First Week Thoughts

Man, this has been a whirlwind week. I managed to plow through four 10-hour days, while having a cold on three of those days. At the same time, I attempted continue daily posts, although looking back, they appear sparse, if not downright incoherent. Note to self, stop blogging under the influence of cold meds.

A few life updates:

1) My car still only exists on paper
2) I want to do a networth update, and explain how I calculate my assets vs. debt for the car, but I still don't have it, nor have I paid the full payment of it yet. Until I do, I won't be doing a networth update

3) I got my first paycheck this week as well from work.

My paycheck got me thinking about my budget, and how off it was.

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From the day I accepted my position, I had already been planning out my cash flows, to figure out how much I had left to use. I put in figures for federal and state taxes, FICA (Social Security), Medicare, 401(k) and IRA contributions, health care costs, food costs, utility costs, student loans, car loans, car insurance, fuel costs, and spending money.

I used rough estimates for federal and state taxes, while the rest are standard rates (see bottom for these rates) for FICA to IRA contributions. The other costs are variable, but since I have been keeping track of my costs for the last year, I had a good monthly average rate for those.

Turns out though, I had been over-estimating my federal tax rate. I had assumed my tax bracket to be my annual salary, instead of considering what my "Adjusted Gross Income (AGI)" is. This ended up being a difference of about $650 extra money a month (which is all going into savings)!

I should have researched it more online. I just looked up my income on the 1040 IRS tax chart, and assumed that rate. Turns out, there are some good calculators out there to estimate the rate. Here's one: http://www.dinkytown.net/java/Tax1040.html

Knowing what your tax rates are going to be, is one big step to making your budget, and staying financially healthy.

*Standard rates: FICA is 6.2% pre-tax, Medicare is 1.45% pre-tax, 401(k) should be the maximum percentage your employer is willing to match, IRA contribution is your choice