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Barbara Raasch, RCL Advisors co-founder, on adjusting your budget now that the payroll tax holiday has ended.
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-- tax holiday didn't survive congress fiscal cliff deal and as a result millions of workers are seeing smaller paychecks.
So how should you adjust your budget now joining us now tax expert Barbara -- RCL advisors co-founder.
By McClatchy because a lot of people are really confused so let's be clear first justice first tax preparation goes for 2012.
-- are doing their returns.
Not a whole lot that they need to worry about because everything was extend -- kicked down about boring 2013 now.
A lot of people get paychecks and -- really bummed about it especially.
If you -- more than a 1101000.
In 2012.
-- you hit that you weren't paying into Social Security off.
My opinion you paying it six point 2%.
But you know what -- should've done when he got over that once that you should have adjusted your savings so that it wouldn't have felt so different.
But nobody ever does that and that please do this every single year Yahoo! pets like this how about I -- people.
Blowing up -- K contribution to make up for the difference for this Social Security -- Which friction harper -- -- -- do you -- -- that make it tells you gotta look at a from the standpoint I'm not gonna have as much money to spend and save anymore.
-- you've got to look at your budget every single budget has something that can be reduced.
Every single budgets is be reduced this is so frustrating because we have -- -- the American people have gotten ourselves really.
In pretty good shape over the last couple years as opposed to our federal government that's a disaster and I -- we got -- again.
Will not what you have to do is live fiscally prudent just like the government -- to write and sell.
People spend a -- load of money.
I mean how many TVs as a person actually have you know acting from -- so it was a little bit entities is like you're saying there's a lot of other things that we were paying at one point.
They took him away they gave that they did this treated as little as you called it little stimulus yeah.
And that they canceled said it was a -- is exactly and it -- it was important for the economy so we didn't throw ourselves into a recession.
Because the government knows that if they give you more money you'll just spend it because you're not fiscally prudent.
If you have taken that extra money that they gave you because your taxes went down and -- just.
You would be so much better off -- people are not disciplined -- just put some discipline in your life this year.
Do not just a dot adjust your savings down.
I'd just you're spending Don you will be so much better off in time because you know what that is going to be a lot easier retire.
Yeah well it's a great point let's talk about now investment income though because this is something that you can take it take it.
Do get a hold it right now.
You can just.
OK let's op dividends up 20% if you make 400004.
Forty to 50000 as a married found joint so what do you -- -- you dividend -- and it's and it's a lot higher than 20% because there's did.
And it's actually 25% threat of a lot higher so what you do I mean.
As you know other than choosing your financial advisor the most important decision you make on your portfolio is its asset allocation.
You make asset allocation decisions based on risk adjusted return expectations.
Got a look at an after tax dollars.
Dividends.
Are much more expensive for you not because you're not going to be able to keep as much of those dividends so you probably should look at repositioning.
-- -- or something.
Putting an IRA if you return to high dividend paying stocks and -- direct and then what you know under your growth things in your own name.
Good idea and real quickly got to rent next Georgian capital gains now three point and 39 point 6% plus the three point 8% on top of it.
Well over 40%.
Take a short term capital gains could be detrimental.
Absolutely -- yeah you wait until it goes long term unless you think it's gonna -- -- look at it from a promise I think it's kind of about what is -- risk and risk and justice trader that world after tax.
Always look at things an after tax return dollars to traders of the world not happy about this -- -- with our CO advisors thank you very nice to see you know.
