• The Fiscal Cliff: Getting Shoved over the Edge

    baby and toddler shoes-fiscalcliff.jpg The minutes are ticking by and the Fiscal Cliff is becoming seemingly steeper and steeper by the second... reports
    of milk prices soaring to $7+ per gallon by February, loss of earned income tax credit, a 2% rise in payroll taxes and worse. . . Confused yet? Here are the ins & outs of the Fiscal cliff, how it is likely to affect your family, as well as what you can do about it! . . .

    Plunging Head First over the Cliff- Worst Case Scenario:

    First of all, let's get the worst case scenario out of the way- Let's, for a moment, assume that Congress fails to get its act together and we all plunge headfirst over the cliff- if that occurs, the Fiscal Cliff effect remains for the next full year. Here are the expected ramifications:

    1. 9.1% (or higher) Unemployment rate (btw, did you know that if you're unemployed and have already collected all the benefits allotted for you, that you are no longer "counted" as unemployed in the governments statistics)- therefor, the unemployment "rate" given by the media and government is a complete farce.
    2. Low to Middle Income Classes can expect some serious tax increases:
      • If your annual income is $20,000-$30,000- your taxes will increase $1,064 (avg increase)
      • If your annual income is $40,000-$50,000- your taxes will increase $1,729 (avg increase)
      • If your annual income of $50,000 to $75,000- your taxes will increase (avg increase)

    3. In addition to the Above Tax Hikes, there is a little devil knows as the "Alternative Minimum Tax" - which is essentially a flat tax (created in 1969) that ensures that "wealthier" tax payers pay a minimum (Federal) income tax regardless of their deductions, credits or exemptions. If you think this one only affects "Rich people", think again, this lovely tax will nail 31 Million taxpayers and extend well into the middle class. The average increase in federal taxes is expected to be $4,200
    4. Massive Cuts to Government Spending- about 1.2 Trillion Dollars worth, to be exact. This will include cuts in Public health programs, Schools/Education, homeland security, etc
    5. Lifetime Exemption for Gift/ Estate Taxes Increase- thinking of leaving your home to your children when you pass? This tax Increases the tax rate from it's current 35% to a whopping 55%- yes, that means you have to pay 55% tax on items that were GIFTED to you from your family members at their passing.
    6. Current Tax Deductions are reduced or cancelled completely including:
      • Child Tax Credit
      • Qualified Mortgage Insurance Premiums
      • State/Local Sales Taxes
      • Energy Credits
      • Medical Expense Deductions
      • WIC (Women Infant & Children Supplemental Program) loses approximately $543 Million
      • CDC (Centers for Disease Control & Prevention) takes a $464 Million cut

    Now that we have a basic rundown of what this Fiscal Cliff means to our families, here are a few things that would still be available/ unchanged:

    1. Social Security and Supplemental Security Income
    2. Refundable Tax Credits
    3. Food Stamp Benefits
    4. Veterans Benefits
    5. Military Personnel- there are discussions that military personnel will be exempt from the cuts

    5 Ways to Make it off the Cliff Safely:

    Quite frankly, we really have no choice whether or not we go over the cliff, all we can do is prepare ourselves and our families for the increasing expenses . . . so with that in mind, RELAX- getting freaked out or stressed over something that you cannot change is not going to help you or your family.

    1. Prepay for any Taxable Expenses- and keep your Receipts!
    2. Make an Extra Interest-Only Payment on your Mortgage before Jan 1st- it's still tax deductible this year and if you have the ability to pay an interest only payment, you'll reduce your mortgage and have a better write off, win-win
    3. Seniors who have Medicare Claims Denied- appeal it. You have the right to appeal up to 3 times and your odds of winning get better with each appeal.
    4. Maximize your 401K or IRA, try to lock in any extra that you have available
    5. Curb your Spending- reduce your current expenses by:

    baby and toddler shoes-crushclock.jpg As the first of the year gets closer and the fiscal cliff remains unresolved, what are your thoughts and main concerns?

    © Can Stock Photo Inc. / focalpoint

    Comments 3 Comments
    1. BaconEater's Avatar
      BaconEater -
      It would seem we didn't plunge wildly to the bottom because they came to a "deal" but our own household taxes will take a hit of about $100 a month more than what we were already paying.

      I'll be anxiously watching each and every $50 menu plan this year!!
    1. Robinetty's Avatar
      Robinetty -
      Good advice not to freak over something over which we have no control. That's why I'm here, to get some good ideas where I can save! LOL
    1. ReubenBristow's Avatar
      ReubenBristow -
      When worst occur because of fiscal cliff the U.S. economy tumbles back into a recession. Americans' level of interest in the news surrounding the fiscal cliff negotiations remains about the same. Some of us afraid that it might bring trouble to the economic status of the country. Pay for your needs while in between checks with a cash advance.

    Have something you'd like to add? Register & Login to add your own comments, thoughts, questions or suggestions.

    As always, Registration is Free!

  • Keep Reading . . .

    Windshield Washer MixWindshield Washer Mix

    Make your own Windshield Washer Fluid Mix and other easy frugal household recipes

    Suet Cups & ConesSuet Cups & Cones

    Learn how to make your own suet cups and cones to feed the birds in your backyard

    DIY Orthopedic Pet BedDIY Orthopedic Pet Bed

    Pets are like kids, you love them, you want them to be comfortable, but they can be expensive, here's how to make a Dirt Cheap Orthopedic Pampered Pet bed in Any Size...

    Firmer Breasts

    Make Your Own treatment for Firmer Breasts and other money saving cosmetic recipes for women

  • More on Money & Finances:


    Need Digital Chess Clock Board

    Hi ,guys .

    I am a new PE teacher ,looking for a digital chess clock board these days.So I googled many of deals and found it from Ebay ,The digital chess clock board is a deal now,price is $15.99...

    bebeb 11-19-2015, 09:16 PM Go to last post

    Cant Afford a Math Tutor?

    If you're attempting to help your kids with their math problems or need a little assistance to check their homework to make sure they've accomplished 14457finding the correct answer, here are a...

    Liss 10-30-2015, 09:26 AM Go to last post

    selling your car

    Has anyone here sold their car and started taking only bus and bike for work? My husband thinks I have lost my mind since my car is paid in full and I just have to pay for upkeep and registration,...

    dcochran 08-31-2015, 03:19 PM Go to last post

(C) Melissa 'Liss' Burnell & Budget101.com 1995-2016
Material from www.Budget101.com may not be copied or distributed, or republished, uploaded, posted, or transmitted in any way, without the prior written consent of Budget101.com, EXCEPT: you may print recipe pages for your personal, non-commercial home use only, provided you do not delete or change any copyright, trademark, or other proprietary notices. Modification or use of the materials for any other purpose violates Budget101.com's intellectual property rights.