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A simple New Years resolution

Posted by Jill Boynton  December 30, 2010 10:55 AM

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On January 1st all wage earners will be getting a 2% raise, thanks to the recently passed tax package. That’s because the amount you usually contribute to the Social Security system, 6.2% of your first $106,800 of wages, is reduced to 4.2% for 2011. (If you are self-employed, you still get only a 2% reduction even though you pay 12.4%.) That 2% savings could be as much as $2,136 over the course of the year.

A simple fiscally-responsible New Years resolution would be to take that extra money and put it to good use. Here’s how:

- Increase the amount you pay towards your credit card balances
- Increase your 401(k) or 403(b) contribution
- Deposit it directly into your savings or investment account

Remember this change is good for 2011 only. If you decide to increase your spending you will have to make an adjustment down on Jan 1, 2012 as your Social Security withholding reverts back to 6.2%. It’s better to use this money towards a financial goal and keep your spending at its current level.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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