Tax man

[Clarion]

After 12 months of tracking our spending, discovering MMM approx 3 months ago and some serious budget cutting I felt like we were making some real progress and I have been proud of our family's efforts so far.  We have in the last six months or so:

Quit the chiropractor
Stopped expensive hair appointments
Quit eating out so much and tried to work on the grocery budget
Given up the expensive private school
Worked really hard at giving up my clothes buying habit.

Every dollar was accounted for and working for us just great.  Then the tax man (the Australian tax man) came along and as of this month now takes an extra $234 per month from us leaving a hole in my carefully planned budget.  I know I'm whinging.  i know we have to pay tax and we are fortunate enough to be earning good money BUT this has set back my plans that I was so excited about -paying off our mortgage was our biggest goal and now it's going to take just that little bit more work each day.  I'm trying to find a positive to this. 

[matchewed]

The positive is living in a first world country with infrastructure (and weird animals). Taxes are a part of living in a country. Factoring taxation is important for any financial goals. You've learned that. Learning that is also a positive.

[Shor]

And the other half of the deal was that imagine if you still lived an oblivious lifestyle and had to scramble and scrounge amongst a few bank accounts to put that money together. When you have total control of your cashflow, both in and out, you have complete control over the 'unexpected expense' situation that slip in every now and then throughout life.
Avoiding that stress peak is a luxury that surpasses any convenience or fancy toy that money could buy you.

[MooseOutFront]

Another thought would be to find a way to increase tax deferred savings to lessen the higher tax bill.  Doing this instead of paying down the mortgage may be financially superior.  It is in my case.

[DoubleDown]

I assume the increased taxes were unrelated to the cuts you've made??? As in, you aren't now missing out on those excellent Australian tax breaks that are offered for chiropractic care, private school, etc.???

If that's not the case, then you are doing great! Yes, taxes suck, but they're a part of civilized life as others have noted. Look at it this way: You are saving more, no matter what. If you had not made your improvements, you'd be out an additional $234/month, beyond all those other monthly costs you used to be paying. Now you're able to absorb that extra tax bill much easier.

You're not alone in noticing that cutting unnecessary expenses tends to suddenly bring attention to taxes. Many of us find that after cutting larger expenses from our lives, taxes suddenly jump to the top of our largest annual expenses. So now, see what you can do (if anything) to minimize them!

[MooseOutFront]

Yes, I find taxes to be one of my newer favorite hobbies.  I don't have any sort of crazy allergy to having to pay them, it's just that with the complexity of the US tax code there is much optimization to be gained by learning the ins and outs of the system.

[frugalnacho]

Wait, the tax man just came along and increased your taxes $234 with no other changes? wtf? That's a ton of money.

[Clarion]

Yes, yes the tax man did just come along and raise our taxes.  The govt here in Australia decided that as of this new financial year to raise the marginal tax rates and incorporate a medicare levy. 

I assume the increased taxes were unrelated to the cuts you've made??? As in, you aren't now missing out on those excellent Australian tax breaks that are offered for chiropractic care, private school, etc.???

The increased taxes are completely unrelated to the cuts we have made.

Another thought would be to find a way to increase tax deferred savings to lessen the higher tax bill.  Doing this instead of paying down the mortgage may be financially superior.  It is in my case.

You have me intrigued MooseOutFront, do you mean by negatively geared property or something? 

[alsoknownasDean]

Wait, the tax man just came along and increased your taxes $234 with no other changes? wtf? That's a ton of money.

The Medicare levy (which has been around for years) has increased from 1.5% to 2% and there's an additional 2% levy for those earning over $180,000pa.

https://www.ato.gov.au/Individuals/Medicare-levy/

I believe the increase to the Medicare levy was originally mooted to fund the NDIS. I personally don't mind paying a little extra tax if it goes to providing assistance and better opportunities to Australians with a disability.