HarryTheSpider

While Congress buggers off to get lagered up on the last day of the year and the country goes over the fiscal cliff, what, if anything, have you done, or stopped doing in anticipation of having less money in your pocket, if only for a little while?

We've delayed vet, medical & dental appointments, spent about 70% less on Christmas compared to normal and cut back on certain regular entertainments and certain yummy food items.

Back in 2008 our CEO advised having 6 months of income saved - good advice - especially if you are on CEO pay... For most others, that's unlikely to be possible, and having spent all that getting through the last downturn and not having the chance to replenish such savings nearly enough, it might be a little grimmer this time around.

So with a 5% ish increase in taxes, and an impending 5% pay cut likely to come soon, and medical bills that can't be put off, we'll be close to underwater income-wise if we're not even more frugal...

Bink

We haven't done anything yet I'm afraid to say.
We have talked about what we need to do this year to be more frugal so we can save more. We have spare money at the moment that we blow on frivolous things and eating out so we are cutting back on that so we have more in the bank.

I'm fortunate to have a very secure job with a company that has several years worth of salary for the entire company in cash and will make a loss rather than let people go if it comes to that. So that is very reassuring and stops me from stressing out too much.

Definitely less eating out on the cards for 2013 which I need to do for
My waistline as well as my pocket!!

HarryTheSpider

To be fair my company has similar alues, however, it is publicaly listed so whilst it is sat on about 6 years worth of salary in cash - maybe more, that's shareholder money and can't be touched...

Any way - HAPPY NEW YEAR!!

Sally Redux

As they will cut NIH funding that will be the final push for us to move back. So not all bad.

SATX John

Good planning. Reducing investment in the market since a second down turn is likely, cash will be king even with inflation.

Maintaining a 6 month cushion is best for all if possible, IMO.

Possibly a withdrawal from an IRA, while low income tax rates will still apply, to build the 6 month cushion. Same with investments subject to capital gains taxes.

Also, looking around the house and attic and selling off or donating those things you have not seen 2+ years, to increase your charitable deduction, although now that it is the 1st, it could be problematic.

And Congress got a pay raise due to their great job in solving this problem.

DOD as a company is even down right scary, not just for those serving due to drawdown cuts, but the civilian workforce, which is the first to go. They are not required to give cause, just one day they say you are done, be out in 90 days.

md95065

Well, of course, that is the case for the vast majority of workers in the US, except that there is none of this "be out it 90 days", it is just "as of today you no longer have a job here" ...

SATX John

I was talking only about active duty military that get 90 days.

Civilians in DOD get the same, do not show up tomorrow.

Michael

According to the latest survey of economists, the increase in taxes of 4.6% on people making more than $400,000 will reduce GDP growth by 0.2% this year. However allowing the temporary reduction in payroll tax to expire (2% increase that primarily affects people making less than $100,000) will reduce GDP growth by 0.5%.

So even though the republicans fought very hard to not increase taxes on the richest Americans and were willing to go off the fiscal cliff claiming that that the tax increases would hurt the economy, apparently they didn't fight at all to keep the reduction in payroll taxes from expiring even though that would affect the GDP growth by 2 1/2 times as much.

The republicans are now claiming that the fiscal cliff bill did nothing to solve the budget deficit and claim that it is actually adding $4 trillion to the national debt over 10 years. How did they come up with that number? AMT became permanent instead of voting on it and passing it every year along with a one year DOC fix which will still be voted on every year. Also the farm bill and long term unemployment benefits was extended for one more year and the child tax credit and the college tuition tax credit were extended for 5 more years.Republicans favor the DOC fix at 27% (which was passed in the bill) claiming any reduction would have doctors not accepting medicare patients but democrats would like to reduce that amount a bit to maybe 20%-22%. It seems highly unlikely that doctors would give up about 1/4th of their patients and possibly more than 50% of their business due to a 5%-7% reduction in reimbursements. If a 5% reduction in total medicare reimbursements were implemented, that would amount to about $350 billion in medicare savings over 10 years.

I guess as a republican, you don't consider increases in payroll taxes, eliminating child and college tuition tax credits, and not permanently fixing AMT as tax increases but tax increases are only considered as tax increases if they are levied on the wealthy.

Bob

Already broke, so not much difference there then...

Bink

Happy New Year!

Mine's private and back in 2008/9 we did hit a rough patch and business was slow. They took a loss rather than laying people off though, knowing that the business would turn back around which it did. It's a nice position to be in.

I've spent the morning on Turbo Tax trying to figure out my tax return refund to put aside for a rainy day. This year I intend to bank it rather than blow it. I know many people disagree with this but I always tend to be cautious and overpay my taxes and get a refund. Better than being out of pocket at the end of the year and the interest I would have earned on it... what interest?!

Tegwyn

Is there any criticism on the Dems for wanting tax increases at all - especially at a time that this country is trying to claw it's way back economically? I am fine with paying more taxes as long as there is a genuinely concerted effort to cut/control spending. So far, financial irresponsibility rules the day on both parties, and I feel less inclined to want to pay more to see that money squirted against a wall the way this administration has been doing. They are no better than the previous but it would be nice to actually see concerted efforts to try bring things back to a responsible footing. We've lost leadership and instead we watch both parties posturing and taking care of their own interests instead of seeking the right course for the people.

Macca67

I was hoping we'd charge over the cliff. I'm more than happy to pay a bit extra in tax if that means big reductions in defence spending.

Sally Redux

Yes I agree, at some point they have to look at this monster.

fatbrit

What do you want to cut? The big ones are: defense, Medicare/Medicaid and government pensions. Each of these take more than 20% of the budget. The right screams that it wants to cut government spending, but never comes up with proposals about where except the irrelevant Big Bird.

Anian

I survived a 10% pay cut for a couple of years when the recession first hit, so I know I could survive a 5% cut. Not that the fiscal cliff is really a cliff but more of a sloping hill.

I'm not even sure what this new budget is. It sounds like the Dems got some of what they wanted but the Reps only got spending cuts delayed by a couple of months. I must have missed something somehwere because it sounds like an appalling deal for the Reps, but the news is being crappy.