NEW YORK (MainStreet) — The payroll tax cut extension is set to expire at the end of this month unless Congress can agree on a plan to renew it for the remainder of the year – something that is looking increasingly unlikely.
While the Obama administration and many in Congress agree that the tax cut is worth the $100 billion or more that it would cost the government to extend it, legislators are split on how to fund it. Unfortunately, without an extension, many Americans may soon be struggling with their monthly budgets.
Just how much a person saves with the tax cut depends on one’s income, but the typical family earning $50,000 a year currently pockets an extra $80 each month from money that would otherwise go toward Social Security and Medicare taxes. As one woman noted in December prior to the latest extension, that extra money is “the difference between having food on the table the next week and not.”
If Congress fails to approve the payroll tax cut extension, here are a few expenses you can cut out of your budget to adjust to what will essentially feel like a pay cut in your salary this year.
Rethink Your Cable TV
The average monthly cable bill has more than tripled in the past 10 years, increasing from $40 in 2001 to $128 in 2011. Even in the best of times, that’s a lot of money to fork over each month, especially when you consider the incredible selection of TV shows available online through sites like Netflix and Amazon, whose combined cost would be about $30 more for an entire year than what Americans pay on average for a single month of cable access.
Bring Your Own Lunch to Work
It might sound like a small change, but one recent survey found that workers spend $2,000 a year buying $5-$10 lunches every day at work. A better option is to prepare your own meals at home the night before, which should cut down on much of the cost. If it feels like a big lifestyle change, try making the switch for one or two days a week and work your way up to doing it every day.
Cut Out Your Vices
Even if Congress does approve the payroll tax cut, it’s always a good idea to cut out (or cut down on) some of your vices, but this is especially true when money is tight. As MainStreet has reported before, the cost of cigarettes and alcohol adds up quickly. If you spend just $15 a week on drinks (which in New York barely gets you two beers) you’ll end up spending nearly $800 for the year. So if you really need to cut costs, either give up the vice entirely or in the case of something like alcohol, try mixing your own drinks at home on the cheap.
For more expenses that you should rethink this year, check out MainStreet’s roundup of 12 things to stop paying for in 2012.