Your Paycheck

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I haven’t listened to Dave Ramsey’s podcasts for a few days but I’d love to hear what he has to say about the new federal withholding rates that were released last week as a part of the stimulus package. I’m pretty sure he doesn’t like them.

With the new withholding rates, those who are at the lower end of the income ladder will see their paycheck amounts increase because the tax amount withheld will be less. Those who are at the higher end of the income ladder will see very little change in their paycheck.

Will this help people out? Not even close and here is why I think that:

  • Most people aren’t that disciplined. There will be extra money coming home, but will they do something intentional with it? I don’t think so. Only those people who live on a strict budget will reap the benefits of the extra cash because they know exactly how much money comes in to their house and how much goes out.
  • If someone can’t pay their bills because their paycheck is small, a change in federal withholding rates is not going to solve that problem. A different or additional job is needed!
  • If the paychecks are that small, a change in the tax tables isn’t really going to make that much of a difference.

    • The government is trying to solve everyone’s problems. This action above is not the answer. People need to solve their own problems!

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