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What to do with the 'extra money' in your paycheck

Options for using the 'extra' money in your paycheck to your advantage

Since mid-February, employers have used the new federal tax withholding tables. That means less is being taken out of paychecks, and take home pay for almost a month has been bygger by about 3.5%. Tim Shumer, with Money Management International, says it is $130 to $145 a month more take home pay, about $1500 over the course of a year.

Options for getting the most out of your income include a) paying down debt (especially credit cards, where interest continues to increase their costs), b) increase savings, or c) put it away for retirement.

>Paying down debt is simple: just apply more money to the amount owed.

>Increasing savings is a matter of 'storing' the money. It's sometimes easier to save for a goal, for example a fund that will be used for holiday shopping. Having such an account can also save by having that money on hand, rather than spending and going into debt, and having to pay interest on the debt.

>Putting the additional pay into your employer's retirement plan could actually return more than that 3%, especially if your company matches the amount you invest.

If you'd rather spend on something you've wanted a long time, like a vacation, it makes sense to save up for it, then when you spend it, you don't go into debt.

We do not know, yet, the possible consequences of less tax withholding. It will probably be after tax filing time in mid-April before we find out what our tax bills could look like for next year, under the new federal and expected state of NY changes.

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