Author Topic: Decreased My Take-Home Pay  (Read 2961 times)

bludreamin

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Decreased My Take-Home Pay
« on: July 04, 2017, 09:01:24 AM »
I recently received a promotion and it came with a 7% pay increase - my first step was to go into my 401k and increase my contributions from 16% to 23%.  The net effect is that my take home pay is going to decrease about $40 per pay period.  Will have to rework my budget to adjust for this (looking at grocery and fun money budgets).

Also realized that I've done this with every pay increase over the last 5 or so years - great way to increase savings with no change in lifestyle (so maybe not so much badassity).  The way things are going I should be maxing 401k after the next pay increase - then it'll be on to figuring out non-tax advantage investments. 

marty998

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Re: Decreased My Take-Home Pay
« Reply #1 on: July 04, 2017, 03:46:34 PM »
I did that with a previous pay increase - saw my net pay go down because of paying more into post-retirement accounts.

Not a great feeling initially, but you adjust to the new-normal quite quickly.

BTDretire

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Re: Decreased My Take-Home Pay
« Reply #2 on: July 04, 2017, 03:57:57 PM »
You both fit in here, but you clearly are not normal if you don't just figure out how to spend it all. Just not normal! Outcasts from society.  :-)

Dicey

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Re: Decreased My Take-Home Pay
« Reply #3 on: July 05, 2017, 07:31:55 AM »
One way to mitigate your "loss" might be to adjust your withholdings, if you got a big tax refund last year. Easy to do and as long as you have as much withheld as you paid the previous year, there's no risk of penalty. Sure, it's possible you could end up owing a little bit, but that's what savings are for. Better to keep as much money in your control than give the government an interest-free loan. Congratulations!

ABK

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Re: Decreased My Take-Home Pay
« Reply #4 on: July 05, 2017, 10:51:33 AM »
Not a great feeling initially, but you adjust to the new-normal quite quickly.

I hope you're right about that! Today was my first paycheck since increasing both 403(b) contributions and tax withholdings. It stung, though I know we're still well able to cover our perfectly frugal monthly budget.

sisto

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Re: Decreased My Take-Home Pay
« Reply #5 on: July 05, 2017, 01:11:05 PM »
I did the same thing over the years and now I max my 401K

bludreamin

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Re: Decreased My Take-Home Pay
« Reply #6 on: July 05, 2017, 05:54:55 PM »
@marty998 - Good to know it's a common practice and shouldn't sting too bad.  I've had OT recently so that'll help take some of the sting out.

@BTDretire - bwahahaha - oh I know I'm not normal. I have fully accepted that fact and embrace my weirdness :)

@Dicey -  good point. I adjusted my withholding earlier in the year after getting a >$2K tax refund. not sure that I want to mess with it again - just going to ride it out.

@ABK - hopefully the sting will lessen for you quickly. It must be a good balm to know that your spending is still covered and you're in control of the spending (and not the other way around).

@sisto - Excellent! Pure inspiration -   I definitely think I'll be close to maxing with next raise (and may just jump at it in the beginning of the year)

RobFIRE

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Re: Decreased My Take-Home Pay
« Reply #7 on: July 06, 2017, 02:53:15 AM »
Yes, that reminds me, announcement of annual pay increases and bonuses are due at my company this month. I want to increase my pension contributions (UK equivalent of the US 401K I think) to put all of any pay rise into pension. I'm near the top of the standard tax bracket and for me it's not worth just going into the next one. Though my line manager said something odd about how our HR department had been "benchmarking" everybody's salaries and would not be giving salary increases to those who were found to be over the "benchmark", so who knows I may not have a pay rise to deal with...