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HomeBlog Credit Card DebtThink You Own Your Paycheck? Better Think Again
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Think You Own Your Paycheck? Better Think Again

September 21, 2016 by National Debt Relief

business man looking tiredYou drag yourself out of bed five days a week, brew up some coffee, get dressed and then hurry down to your job where you spend eight hours or even more. Then, at the end of the day, you go home feeling totally stressed out – all in pursuit of that glorious paycheck.

But do you really own your paycheck?

That would be a no. In fact, you may own only a very small percentage of that check.

How can that be?

If you earn $90,000 a year

For the sake of an example let’s suppose you earn $90,000 a year. Let’s look at how much of that $90,000 your Uncle Sam takes.

First, there’s that nasty income tax. It’s based on the size of your earnings. If you don’t earn much, you don’t pay much. But in this case – at $90,000 a year – you will pay $18,000 in income tax. That’s 20% of your money. So now you’re down to 80%.

Your state will also want its share. If you live in Michigan, you’ll be taxed at the rate of 4.25%. The tax will be 3.07% if you live in Pennsylvania and 5.0% in Utah. So, if you live in Michigan it will cost your another $3825 in state income tax.

You will also pay a Social Security tax. While you may not ever get this money back it will cost you 6.2% out of every paycheck or $5580 a year.

But the government still hasn’t quit taking money out of your pocket because there’s the Medicare tax. This is an easier one to swallow because it helps provide medical care for the elderly. But whether you think this is good or not, it will nick you $1305 a year.

What you now have left

If you haven’t been adding up these taxes as we go, the government has now taken a total of $28,710 out of that hard-earned $90,000. So instead of $90,000, you have $61,290. While that may not seem too bad, there’s more to come because of the decisions you’ve made.

Your bad choices

It may be a bit harsh to say that you’ve made some bad or, even worse, stupid choices. But you probably have. And this will mean that $61,290 still isn’t yours. We live in a sort of “have it now” society and you, like most of us, have undoubtedly bought things you couldn’t really afford with the idea that you would pay back the money over time. To put this another way, you’ve willingly agreed to make payments on something you wanted to experience today but couldn’t pay for. The number one example of this is auto loans. Very few of us actually save enough money to pay cash for an automobile. Since the average auto loan today in the US is $30,000 this would mean a monthly payment of $503 or $6036 a year. Was it necessary to buy an automobile this expensive? Probably not. If you saved enough to put $3000 down on a new car you actually would have enough to buy a decent used car that could last you many years. But you didn’t so instead of you having that $6036, your bank does.

money and graduation cap in chainsStudent loans?

Last May’s graduates owed more than $36,000 in student loans. Since you’ve been out of school a few years we’ll assume that you don’t owe anything close to this. You could have had a plan that would have allowed you to graduate without owing anything in student loan debt but you didn’t. The good news here is that some experts consider student loan debt to be “good debt” because the money helped you get a better career, which meant earning more money. However, that said you probably have yearly payments of around $4000.

Don’t forget credit cards

If you’re typical you don’t have an emergency fund. This means that if you have to pay for an emergency you probably do it with, yes you guessed it, a credit card. In fact, thanks to not planning adequately the typical American has $4750 in credit card debt. That translates into $120 a month just in the minimum payments. Of course, if you make just the minimum payments you’ll owe that credit card issuer $1440 a year for many, many months. In fact, it could actually take you 25 years to pay off that $4750.

Where you now stand

After the government took its share of your paycheck you had $61,290 left. But now, after your $11, 476 of bad decisions and lack of planning there’s just $49,814 left. And that’s not the end of it. You now have to pay for things like shelter, food, clothing and utilities.

Your mortgage

If you earn $90,000 a year, it’s almost certain that you have a mortgage. Houses in the US get bigger every year and so do the mortgages. According to The Motley Fool website people age 35 to 44 have an average mortgage payment of $1073 per month. That’s $12,876 a year. So now you’re down to $36,968 and were still not through.

Food and clothing

Let’s take food first. According to USA Today, it takes, on the average, $800 a month to feed a family of four, which is another $9600 out of your paycheck each year. The Bureau of Labor Statistics has found that $1700 a year is spent on clothing by the average family, which isn’t too bad. But subtracting the cost of food and clothing means another $11,300 a year you don’t really own out of your paycheck.

Utilities

If you live in a part of the country where there’s both summer and winter your utility bills should be pretty constant throughout the year. This will be somewhere around $250 a month or another $3000 subtracted from your hard-earned paycheck.

If you throw your smart phone bill into the category of utilities, it’s probably costing you an average of around $150 a month – not counting the cost of the phones – or roughly $2000 a year. And if you’re an iPhone user you’re probably paying more as revealed in this short video.


Then there’s cable and Internet. Again, if your family is typical these two “luxuries” are probably costing you around $200 a month or $2400 a year unless, of course, you choose to cut the cable.

Transportation

Since we’ve assume you have a car we can’t leave out the cost of fuel and automobile insurance. How much is gas costing you? The US average is approximately $2200, plus there’s the cost of insurance, which averages $815 per year. If you add this to that $6036 your auto loan is costing you then wow! That car just by itself is taking a hefty chunk out of your paycheck.

So how much of that paycheck is really yours?

When you add up all of this, what you have left – or how much you actually own of your paycheck is a whopping $15,233. And, of course, this doesn’t include saving for retirement. What this boils down to is that, sadly enough, the average American really owns about 17% of their paycheck.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/17/2021 Charlotte: I am calling because I wanted to ask a few quick questions about your experience with National Debt Relief [unclear 0:00:27]. JOSE: It’s good. Charlotte: Now before I begin, I have to let you know that our call is recorded. Can you tell me what actually made you decide to work with [unclear 0:00:40] National Debt Relief as opposed to other providers? JOSE: Good. Charlotte: What made you decide to work with National Debt Relief, as opposed to other debt relief companies? JOSE: Aside from your reviews, I’m guessing the success of the reviews. Charlotte: Tell me about the service and the program that National Debt Relief signed you up for? JOSE: I was able to collect all my debt into one chunk and then pay it off. Also was able to get settlements lower than what the balance was. Charlotte: How easy or difficult would you say the enrollment process was? JOSE: It was pretty simple. It wasn't difficult at all. Charlotte: Now is there anything about the process that you feel could have been improved? JOSE: Not at all. I think everything went smoothly. Charlotte: Perfect. Can you give me a little feedback on your experience with your negotiator? What did you think about your negotiator? JOSE: Negotiator was really firm and fair. Charlotte: Do you happen to remember the name of your negotiator by chance? JOSE: I do not, actually. Charlotte: Okay. Is there anything about that representative stood out [unclear 0:03:04] at all? JOSE: No, not at all. Charlotte: Perfect. How comfortable did you feel working with the negotiator through this process? JOSE: Very comfortable. Charlotte: Perfect. So if you had any questions or concerns, how did the negotiator work with you to resolve any questions or concerns that may have arisen? JOSE: At this point, I really didn't have any concerns at all. So, I mean, been doing a great job. Charlotte: Awesome. So if you were gonna rate your experience with National Debt Relief so far, on a scale of maybe one to five, and five would be that you would recommend to friends and one is you were pretty dissatisfied, how would you rate them? JOSE: Is 5 the highest? Charlotte: Yes, 5 is the very highest. JOSE: Okay. Then we’ll go with 5. Charlotte: Would it be okay if I posted your comments as a review on our public web site for National Debt Relief? JOSE: Yes. Charlotte: I will also send over a link so that you can have it as a record for yourself as well. And I have you at salvipride673@gmail.com. JOSE: Yes. Charlotte: How did National Debt Relief work with you as far as setting up a payment [unclear 0:04:45]? JOSE: They did pretty good. Like I said, I have no complaints at the moment. Charlotte: How comfortable were you with the amount that you were paying? JOSE: Very comfortable. Charlotte: Perfect. Now as far as your thoughts on the cost in relation to the quality of service you received at National Debt Relief, what would you say about that? JOSE: The service team was all right. Charlotte: Now if you were going to rate your experience on a one to five, five is that you would recommend to friends and one is you're pretty dissatisfied, how would you rate them? JOSE: 5. Charlotte: Perfect. Would it be okay if I posted a few of your comments to our website? JOSE: Yes. Charlotte: Now if a friend or a family member were asking you about National Debt Relief, what would you say? JOSE: Really great people to work with. Very quick and easy, very responsive, no issues. Really makes you feel like they’re there for you. So not a scam at all. Charlotte: Perfect. Now about where are you in the process at this point? JOSE: I've already had two creditors resolved already. Pretty happy about that. Charlotte: And of course, our call is recorded.

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