WHEN YOU DON’T HAVE A RAINY DAY FUND… AND IT’S RAINING.

rainydayfund

Dear Noëlle:

Hey “Money-Knowing-Shit-About-Person”! Need to ask you a question…
I have to take a prerequisite course online this summer for one of the schools I’ve applied to. The course cost $850 and I was just going to try and squirrel away a little money at a time since I have until mid September (the latest to start the course in order to complete it by December). Recently however, my hours at work have been cut because we don’t have the patient load we used to have; now every penny I make is mostly going to have to go towards bills. So my question is how do you think I can get the funds for this course? It has to be paid in full before I can begin, and I cannot take any student loans at this time. I already have an undergrad, so I am ineligible for Pell grants, etc. I’m looking for some part-time weekend work, but wondered if you might have a clue about other options as well.
~NM
ANSWER:

Good morning NM,

Hahaha at “Money-Knowing-Shit-About-Person”…

If I’m short around $1,000 (or 6 lol) on anything important to me, and I’m not in the position to earn more money (or don’t have the time), I increase my deductions on my W-2 and save the extra net pay for a few pay periods.

In your case, if you expect a tax refund of at least $850, it’ll be an easy wash at the end of the year… BUT if you don’t expect a refund, you can make up for it by paying additional payroll taxes towards the end of the year (if your financial situation will be better). Then you’ve just given yourself a free loan until April 2015.

If you don’t expect a refund AND you don’t think your situation will change during the year, my favorite way to make up for not paying enough income tax is my home business. PUT A SIDE HUSTLE ON PAPER! NM’s Paper Clip Co… idgaf what it is, just anything you don’t need a license to sell. All u need is a tax ID in your state (it’s free and you get the # right away online). Even if you don’t sell 1 paper clip, the home office deduction, auto deduction, and “things you already use to live- deductions”, will easily wash out $850.

I own a home-party company and the income from that is really an afterthought. My business’ purpose is so I don’t have to pay income tax at my real job, free food, party in controlled environment, and popularity with great new people that are always attracting money into my life somehow.  I’ve never had a loss, but the way our country is set up, if I did have one, I get dollar for dollar back off of what I didn’t hand over from my paycheck.

Happy to help,

~Noëlle

(See follow-up Q&A’s in the comments section of this post)

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One comment

  1. Follow-up questions…

    NM: How many deductions do you think I should take, if I go that route?

    Nollie J: Each (1) allowance exempts about $3,900 from withholding for the year. Here’s how you figure out how many and for how long. Are you paid weekly or biweekly?

    NM: Bi-weekly

    Nollie J: Ok, so going up 1 exemption on your W-2 will give you $150 more in your check (3,900/26 pay periods). So to get $850 in your pocket, go up 1 exemption for 6 payrolls ($150 x 6= $900).

    If you’re at “Single 1” now go to “Single 2” for 6 pay days, and then go back to “Single 1” for the rest of the year. You’ll just get $900 less of a tax refund.

    If you want to pay it back before the year is over, go to “Single 0” once you’ve saved $900, and it’ll wash itself out without affecting your tax liability at the end of the year.

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