Archives: Useful Homebrew Financial Calculators

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calc.jpgIf have to repeatedly have to make a calculation and I can’t find it elsewhere to my liking, I usually try and make my own calculator to save time in the future. Below are links to ones that I still use regularly, I wanted to point them out because they tend to get lost in my archives. Hopefully, they can be useful to you as well.

Ultimate Interest Rate Chaser Calculator
A “rate chaser” is someone who move their money to whichever bank offers the highest interest rates. For example, due to various promotions I have over 10 accounts open at various online banks. This calculator helps you figure out how much money you’ll earn by switching.

True Cost of Impulse Buying Calculator
Being smart with money is all about choices and priorities. Would you rather have another $300 iPod, or realize that with compound interest you could have an $2,000 more (inflation-adjusted!) later on. You’re not just saving $300, you’re shaving weeks off your retirement date!

Your Portfolio’s Rate of Return – Estimation Calculator
When trying to figure out your portfolio’s performance, don’t just trust the performance stats of your mutual fund or that number on your statement. Calculate it independently using this simple calculator. It gives surprisingly good estimates.

Your Portfolio’s Rate of Return – Exact Calculator
Slightly more complicated to use, but more accurate. You must know the dates and corresponding amounts of cash inflows and outflows.

Asset Allocation Guide: Percentage Of Your Portfolio In Stocks?
The calculator at the bottom shows you how your stocks/bonds ratio might look if you use popular Target Date mutual funds as a reference.

0% Balance Transfer Profit Calculator Tool
My series of articles on How To Make “Free” Money From 0% APR Balance Transfers has been very popular and many readers have also jumped in. Despite the risks, I’m still happily earning some money from the credit card companies for a change, and haven’t missed any payments.

This calculator is for the analytical types that want to have a better idea of profit potentials. The calculator takes into account minimum payments required by credit card issuers. Use in conjunction with my list of best 0% APR balance transfer offers.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Make Money From Credit Cards: 0% Balance Transfer Profit Calculator Tool

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

My series of articles on How To Make “Free” Money From 0% APR Balance Transfers has been very popular and many readers have also jumped in. Despite the risks, I’m still happily earning some money from the credit card companies for a change, and haven’t missed any payments. From the beginning, people have asked me to make a spreadsheet or calculator in order to estimate the potential profit from such endeavors. I initially decided against doing so because there are lots of different variables at stake that make an exact prediction close to impossible. However, I think it may still be useful to obtain some more realistic numbers.

Without further ado, I present to you the…

0% Balance Transfer Profit Calculator

Enter savings account APY: %
Enter starting balance: $
Enter the monthly minimum payment percentage (2%) %
Your interest earned:   $
(See assumptions and definitions below)

Inputs and Definitions

  1. Arbitraged Interest Rate (APY) – Where are you putting the money you’re borrowing for free? This is the interest rate of the investment vehicle (savings account, CD, Treasury bond) you are using, or perhaps the interest rate of the existing loan (car, home equity, student) that you are paying down.
  2. Starting Balance (dollars) – How much money are you transferring?
  3. Monthly Minimum Payment (%) – Usually you must still make a monthly minimum payment on the outstanding balance during the 0% period, which will decrease your profit potential slightly. This is usually around 2%, but may vary between 1.5% and 4%.

Assumptions

  1. The balance transfer is for 12 months at 0% APR, with no balance transfer fee. You can find my list of the best 0% APR offers here with low or no balance transfer fees here.
  2. The interest is assumed to compound monthly, which allows me to convert from APY to APR, and then to a periodic rate. Compounding frequency is a variable here, but doesn’t change the numbers too much.
  3. I am ignoring the time required to actually convert the balance transfer into cash earning interest. Sometimes this can take up to a few weeks, sometimes it is much faster. Instead of guessing, I just leave it be.
  4. I am also ignoring things like grace periods and the timing of statement cycles and due dates, which can actually increase the time that your borrowed money is earning interest, and thus your profit.
  5. If you are earning interest in a taxable bank account, you will likely owe income tax on that interest at your marginal rate. This is not accounted for in the calculator, but is a simple calculation.

(If you’re confused about what I am talking about, please refer to the tutorial mentioned above.)

Example Profit Calculation
Let’s say you obtain $15,000 and place it in a bank account paying 5.25% APY, with a 2% monthly payment. Using our assumptions, the 5.25% APY is equivalent to 5.13% APR, or earning 0.4273% of the balance each month.

Beginning of Month #1: You have $15,000 in the bank. Total balance left on credit card: $15,000. Nothing is due yet.
End of Month #1: You earn $64.10 in interest, but also need to pay back $300 (2% of $15,000) out of your bank balance for the minimum payment.

Beginning of Month #2: Total in bank:$14,764.10. Total balance left on credit card: $14,700.
End of Month #2: You earn $63.09 in interest, but also need to pay back $294 (2% of 14,700).

This continues for 12 months, as shown below:

altext

At the end of the 12th month, your bank balance is $12,477.87, and you still owe $11,770.75 on the card. You pay it off completely, leaving you with the resulting estimated profit of $707.12.

Play around with the calculator. Some people actually have over $100,000 out at once, earning them thousands of dollars a year. My credit limits aren’t quite that high…. yet!

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Cost Comparison Tool For Comparing Vanguard ETFs and Mutual Funds

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While on Vanguard’s website I recently ran across a new and useful tool that help helps you calculate and compare costs for similar Vanguard ETFs and mutual funds. The tool takes into account trade commissions, the difference in expense ratio, redemptions fees, future purchases, and even the expected bid-ask spread.

For the unfamiliar, I’ll be very simplistic and say that exchange-traded funds, or ETFs, are mutual funds that can be traded like individual company stocks. Due to the way they are constructed, ETFs tend to have lower expense ratios than their mutual fund counterparts, but you will need to pay a commissions each time you trade. There is also a little bit of added loss due to the bid-ask spread.

For example, you could compare the Vanguard Total Stock Market Index Fund (VTSMX) with the Vanguard Total Market ETF (VTI). Both invest in the exact same set of companies, and holds over 1,000 companies that track closely the entire U.S. market. VTSMX charges an annual expense ratio of 0.19%, or $19 on a $10,000 investment. VTI has an expense ratio of only 0.07%, a mere $7 for each $10,000 invested.

I tried an example where I start with $10,000 of either VTSMX or VTI, and say that I will add another $1,200 each quarter for another 10 years. I assumed $5 trade commission and a 8% annual return. Here are the results:

Cost Results

(fixed the numbers :P) The cost edge goes to the ETF in this case, with a cost difference of $300. Really, I don’t see that as all that much over 10 years. But, as you get into larger amounts, the gap widens. If you continued the same example for another 20 years, the ETF’s cost advantage would be $7,000.

For this reason, I feel like it is only a matter of time before I start moving all of my current all-mutual fund portfolio into ETFs. In fact, the majority of my funds already have an identical ETF counterpart.

Anyhow, you can play with this calculator and change the variables to see your situation. Note that Admiral shares are an option once you reach $100,000 per fund. I’ve got a while before that…

But in terms of the big picture, both of these funds have very low costs and would serve as a great cornerstone to a retirement portfolio. If you are just starting out, I think you’ll see the difference is very small; I really wouldn’t stress too much about going either way.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Tax Equivalent Yield Calculator For Savings Bonds, Treasury Bills, and Tax-Exempt Money Market Funds

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There are many investments out there that are exempt from certain taxes. For example, U.S. Savings Bonds and Treasury Bonds are exempt from state and local income taxes. In addition, there are money market funds available that are exempt from federal income tax and others that are even exempt from a specific state or city’s income taxes.

Therefore, it is desirable to know what the equivalent fully-taxable rate is for one of these investments. For example, is it more profitable to earn a federal tax-exempt interest rate of 3.8% or a fully taxable 5.0%? How about a Treasury Bill paying 4.8%? Several variables affect this rate, including your marginal tax brackets for each area, as well as if you itemize your state and local taxes on your federal tax return. I could not find a calculator that accurately captured all of this, so I made my own.

Tax Equivalent Yield Calculator
(You may need to be on the individual post page for it to work.)

Enter the interest rate: %
Enter your marginal federal income tax rate: %
Enter your marginal state income tax rate (if any): %
Enter your marginal city/local income tax rate (if any): %
Exempt?
Federal Tax-Exempt
State Tax-Exempt
City/Local Tax-Exempt
Itemize?
Do you itemize deductions? Yes
No
Your tax-equivalent rate:   %

Example
Let’s say you live in California, and your marginal federal tax rate is 25%, your state rate is 9.3%, and you have no local income taxes. You do not itemize your taxes. You are trying to compare the taxable Vanguard Prime Money Market Fund (VMMXX, yielding 5.08%), the federally exempt Vanguard Tax-Exempt Money Market Fund (VMSXX, yielding 3.48%), and the state and federal tax-exempt Vanguard California Tax-Exempt Money Market Fund (VCTXX, yielding 3.38%).

With that profile, the tax equivalent 7-day yields would be 4.804% for VMSXX, and 5.145% for VCTXX, making the California Tax-Exempt Fund the best bet currently for this specific situation.

How It Works (Warning: Math Ahead!)
The calculator computes the tax-equivalent rates by comparing after-tax returns. That is:

AfterTaxReturnEquivalentTaxableRate = AfterTaxReturnTaxAdvantagedRate

Using the California Tax-Exempt Fund example above:

EquivalentRate x (1 – FederalTaxes – StateTaxes) = 3.38%
EquivalentRate x (1 – 0.25 – 0.093) = 0.0338
EquivalentRate = 5.145%

So earning 3.38% free from federal and state taxes is the same as earning 5.145% in a fully taxable account.

Note that itemizing deductions means that you deduct your state income taxes from your federal taxable income. The effect is that your overall tax liability is reduced, which lowers the benefit of any tax-exemptions and thus the equivalent rates. That would change the previous equation to:

EquivalentRate x (1 – FederalTaxes – StateTaxes + (FederalTaxes x StateTaxes)) = 3.38%
EquivalentRate = 4.969%

The inclusion of this option may give different results from some of the other online calculators out there, but I believe it makes the results more complete. Another fully-worked-out example can be found here for savings bonds.

Finally, it may be handy to use this in conjunction with my Ultimate Interest Rate Chaser Calculator. Be sure to compare APRs to APRs and APYs to APYs.

Useful Resources
2007 Federal Tax Rates
State Income Tax Rates
Recent Treasury Bill Auction Results
Savings Bonds Rates

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

What Percentage Of Your Portfolio Should Be In Stocks?

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

One of the basic ways to adjust the risk and return characteristics of your investment portfolio is to decide what percentage to hold in stocks and bonds. This is another one of those hard questions for which there is no single best answer for everyone. You must take into account risk acceptance and time horizon amongst other factors.

An old rule of thumb is that your stock allocation percentage should be 100 minus your age. That is, a 30-year old should have 70% stocks/30% bonds, and a 70-year old should have 30% stocks/70% bonds. This was not just taken out of thin air, and has a basis from historical returns. As you near retirement, you want to have more bonds as that reduces overall volatility. More recently, others have altered this to a more aggressive “110-age” or even “120-age”.

Members of the Diehards investment forum recently performed a informal survey of member’s asset allocations versus their age, and here are the results:

Credit: Diehards Form

As you can see, there is definitely a lot of scatter in the data. However, if you made a linear fit, it roughly corresponds to a formula of stock percentage = 112.5 – age.

This made me curious – what about all those Target Retirement Funds? Their job is to decide an asset allocation that works for as many people as possible based on their retirement date. If I assume that people retire at 65 years old, here is what the asset allocation versus age looks like for three of the more popular fund families: Vanguard, Fidelity, and T. Rowe Price:

Target Retirement Fund Asset Allocation vs. Age

As you can see, the funds are actually pretty aggressive. (I covered previously how T. Rowe Price is more aggressive than Vanguard.) If one did force linear fits for all three fund families, it would correspond roughly to stock percentage of 119 – age. However, they don’t really adjust linearly with time. If I use a 2nd order curve fit instead, I can make a little tool that estimates their stock percentages for any age:

Input Your Age: Years
Percentage in Stocks
Vanguard Model:   %
Fidelity Model:   %
T. Rowe Price Model:   %
120 – Age:   %
113 – Age:   %

None of this is investment advice, it’s just an observation of what’s out there. Next, I’ll try to find some historical return and standard deviation numbers for another view of how to answer this question. What do you think of all this?

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Certain Yodlee Versions Don’t Show Passwords

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

Yodlee MoneyCenter is an account aggregation service that logs into your online accounts automatically in order to track your financial balances and transactions. It’s also a great way to see all your rewards points. While Yodlee is available for free directly, they make their money by licensing their software to financial institutions. Thus, you may know it instead as HSBC EasyView, Fidelity FullView, Wachovia OneStop, or Bank of America My Portfolio.

I’ve discussed in the past why I use Yodlee to track my accounts, despite the potential security concerns. One of the major worries was that if someone got a hold of your Yodlee password, they could then get access to all your other passwords. But I just noticed that at least for the Bank of America and HSBC versions, they have disabled the ability to see your individual account passwords. They are still viewable in the Yodlee direct version.

I like the hidden passwords, and now use BofA My Portfolio exclusively. It is slightly more inconvenient for those that use the service as a password reminder service, but I think it makes things significantly more secure. It is much easier for a hacker to gain access into a single user’s account by phishing or spyware than to break into to a bank’s central database. Still not perfectly secure, but I thought I’d give people a heads up.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

IRS Calculator To Help Determine Sales Tax Deduction

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If you itemize deductions and live in a state with sales tax, give the IRS Sales Tax Deduction Calculator a spin.

Taxpayers who itemize deductions on Schedule A of the Form 1040 in 2006 have the option of deducting the amount of state and local sales taxes paid instead of deducting their state and local income taxes paid. Taxpayers cannot take a deduction for both sales and income taxes.

Residents of states with no income tax should definitely look into this. If you have made some large purchases this past year, it may also be worth the effort to dig up those receipts. Via Consumerist.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Calculate Your Exact 2006/2007 Portfolio Rate Of Return

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I sensed that people weren’t quite satisfied with my Rate of Return Estimation Calculator. After wasting lots of time trying to program the internal-rate-of-return (IRR) function myself, I realized I could simply embed an online spreadsheet. Ain’t technology grand?

The spreadsheets below will do all the exact calculations for you. I made one for 2006 and one for calculating your ongoing year-to-date and annualized returns in 2007. You will need to supply the date and amount of all deposits and withdrawals in your accounts. If you reinvested dividends then those can be ignored and rolled into the return.

Calculate Your 2006 Portfolio Return

[Read more…]

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

True Cost of Holiday Shopping Calculator

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Can you hear that sound? Sleigh bells a-jingling? Carol singers? No, it’s credit cards a-swiping as part of what is now officially BUY BUY BUY season.

Here’s a psychological trick that I use to temper my “self-gifting” urges. It’s based on the fact that every dollar that you save now will be worth much more in the future. However, it can be hard to forgo short-term pleasure for long-term gain. Use the calculator below to see how much of your own “future money” you’re actually spending your disposable income on.

Step 1: Pick Your Purchase:




Name Your Own Impulse Buy Price

Step 2: Pick your estimated annual return (default is 6%):
4%     6%     8%
Step 3: Pick your time horizon (default is 30 years):
10 years    20 years    30 years    40 years
Assuming a 3% inflation rate, the inflation-adjusted TrueCost™ of your impulse buy in years is:   

That’s the power of compounding. A $450 sweater? $1,000 MP3 Player? $7,000 Flatscreen TV? Maybe you’d think twice about how badly you want it. This is not to say Starbucks or the occasional splurge is never worth it. (Just writing this gave me an urge for a Peppermint Latte.) Perhaps it is. But I hope that this calculator can provide a different perspective while you are barraged by retailers to buy stuff you really don’t need. Now just imagine if you invested that money instead…

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Big List of Free Budgeting Tools and Software

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

More than a month ago, I wrote a post about tracking your spending for a month. I tried to think of the best way to budget, but I don’t think there is anything that works for everyone.

Everyone knows about MS Money and Quicken, so instead I’ve decided to compile a resource of free budgeting tools so that people can try them out on their own. Try a few. Get some ideas. Make your own. The important thing is to find something that works for you.

Here they are in no particular order:

  • Mint – Free, and now owned by Intuit (the Quicken folks). Tracks your spending and categorizes it automatically. Getting very popular.
  • SimpleD – An “open source Windows application designed for personal or household financial management.” The screenshots actually look pretty slick.
  • AceMoney Lite – Freeware version of an offline personal finance management program. It even downloads stock quotes from the internet. Thanks Ken.
  • PearBudget – An Excel spreadsheet that has definitely had a lot of time put into it. It’s a bit busy, but I still like it.
  • Microsoft Office Accounting Express 2007 – Seems targeted at business, so this may be overkill for home budgets. But amazingly it’s free!
  • Yodlee MoneyCenter – Initially just an account aggregator, Yodlee now offers spending categories which can be used to help you budget. (Why I use Yodlee for account aggregation.)
  • Stackbacks – The “Stackbacks Automated Budget System” is more of a budgeting setup guide than a tool, but hey, download the .pdf and read away.
  • Buddi – An open-source personal finance and budgeting program, which will run on any machine with Java installed. Thanks Gerard.
  • Budget On Web – Also more biz-oriented, it is a “free online system that integrates project management with contacts management and financial tools.” Free up to 5mb of storage, that is. But that sounds like plenty for personal needs.
  • Mo.neytrack.in – A “free online webapp that allows you to track all your expenses and income.”
  • Grisbi – Another offline open-source personal finance app.
  • MySpendingPlan – A free online budgeting software system that works on the ?”envelope” system. (Somewhat dated overview here.)
  • PHPFIN – An open-source personal finance management program. It seems like you have to install it on your own server?
  • GnuCash – “Personal and small-business financial-accounting software, freely licensed under the GNU GPL and available for GNU/Linux, *BSD, Solaris and Mac OS X.” Does OFX and QIF imports.
  • Budget Master – A free personal budgeting program that offers charts and visual reports.

I haven’t had the chance to look through all of these, but if you go to SourceForge and search for “budget”, you get a variety of programs. Some look interesting and some haven’t been updated in a while.

Unnamed “Homegrown” Spreadsheets

Some of these I have on my computer, but I can’t remember where I got them from. Either it was downloaded somewhere where it was openly available, or someone e-mailed it to me and said it was okay to distribute. I do not take credit for any of them.

  • Spreadsheet #1 – Very simple budgeting spreadsheet. Nothing fancy.
  • Spreadsheet #2 – by a Neil Rothman – A bit more advanced with pull down menus and better layout. (Updated 2012)
  • Spreadsheet #3 – Not sure who made this, but according to the file properties it was by “Anne, Edward & Frank Robinson”.
  • Spreadsheet #4 – Another simplistic spreadsheet, author unknown.
  • Spreadsheet #5 – Submitted by user Tony B. Instructions on use are included.
  • Within Your Means – Via LeisureGuy, it looks like pretty polished.

This list is will be updated as I find more. If I missed anything or you have your own spreadsheet to share, leave a comment or shoot me a message with it attached.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

When Should You Redeem I Savings Bonds? A Calculator

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

As predicted in October, the new inflation portion of I-Bonds is 3.12% and the new fixed rate is 1.4%, for a total of 4.52%. This is still lower than what is available via Treasury Bills and online savings accounts, so those of us with older Savings Bonds should really think about cashing them in. But when is the best time to do it? Here how I try to figure it out, and a quick calculator that does it for you.

Should you redeem?
But first, let’s make sure you want to redeem. I-Bonds have several tax-advantages:

  • Interest is exempt from state and local income taxes (although so is T-Bill/T-Bond interest)
  • Interest can be tax-free for certain educational expenses
  • You can choose when to pay taxes on it with cash basis reporting (and thus possibly delay until when you are in a lower tax bracket)

[Read more…]

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Paycheck Tax Withholding Calculator

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It’s open enrollment season again, which means it’s time to decide on your benefits and spending account contributions. PayCheckCity has a variety of tools for simulating what your take-home pay would be if you added disability insurance, increased your FSA amount, and so on.

It can also be a good time to check your paystubs and see if you want to make any other changes. Maybe you want to increase your cashflow, or see if you can afford to put more away in your 401k. You can also check if you’ve already paid as much taxes so far this year as you did last year. If so, you could underwithold taxes on purpose and stick the difference in an interest-bearing account to make a few extra bucks. You can then wait until April 15th to pay up what you owe without penalty. Uncle Sam makes millions every year on people who overwithold their taxes – why not flip the tables? Hint: If you want to stop withholding as much, you can put up to 10 allowances on your W-4 without IRS notification. You can put as many allowances as you want, but I wouldn’t go totally nuts.

Thanks to Mapgirl’s Fiscal Challenge for the PayCheckCity link.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.