Tag: 401(K)

How Are Businesses Helping Employees During This Time?

During this unprecedented time, Just Capital has created a Tracker of America’s 100 largest public employers to offer a snapshot of what’s “happening on the ground.” Visit their site, https://bit.ly/36dx5A4 or one of these links to read more.

 

 

A Little Bird Told Me

5peepyeljpg-c3f3b79c7059f81aSo it’s the dead of summer, at least here in Texas and not really anywhere near Easter but I thought we could all use a little #FridayFun in our lives.

Anyone else love Peeps candy?  They were created by the Just Born company of Brooklyn in 1953 and have been an Easter delicacy ever since.  Enjoy the Peeps trivia in this article from the AARP magazine, 11 Things You Didn’t Know About Peeps and don’t worry, if reading this makes you crave that soft, sugary treat, they sell them year round!

This Just In
Workers at the Bethlehem, PA plant where they make Peeps have walked off the job in protest of a proposed change from a pension plan to a 401K.  Might want to get your Peeps sooner rather than later.  Although, the company is reportedly hiring replacement workers to keep production up and running.
‘No pension, no Peeps:’ Strike threatens holiday candy supplies

What, me budget?

Yes, you.   We all should.  Some expressions:  failure to plan is planning to fail or without a goal, wherever you end up is your goal.

My favorite budget guidelines have always been Larry Burketts, Money Matters , financial planning guidebooks.  In the referenced tribute to Larry, his philosophy of money is reflected:

One of the central principles Larry taught is that we don’t really own things; we are simply stewards and managers of what God has entrusted to us.

There are many budget preparation guidelines, but I’ve always liked the ones provided by what is now Crown Financial Ministries.  Here is a link to Crown’s Suggested Percentage Guidelines for a Family of 4 (High Housing Cost Areas) (since I live in Austin!).  There are also guidelines for singles, single parent, couples, etc.

Important to note is that these budget guidelines start with gross income so that a tithe comes off of gross.  No funny business about giving on net or gross.  I’ve heard other financial planners say that wherever you give your money, if you can’t live on 90% of your income, you have a problem.

The next reduction is for taxes.  If you are an employee, you can use the amount withheld for taxes from your paycheck.  Be careful not to have too much income tax withheld.  It’s better to pay a $1 than to let Uncle keep your money for up to 16 months!  If you are self-employed, you can look at the total tax paid on your prior year return.  Taxpayers think that they are saving money, but in fact, saving a little money each month in a savings account generates more savings than the “income tax withheld” savings account.  The tendency is to spend that tax refund impulsively rather than putting it into savings for planned spending.

After the reductions for both giving and taxes, then you compute your budget percentages.  Your budget is based on your spendable income.

As you complete your budget, remember that many employees have additional reductions in their pay that need to be considered as you budget:  health insurance premiums, 401(K) contributions,  day care tuition, etc.

I started a 30-Day Diary to really check in with how I spend money on a daily basis.  My dad (the first Newby CPA) used to keep a notebook in which he recorded all cash expenditures for the day.  What discipline!  Join me in the goal of tracking out of pocket expenditures (so to speak!) for 30 days.  Let me know how you do.

 

 

 

 

 

 

States’ Busted Budgets Not Caused by Union Pay

This is what David Lenohardt wrote in the NYT on March 1. His major points:

Government workers receive compensation that is similar–with somewhat lower salaries and somewhat better benefits on average–to that of private sector workers with similar qualifications.

Government pay is skewed too heavily toward pensions and health insurance.

Health plans for union workers and retirees are much more likely to require little or no co-payment, which leads to lots of medical treatments that don’t make people any healthier, and to huge costs.

Many government workers receive pensions that start at age 55 and still let retirees draw a full salary elsewhere.

Only recently have teachers’ unions started to cooperate with serious efforts at teacher evaluation, and they are still not giving their full cooperation.

The cause of our looming federal and state deficits . . .is Americans’ collective desire for low taxes and generous government benefits. . . Eventually we will have to pay for the government we want.

I have a friend that retired from the state, receives his pension, and was rehired as a contract employee by the same agency:  working full time and receiving his pension from the same agency.  Texas has a defined benefit retirement plan so that retired employees receive a guaranteed benefit rather than a value based account as in a typical 401K account. Steven Greenhouse discusses the differences between retirement plans.

In Texas, the Margin Tax and a cigarette tax were supposed to make up income deficits created from reducing the property tax , and to date, the Margin Tax has  increased revenues modestly but not at the levels expected at enactment.   (David Gilliland, Texas Margin Tax).

One result for Austin has been the expected layoff of 1000 teachers and the expected closure of exemplary inner city, low income schools. ( AISD News Release)