Extra December cash flow

If you max out your 401(k) like I do by asking your employer to send a percentage of your income to your 401(k) each paycheck, you will probably have some extra cash flow on your December paycheck.

If you earn more than the Social Security maximum earnings for the year ($106,800 for 2011), then you’ll probably have that extra cash flow on your December paycheck as well.

I’ve gotten so used to the huge chunk of money that comes out of my paycheck to go to my 401(k) each month that I don’t even notice it’s gone anymore. But now I’ve realized that the full contribution won’t be taken out with my December paycheck since that’s unnecessary to max out the 401(k). I then realized that I’m hitting the Social Security maximum earnings for the year with part of my December paycheck, so I won’t pay the full Social Security tax amount that I’ve been paying all year. I used a paycheck calculator to estimate my December paycheck.

I estimate that I will see about $500 more in my checking account with my paycheck tomorrow! That’s all extra money going to my emergency reserves, closing and moving costs and will reduce how much I have to pay myself back over the course of next year.

Readers, are you getting any extra cash flow with your December paycheck? What are you going to do with it?


8 thoughts on “Extra December cash flow

  1. I’m loving this extra December cash. We used part of it for Christmas, part for unexpected health bills, and part will be used to pay down a credit card more.

    • Part of it for Christmas would definitely be a help since more things always seem to pop up at this time of year! I actually had leftover Christmas budget since I budget for a partner and I had no one to buy presents for.

      Sounds like your extra December cash was well-appreciated as well!

  2. I’m on an academic fiscal calendar, not a January based one– so all the money that doesn’t get taken out in May is more than balanced out by the extra benes taken out to cover insurance for June, July, and August.

      • Well, it’s actually a smaller paycheck in May as well because they take out all the money for June, July, and August benefits at that time.

        Our paychecks this month were smaller than normal because they changed the withholding because of congress being slow. We may get that money back in a later paycheck.

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