hmm, to adjust or not to adjust

Today is W2 day at work and I've already gone online and filed my return, $741 refund which is direct deposited into savings. Now I'm considering adjusting my withholding. The IRS has a handy withholding calculator, you input your 2007 estimates (salary, retirement contributions etc) and they recommend how many allowances to claim. IRS says my estimated 2007 refund is approx. $800 and they recommend claiming one allowance which I already do. But alternately they say that if I change my allowance to two, I will end up owing about $50. Now I figure that if I change to two allowances, that the $800 refund I am giving up should be reflected as additional monies in my paycheck. So subtracting the $50 they say I will owe and dividing by the number of paydays left this year, that comes out to roughly an extra $34/check. My conundrum becomes this: will I fritter away the extra money each check or be good about putting it directly into savings? If I'm going to be a fritter-er, its probably best to stick with the refund. And it is quite nice to have a nice chunk of change going into my savings at the start of the year. Sounds to me like I'll just stick with the status quo, but if my refund ever gets larger I'll have to visit this issue again.

How do I decide: buy a house or save for retirement

Having started rather late in life with worrying about saving for retirement, saving for a house or just saving in general I'm finding myself becoming obsessed. How am I going to be able to do both when I have less than $3k saved up? Should I even attempt to do both or should I just concentrate on one? If I concentrate on one, which one should it be? Last week I had no clue, yesterday I decided I could do both. I was all set to start maxing out my IRA once I am debt free in April and then really start socking away money for a house downpayment. Well now I read this in today's Seattle PI and I'm undecided again:

The median Seattle home sold last year cost $449,950 -- 6 percent higher than homes in King County as a whole and nearly 40 percent higher than the median for the 19 counties in the Northwest MLS. The median new house cost 13 percent more than the median existing house.

Condominiums continue to become a larger part of Seattle's home market, accounting for 28.5 percent of homes sold last year, up from 28.3 percent in 2005 and 26.6 percent in 2004. The typical condominium sold for $292,950.

The housing market here is sooo expensive, the article says that a downturn is coming at the end of the year but I don't believe a downturn will make housing that much more affordable. My salary is only around $48k, I think a median home price of $449k is to much for me to take on. And I don't really want to move out of the city because I work in the city and I want to keep my commute time as little as possible. Oh what to do???

Where do my tax dollars go?

Boston Gal had an interesting post last week linking to an article about voluntarily reducing your income to the level where you do not have to pay income taxes and this being a form of antiwar protest. Frankly I don't think this would be possible for me, but it also led me to wonder, what about all the other programs that tax dollars support, which is how I found the National Priorities Project . They have a handy little pie chart where you put in how much you paid in income taxes and they break it down so you can see where it went. My 2005 tax dollars went to:

Of the $5994.32 you paid in taxes:
$1708.38 goes to the military
$1120.94 goes to pay the interest on the debt
$1210.85 goes to health care
$395.63 goes to income security
$245.77 goes to education
$221.79 goes to benefits for veterans
$161.85 goes to nutrition spending
$119.89 goes to housing
$83.92 goes to environmental protection
$17.98 goes to job training
$695.34 goes to all other expenses



David Gross, who is the gentleman who reduced his income, has a website where he provides a guide on "How to Resist the Federal Income Tax Through the “Don’t Owe Nothin’” Method" in case you'd like to give it a go.

Coming Back Soon

I'm coming back soon, this is a promise to myself more than anything. I had holiday apathy all of December, but my new buzzwords for 2007 (instead of resolutions) are diligent and healthy which means that I will be diligent in posting to my poor little blog.