When we first started doing this dh boss had never heard of it and it isn't a big company which he works for, matter of fact dh is the only full time employee here in Canada for his boss

but they do have a few part time staff. The accountant for the business deducts it out of dh pay every 2 weeks and then once a month gives dh a cheque for $500 unless there are 3 paydays in a month and then it is a cheque for $750 for him to deposit into his retirement account and then he brings back the receipt for the accountant to have a copy.

Because it is such a small business they do not have direct deposit for dh paychecks .

**Jenna** · 02-02-2006, 03:06 PM

FYI: It may not be available with your employer, but mine offers a "cafeteria plan" where health insurance and other qualifying expenses are on a pre-tax basis. It really helps.

.

My company called this a Flexible Spending Account. The catch was -- the entire amount had to be spent by the end of the plan's fiscal year, and only approved expenses were covered.

**Mojjo** · 02-02-2006, 04:56 PM

We do deferred compensation...it's pretax dollars going towards retirement. Right now we just do DH but after we get into a house we'll start mine. This is on top of a pension.

We also have a Flexible Spending Account...this year we opted for the max of $2000 because SS is getting braces, but most years we'll probably do about half that. We can really benefit from it because DH has so many meds.

**Persimmon Lace** · 02-02-2006, 05:01 PM

Our health insurance premium is pre-tax for me and so is our cancer premium. 401k or Sar-sep and several other types of retirement are pre-tax as is FSA and HSA account. Even without a FSA or HSA insurance premiums not paid by your employer should be taken out pretax.

**Nath.** · 02-02-2006, 08:05 PM

Originally posted by bee9984
I am Canadian . The link that I had copied and pasted above is for Americans. David Bach did a Canadian and an American version of his book which I read.

When we first started doing this dh boss had never heard of it and it isn't a big company which he works for, matter of fact dh is the only full time employee here in Canada for his boss but they do have a few part time staff. The accountant for the business deducts it out of dh pay every 2 weeks and then once a month gives dh a cheque for $500 unless there are 3 paydays in a month and then it is a cheque for $750 for him to deposit into his retirement account and then he brings back the receipt for the accountant to have a copy.

Because it is such a small business they do not have direct deposit for dh paychecks .

That's awesome!

I'm canadian also and i didn't know this. DH and I also work for a small cie. I'll check this out for sure!