Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective

Recently my wife’s boss proposed the following: If she could give up health benefits she would receive a 17% raise. Until now, our family had been receiving all of its health benefits through my wife’s employer. My employer, however, offers health insurance as well. So the math is pretty simply here: Do the health benefits through my job cost more or less than 17% of my wife’s salary?

The astute reader, however, will recognize that this equation is not so simple. The health insurance premium is quoted in a before-tax amount, which means the actual difference in my paycheck would be somewhat less than the premium amount. Additionally, my wife’s raise would mean that more taxes would have to be paid on her earnings. To figure out what the difference would be, exactly, I popped over to the NetPay calculator at Paycheckcity.com

Paycheck City

To use this calculator, you choose your state, enter your salary indicating how often you earn the amount you enter, fill in your deductions, and click calculate. In my case I already know the deductions that I’m claiming, and wanted to compare 4 different sets of incomes and deductions. But this tool can also be used when you start a new job and need to figure out what your actual check amounts will be, Additionally, if you over- or under- withheld on your taxes you can figure out how many more exemptions to take or how much extra to withhold. You can also figure out what the impact of increasing your 401k deduction will be.

The result of my calculations shows that my wife, who works half time as a structural engineer (and more than full time as a stay-at-home-mom) for good money, and I will net a whopping $136/month increase in salary. Now $136 is $136, but it’s a little surprising to me that a 17% raise can result in such a small net increase. This increase will go straight into our debt snowball extra payments.

I have used this Salary Paycheck Calculator a number of times and it’s great to have an analytical tool like this to see what the effects of payroll changes can have before you actually make them. So check out the tool and let me know if you find it useful.

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