You are currently browsing the Your Two Bits blog archives for February, 2010.

Here’s a Way to Collaborate on Your Budget

February 23rd, 2010

Problem

Have you run into the problem of creating a wonderful budget in Excel or some other spreadsheet software but struggled to refer to it, because it was only on one computer at home? If you’re like us, my wife tends to take care of most of the day-to-day budgeting, and by most I mean all. This means that I’m not always as aware of how much is actually left in a given category, so I call my wife to check.

Solution

My friend Troy and his wife downloaded our quarterly budget template and have been using and customizing it. One of their most ingenious steps was to upload it to Google Docs. That way either one of them can refer to it when they need to. For me, that would mean I could check it before running over to the hardware store at lunch, without having to call my wife to see if we have enough in the budget, which she may not know without looking.

However, I’m still big on communication. I will probably still call my wife, but it’s just to communicate the plans and make sure she didn’t have other more important plans with the money. But I’m able to look for myself and not put the burden on her to always know or have to go check.

Also, Troy likes that both he and his wife can be in different places, like one at home and one at the office and both access the spreadsheet at the same time. They can talk on the phone and Google Docs highlights the cell they each have selected with different colors, so it’s easy to follow each other in a discussion about it.

Document

Quarterly Budget Template (Google Docs)

You will need a Google account such as your Gmail account to access the Google Docs version of the quarterly template. Click the Use this template button. Clicking this button does two things:

  1. The spreadsheet will be added to your personal list of documents (what you see when you first open Google Docs).
  2. Your personal version automatically opens, and you can begin working on it.

In order for your spouse to view the document, you need to send them an invite. Either from the budget spreadsheet page or from your list of documents with the desired document selected, click the Share button and select Invite people…. A dialogue box will open where you can enter the email address of the person(s) you want to invite. You can select whether that person can edit or only view the document.

If you already have a budget in a spreadsheet and don’t want to start from scratch, you can import it into Google Docs either by using the Upload button from the Google Docs home or by opening a new Google Docs spreadsheet, clicking File, and then Import….

Google Docs Quarterly Budget Template

Spreadsheet Sharing Video Tutorial



If you want, you can watch this video that walks you through the basic steps listed above.

And don’t forget, you can bookmark the spreadsheet in your browser for quick easy access.

That’s it. Now you can work together and be a team.

Related Posts:

Tags: , , , ,
Posted in budget
» No Comments Yet...Share Your Two Bits

Do You Know How Tax Brackets Work?

February 15th, 2010
Income Tax Brackets Video

Click to Play Video

I used to think that I could potentially take home less money if I was at the bottom of a higher income tax bracket. This video gives an example of two different people’s incomes to illustrate why that is not the case.

(Can’t view Flash? View the YouTube version.)

This is a Your Two Bits explanation of income tax brackets.

Have you ever wondered how exactly income tax brackets work? I used to think that if I was at the top of one bracket and got a raise that pushed me just barely into the next bracket, I could potentially bring home less money. I know I’m not the only one who has had this misconception, so here’s an explanation.

This table represents the 2010 tax brackets. Notice that your tax rate is affected by two main factors: how much you earn and how you file your taxes, such as single or married filing jointly.

For example, if you are married filing jointly and earn $137,300, you are probably a very hard worker or doing something illegal. You are also in the 25% tax bracket.

Does that mean that you pay 25% of your $137,300 in taxes, which is $34,325? No.

Let’s illustrate why, by looking at how two people’s incomes compare: Harold earns the maximum for the 25% bracket and Becky earns the minimum for the 28% bracket. That means Harold earns $137,300 and Becky earns one dollar more or $137,301.

Let’s first look at the taxes Harold will have to pay.

The first tax bracket is 10%. That means that on everything he earns up to $16,750, he would pay 10% in taxes. So for that portion of his income he would pay 10% of $16,750, which is $1,675.

Now let’s move on to the 15% bracket. Harold will pay a tax of 15% on everything he earns after the first $16,750 up to $68,000. $68,000 minus $16,750 is $51,250. So he will pay 15% of that $51,250 in taxes, which is $7,687.50.

Continuing on with the 25% bracket, we follow the same pattern, meaning Harold pays 25% on everything he earns after $68,000 up to $137,300. So he pays 25% of $69,300 which is $17,325.

Now we need to add all of the amounts from each bracket to determine Harold’s total tax liability or what he is responsible to pay—assuming he doesn’t want to go to jail. When we add all of these together, we get $26,687.50.

Notice that $26,687.50 represents 19.4% of Harold’s $137,300 income even though he is in the 25% bracket. It’s not as bad as a straight 25%, but it’s probably about $26,000 more than he would like to pay.

Now if Becky earns just one dollar more, she is in the 28% bracket. She would pay the same amount in taxes as Harold for the first $137,300—assuming she is not a tax evader—then she would also pay 28% in taxes on the $1 she earns that falls in that 28% bracket. This means she would owe an additional $0.28 in taxes, which makes her total tax liability $26,687.78.

You can see that Becky still brings home more money than Harold, even though she just barely falls into the next higher tax bracket. So while being in a higher bracket does mean a higher percentage of your income goes toward taxes, it does not mean that you will bring home less money.

Now that you understand how tax brackets work, you don’t have to be afraid of getting a raise. And that’s a Your Two Bits explanation of tax brackets.

Related Posts:

Tags: ,
Posted in taxes
» 3 Comments