I just received my first paycheck of 2015. I was so excited to see it that I accidentally awakened at 5am to view the paystub that’s sent at 4am. I wasn’t excited to see all the money I could spend, but how much that would be left with after trying to max my 401K in 6 months and the challenge of living on the remainder. After I opened it I was excited to see how much was going into my 401K. It was over $1,500 in one pay period, which is about how much I would input into my IRA every few months. A few months of work done in two weeks because of the miracle of tax-advantaged accounts. I was so excited.
On top of the 401K deductions I contributed to what I thought was my first HSA (it turns out it wasn’t, but that’s a story for another time). Insurance and taxes took the rest until I was left with 26% of my original paycheck. See below for the full list of what that paystub included. Given NYC rent this has presented a challenge of how to pay for everything I currently enjoy while maintaining this goal. While I admit that my situation is a lot better than most since I have found that I can live in one room with someone else, which allows me to live in serious luxury in a beautiful high rise with lots of sunlight by the water with the best transportation access outside Grand Central and Penn Station. I know that I am very lucky to have found a small space I enjoy and can live in easily and someone I could share that space with without us killing each other.
Luckily I have a plan to max all my tax-advantaged accounts this year — before we leave New York if possible — to help offset the incredibly high New York State and New York City taxes we’re subjected to. It’s slightly understandable given everything this city does, but still disconcerting when you see such large chunks taken from each paycheck. I’ve calculated that maxing my 401K, IRA and HSA before leaving the city will save me approximately $7,000 in tax payments based on me being in the 25% tax bracket. That pays for my move almost 4x over. Then when we’re in Seattle all these tax-advantaged options will be filled for the year, but since they do not have state or city tax it will be a much more manageable situation. I’ll check back with an update to see how this goes. Given current rent costs it might get a little tight in the spring. Let the challenge begin!
$2,816.67 Income
+ $31.25 Company HSA contribution
+ $3.25 LTD (Long term disability)
+ $8.75 STD (Short term disability)
= $2,859.92 Income (Annual $68,638.08)
– $1,549.17 (55% 401K)
– $108.33 HSA (up to $139.58 for 1/2 or $279.17 to fill before leave)
– $47.85 Medical (HDHP)
– $4.86 Dental
– $2.18 Vision
= – $1,712.39 Pre-Tax Deducted
– $83.85 FIT (Federal Income Tax – only tax post 401K)
– $38.65 (Medicare – tax pre-401K)
– $165.26 SS (Social Security – tax pre-401K)
– $1.30 (NY SDI: Statutory Disability Insurance – tax pre-401K)
– $38.70 (NY SIT: State Income Tax – only tax post 401K)
– $25.72 (NY City – only tax post 401K)
= – $353.48 Taxes Deducted
(12% income annually to total taxes while in 25% bracket)
Income In Hand = $750.80
Income In Hand Per Month: $1,501.60