My money has gone missing
My money has gone missing
A shortfall in my compensation has me stumped.
My first paycheck of the year came up short.
I anticipated a dip in my pay in the New Year. But a near $500 deficit from my last check in 2023 to my first check in 2024 stunned me.
I’m still scrutinizing my pay stubs and doing the math, trying to figure out where my money has gone. I’m already eager for my second check of the year, hoping it provides more answers.
One reason is a shift in my company’s pay schedule. Our staff was notified of the changes in a message from the chief legal officer on Jan. 12. He informed us that we were moving from a semi-monthly payroll cadence to every two weeks. The change means we’ll have a different number of pay periods in 2024 than we did in 2023. With our salaries divided across a different number of payment cycles, we were warned that we wouldn’t receive the same amount per paycheck as last year.
But cadence isn’t what has torpedoed my take-home pay. It’s my aggressive investment allocation.
I don’t have the exact percentage of how much of my salary I’m investing. I just know I’m at my limit, stretched thin but still trusting my long-term plan.
My issue isn’t chasing every investment opportunity. It’s my commitment to capitalizing on the powerful vehicles staring me in the face. For far too long, I ignored their capabilities.
A health-savings account is the newest addition to my allocation. It’s the first account of its kind that I’ve owned since probably 2015. But now I actually know what to do with it.
When I began binge-listening to personal finance podcasts in 2022, hosts routinely raved about the advantages of an HSA. They touted them as “triple-tax advantaged,” which went straight over my head.
Until I kept listening and learning.
Essentially, an HSA is an account that can be used to pay for qualified medical expenses. What turns podcasters pink about them is that contributions are pre-taxed, the money grows tax-free (or tax-deferred if saved for retirement) and withdrawals for eligible medical expenses are tax-free. Thus, the “triple-tax advantage.”
And so I signed up during open enrollment back at the end of fall. I’m doing it to limit my tax exposure and maximize my earnings. I believe it makes sense for me in part because I’m healthy. I rarely require medical attention. The high-deductible health plan associated with my HSA shouldn’t squeeze me too bad on upfront, out-of-pocket expenses.
I figure it’s better to sock away some cash now while that remains my reality. And hopefully it remains my reality for a long time. If so, I can use the money however I want in retirement and pay the income taxes. If medical needs arise, I’ll have a pool of tax-free funds to draw from.
Because I carry my daughter Parker on my insurance annually, I enrolled for the family HSA. Its contribution limit is $8,300 for 2024 compared to $4,150 for an individual HSA.
Soon, I hope to be able to max out my HSA account annually. For now, as I said, I’m tapped out. I’m content doing what I can.
I settled on bi-weekly contributions of $204. My self-imposed limit for 2024 is $5,100. The decision cut off my already constricted breathing room in my budget. But it’s only a bad thing if I can’t pay my bills. If that day comes, I can lower my contribution.
But rather, I believe my latest investment strategy will force me to keep my spending in check, avoid lifestyle creep and continue funneling additional capital to places that compound my money.
Another $72.62 from my first check of the year went to my employee stock purchase plan I enrolled in. I also can alter or eliminate this contribution if lean times come. For now, I’m interested in accumulating a small stake of my employer’s stock at a discount from its market price.
But those two investments don’t amount to $484.72, which is how much less my first paycheck was in 2024 compared to my final check in 2023. I’m still missing $208.10.
My federal income tax withholding increased by $47.50. But my Illinois state tax withholding decreased by $20. My insurance deductions, social security taxes and 401(k) contributions all nudged higher or lower by negligible amounts.
The shortfall has me stumped.
Hopefully answers — and a higher amount — arrives along with my next paycheck on Feb. 1.
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