We are just over a week into 2013 and tomorrow might be your first paycheck of the new year.
If you didn’t get a raise then it might be smaller than you are used to because taxes have gone up. That’s what happens when you live in a country that believes the government should continue to grow and it should be funded through income taxes, inflation, and debt.
But if you did get a raise for 2013, your paycheck might be a little bigger in 2013 than it was in 2012. Or maybe you didn’t get a raise but you did get a nice Christmas or New Year’s bonus.
For anyone that earned a bonus or a raise, what are you going to do with your money? Are you going to be like Honey Boo Boo’s mom, or are you going to be irresponsible?
Wait… what?
Honey Boo Boo’s Mom is Financially Wise
If you aren’t familiar with Honey Boo Boo, she is a young girl who lives somewhere in the deep south with her mother, father, and three sisters. The family has a reality TV show on TLC and they are paid around $15,000 PER EPISODE.
Here’s my completely politically incorrect description of the show for those who haven’t seen it: TLC found an uneducated, overweight family with a crass little girl so people can laugh at an overweight and uneducated family. It allows viewers to think “At least my family isn’t as stupid and trashy as those people.”
Well anyone who wants to judge this family for being “stupid” might want to take a closer look.
Many reality TV stars spend the money faster than it comes in because 1.) they aren’t very smart and 2.) they think they will be famous and make money forever.
June Shannon (Honey Boo Boo’s mom) is smart enough to know that her 15 minutes of fame won’t last forever and she is putting every penny she earns from the show into trust funds for her four daughters.
Every. Single. Penny.
She’s not buying a new house with some and saving a little on the side. According to an interview with TMZ, Mrs. Shannon says:
TLC puts the money into the girls’ trust accounts for me and then I get an email telling me how much everyone gets.
The article states that they are making at least $15,000 an episode. They had 10 episodes last year and have another whole season dialed up for 2013. They probably earned less money for the first episodes before the show was popular, but I think it’s fair to say that the family will earn at least a few hundred thousand dollars even if the money dries up after the 3rd season.
This “stupid” family is saving every penny of the hundreds of thousands of TV money and continuing to live off the modest salary the father earns as a contractor.
Who’s stupid now?
What Are You Doing With Your Raise?
Maybe you got a raise or bonus for the new year. Maybe you are working hard and will get a promotion (and a raise) sometime in the near future.
What are you going to do with that money?
Are you going to raise your standard of living so that you spend every penny, or are you going to maintain your standard of living and invest the money in something like my favorite 2013 investment silver.
Don’t let a reality TV star show you up on being responsible with money. There’s nothing wrong with spending money as long as it’s within your means, but your “means” don’t have to increase every time you come into some extra money.
I’ll admit that my standard of living has increased a bit as I have gone from a college student to a newly-hired college graduate and then earned two more promotions. However, my first priority has always been financial responsibility and I’ve saved enough over those 4.5 years to go from $30,000 in student loan debt to being debt free and having a net worth over $70,000.
As the financially-wise mother of Honey Boo Boo once said:
You’re never gonna see me drive a Range Rover or a Mercedes. I’ll drive one if someone else pays for it. Never gonna live above my means.
What about you?
Readers: The last time you got a raise, did you increase your standard of living, increase your savings/debt repayment, or both?
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
If you are referring to the Social Security tax, no, it has NOT gone up. It has simply returned to the original percentage of 6.2, which is what was planned all along. You know, the part about a “temporary” abatement of the SS tax that was instituted a few years ago.
What has gone up and typically goes up every year is the base salary that is taxed. It was $110,000 in 2012 and is now $113,700.
I am no fan of taxes, but please, let’s characterize them correctly 🙂
Last year was 4.2%, this year is 6.2%. That’s going up. Yes it was a temporary reduction, but that doesn’t change the fact that people are getting smaller paychecks.
The George Bush tax cuts were never permanent so when those rates went up for people making $400,000 plus, nobody considers that “going back to normal”. An increase in taxes is an increase in taxes as far as I’m concerned (and this one came at a really bad time).
I usually get a cost-of-living raise every year, but I haven’t received my first paycheck yet so I’m not sure. I take all my raises and apply them to a secondary bank account. So my take home doesn’t increase but my peace of mind does! Also, I’m not sure if this year we will even get the cost-of-living raise because credit unions, especially small credit unions, are getting raked over the coals with all these “big bank” regulations that are blanket for financial institutions. I tell ya, if they keep this up you won’t be able to find those local banks and credit unions for much longer!
I believe the moral of this story is that you don’t have to have any marketable skills in order to make a lot of money. Truly sad that reality stars make so much money….
If I do get a raise, it will just be placed into my son’s college fund, my retirement, and my savings account. I am still living on my 2008 paycheck that includes the original 6.2% tax. While I agree the taxes are going up, it won’t affect those that actually accounted for the temporary decrease and socked that money away instead of spent it.
I agree with you that it came at a bad time, but Social security needs to get back on track or when we want to use it, it won’t be there. That means all of the money that you placed into the fund will no longer be available.
When I get a raise I just up my 401k contribution by that amount and so does my wife. So far we haven’t missed the money, even though we have had a huge increase in expenditures thanks to paying for day care.
This is a great question! I look forward to reading other responses as they come in. I just graduated debt free from college in December and my employer gave me a modest four-figure sign-on bonus. I’m going to use the money to add to my house down payment fund that I started when I entered college. My hope is that I can get into a house in the next 12-18 months if I keep saving at an accelerated pace. I would like to enter homeownership no later than age 25 (ideally by age 24).
I’m very impressed to hear that. Everyone makes fun of them but she’s obviously not as dumb as people make her out to be. She’s providing insurance for her kids’ futures and that’s impressive. It may lead others to think differently of her.
Despite the fact that Honey Boo Boo makes my eyes bleed, I’m rather impressed that she’s smart enough to actually save her money.
Every time I get a career advancement, I crank up my savings rate. Maybe 2% in grad school, 25-30% as a postdoc, now I’m shooting for 50% or more with my current job. My standard of living has also increased a little bit with each career improvement as well. I pick those areas that I think are the most important to me or most enjoyable and spend more. Everything else, I try to keep the same.
Never watched the show and never will. I don’t really get into “reality TV” all that much anyway. But I did read about what she did with the money and must say that I was impressed and a little surprised. She earned a bit of respect.
I love this! What a great thing to bring to light. The show is a little ridiculous and addicting for some reason, but I would NEVER have guessed she was so smart with her money. But..I did always think it was neat that she didn’t want to change up her lifestyle and stay true to the simple life.
First off, I have to admit that A) I’ve never watched an episode and B) I hope I never even accidentally come across that show on television!
That being said, the financial decision-making you shared here is impressive. Saving every penny of those earnings seems very responsible, and is quite impressive. Who knew?
I say fair play to her, she’s not being lavish and really doing something worthwhile from people watching the trashy show. Don’t hate the player hate the game!