*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Congress delivered on its tax cut extension, which put to rest the fears of a lot of struggling Americans in the New Year.
Based on an income of $50,000, the 2 percent cut in payroll taxes could boost take-home pay by about $20 a week, according to the Associated Press. For a husband and a wife each making $50,000, the payroll tax cut would be an extra $160 a month to help pay for necessities.
My family has gotten used to the extra money in our paychecks.
A lot of people complain that the payroll tax cut is cheating the Social Security system, but others argue the payroll tax cut won't harm the solvency of the Social Security trust.
I've heard people say that some of us have overpaid into the system. Others warn we taxes will go up to pay for the shortfall in the system.
Although I plan to save enough for retirement to replace what would have been my Social Security benefits by 100 percent, most experts say a person in my Generation X will receive at least 75 percent of his or her benefits.
I can think of a million ways I'd like to spend my payroll tax cut money. Instead, it seems more prudent to save that extra money every month into a retirement and emergency savings accounts.
Some of my friends who received the benefits of the payroll tax holiday last year told me they regretted not setting the money aside. They were laid off at the end of the year.
Having a financial cushion is essential during these unpredictable times.
Although having an extra $20 to $40 a week might not seem like a lot, but it can quickly snowball into a fortune as the interest compounds over time.
For those who unexpectedly lose their jobs, having money in a rainy day fund can be the difference between going without medical care or going hungry and having the basic needs met.
Now we will wait for the full-year tax cut that most people support. It would be nice if Republicans and Democrats would put aside their political agendas and campaign strategizing to get their jobs done.
There are no comments yet