Our couple sat across from each other and were talking about philosophy and economics. Well, actually they were just trying to understand Bill’s homework assignment but their conversation just lead to money matters. AGAIN.
PENNEY: There comes a time when you have to worry about your own finances first before you worry about helping others.
BILL: I think Socrates said something like that. Or was it Plato? Maybe it was Aristotle? I can’t remember. I need to study more. Anyway, one of them says it’s a virtue to help out with charity but not at the expense of your own welfare.
PENNEY: Exactly.
BILL: Well we can only do what we can with what we have.
PENNEY: Yeah, I have been doing the numbers and we are barely positive on our cash flow.
BILL: But we are still positive though, right?
PENNEY: Yes we are but we might have to stop our contributions to Kiva soon.
BILL: That’s only like 25 dollars a month though, right?
PENNEY: Yes but I feel like we need to put that 25 dollars to an emergency fund instead. It’s only a little bit but it would give us some breathing room.
BILL: Well, why don’t you just increase your take home pay like what I did last year?
PENNEY: Huh? What do you mean?
BILL: Well you expect to get a tax refund next year right?
PENNEY: Yeah I should get a good chunk actually.
BILL: You know what that means right?
PENNEY: What? We get to put a huge deposit to our savings account on the beginning of next year?
BILL: Yeah, that and you gave the government a loan.
PENNEY: Well—
BILL: Yeah you did. They taxed you too much and they are just returning money that should have never been taken from you.
PENNEY: Well as long as they return it…
BILL: But think about it the other way. If you did not get taxed enough they come after you and they charge interest. But when they give you back your refund, they do not include interest.
PENNEY: That’s true.
BILL: Yeah they borrow your money for an entire year and nothing in return. They just give it away to who ever needs the next bailout.
PENNEY: Oh don’t get me started on that. But how does all this fix our cash flow issues?
BILL: Well you can use this tax withholding calculator to find out how much to reduce your income taxes by each paycheck.
PENNEY: OK. Then they will reduce how much they take from my paycheck every two weeks?
BILL: Yup. Just like that you have increased your income.
PENNEY: That’s very handy.
BILL: It’s very useful.
PENNEY: What’s the catch though?
BILL: Since it is your money anyway that you are merely holding back from the IRS, everything is good. BUT you have to make sure that you do not withhold too much from Uncle Sam.
PENNEY: Let me guess: they will come knocking around April 15 if you do?
BILL: Yup.
PENNEY: OK, so I use the calculator and once I have that number, then what?
BILL: Just resubmit a new W-4 to HR or your boss and the new deduction will show up on your next paychecks.
PENNEY: This extra income should definitely help right about now.
BILL: Yeah I did this while I was working and I got a little but more each paycheck but I did not receive a huge refund like I used to around tax season.
PENNEY: So now I can use the extra money to keep our lending going and still have money left to go to our emergency fund.
BILL: Exactly. With all due respect to Plato,or who ever it was, it is just too easy to come up with reasons not to keep doing good.
PENNEY: I guess it really shows that if you want to do something bad enough, you will find a way to do it.
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Related Posts:
- Money Talks–CHAPTER 2 (WHY KIVA?)
- Money Talks–CHAPTER 5 (SEEK YE THE TRUTH)
- Money Talks–CHAPTER 3 (WHY NOT KIVA?)
I need to shape up...
