money talk

**Sara Noel** · 01-21-2005, 10:42 AM

Gabe and I had a good talk about money last night. We do ok, but we make lots of little mistakes along the way with our finances. There are just times we don't make the best choices, but we do the best we can and aren't doing horribly.

Anyway, we're a bit nuts with our income tax. Gabe overpays and we get a large return each year vs. having the money ourselves and saving it.

This is the year of change. lol We've decided to change things and take the money in our monthly pay instead of letting the govt use it. With the excess money, we'll use part for our regular budget/savings and part will be going into 401k.

Our state/federal returns end up roughly 7k. I know we've been crazy to be doing things the way we have been and it's time for it to stop. I want to use this money in a different way than we have been doing. I'm really feeling sheepish admitting this, but am really excited about implementing the new changes.

**homesteadmamma** · 01-21-2005, 12:00 PM

Sounds like a great plan to me.

**paelthom** · 01-21-2005, 12:38 PM

Sara, I think you are wise to do this as long as you can be deligient about saving the money necessary to pay any taxes that may be due next year. I have been overpaying as well this year since I'm not sure how my taxes are going to work out (no mortgage to deduct this time). Once I see how this year's return computes, I plan on revising my take home portion as well. No sense in letting the gov't. use our money when we can be earning interest on it, even if it's only a little bit.

**thrifty gal** · 01-21-2005, 12:40 PM

WTG for coming up with a plan!!!

**Sara Noel** · 01-21-2005, 12:51 PM

Originally posted by paelthom
Sara, I think you are wise to do this as long as you can be deligient about saving the money necessary to pay any taxes that may be due next year. I have been overpaying as well this year since I'm not sure how my taxes are going to work out (no mortgage to deduct this time). Once I see how this year's return computes, I plan on revising my take home portion as well. No sense in letting the gov't. use our money when we can be earning interest on it, even if it's only a little bit.

That was my apprehension, but I think with how Gabe has things currently setup, the changes he makes won't create a situation where we'll owe. We just won't be overpaying as much.

I said I didn't mind the change at all, but of course was concerned where that "extra" money would go. Having it automatically going to 401k makes me feel a lot better because I know it won't get absorbed into our regular budget. I've found that we're not great about making more and saving more. It seems there is always something that the extra has to go to. ugh

I know with the effort we put into our finances, that things will improve and we are working toward goals. It's easy to feel the bite of sacrifice sometimes though and feeling like is any of this working? It is, but it's a lot like weightloss. Sometimes, the little changes don't seem to be adding up to much, but then in the long run....ya hit goal.

We'll see. If nothing else, it increases our 401k.

**paelthom** · 01-21-2005, 01:04 PM

I think that it's especially great that you and Gabe are on the same page with your finances. It makes a huge difference. I'm not the greatest at saving any extra either and I am really trying hard to improve in that one area this year.

**guest2** · 01-21-2005, 01:19 PM

This sounds like a great plan to me!

**dolphin** · 01-21-2005, 01:19 PM

Great plan Sara and Gabe!

**PrairieRose** · 01-21-2005, 05:16 PM

I so love the way it feels when you are plugging along and not much seems to be happening....then like you said you hit goal. It's amazing. Sounds like you are making the right decisions Sara. It's great that you 2 talk about money so many couples don't.

**MelinaG** · 01-21-2005, 06:13 PM

This sounds so great!

I have a few questions: when tax time comes you then take money out of your 401k to pay the tax bill? Is there any penalities for this? I'm asking because if not then I'm hooking up with this plan. Sounds great! Good going!!!!

**Sara Noel** · 01-21-2005, 06:51 PM

No. We're not taking money for taxes from the 401k. It's just that we've been overpaying so we'd have a big return and now instead of the big return, we'll have the amount in our regular paychecks and putting some of that "extra" money into our 401k.

We have plenty of wiggle room to not have to owe come tax time. If by chance we do owe, it wouldn't be a substantial amount.

Basically, a 7k income tax return is great to have as a lump sum, but we'd rather utilize it differently and have it in our paycheck instead.

This gives more money toward the 401k (since we're currently not taking our return and putting it there and it can be auto deducted, so we're "forced" to save) and also give us more per paycheck vs. the big return yearly.

I'm also taking our gym memberships and cancelling it and putting it toward an educational plan for the kids.

**simplemom** · 01-21-2005, 07:12 PM

I think it's a good idea. We did something similar years ago with Pierre's paycheck...mostly because we couldn't make ends meet, and we never regretted it. We were also able to put some money for our retirement fund, the kids' education and the rest helped us stay out of dept. Goodluck to you.

**AmyBoz** · 01-21-2005, 08:38 PM

Sara, I know how you feel. It is a great feeling to have that talk with your husband, both be on the same page, and come up with specific goals. I get really excited about implementing the changes as well. Good for you guys!

**gkp1031** · 01-21-2005, 09:49 PM

Great plan Sara

**Mom23boys** · 01-21-2005, 10:57 PM

It is great that you and Gabe can agree on the change.

We have been receiving our money in our paychecks instead of getting a large refund each year. I saw someone on a talk show one time saying that you should take your money throughout the year instead of one lump sum on your income tax. That is when we changed everything. We have done this for about 3 years now. It works for us.