How Bush Tax Cut Extension Could Affect Chicago Workers With Debts

It looks like American workers could be getting a raise next year, albeit a small one.

If the tax agreement between President Obama and legislators passes, one of the provisions will reduce the Social Security payroll tax rate from 6.2 percent to 4.2 percent. For someone making $60,000 a year, that's an extra $1,200 in annual take home pay - or the equivalent of another $25 a week. It might not seem like much, but if you're looking for ways to make ends meet, any little bit can help, say Chicago bankruptcy attorneys.

Let's say you've got $5,000 in credit card debt and you save your extra take-home pay to help pay it off. Now you're only paying interest on $3,800 instead of $5,000. That means you just cut your interest payment by almost one-quarter - turning your savings into even more savings.

Here's another thought. You can use that money to pay a cost like your phone or cable bill - or better yet, you can cancel your cable or land line and double your savings. Maybe you can save it for unexpected expenses that arise throughout the year, so you don't have to continue realying heavily on credit - and adding to debt.

Of course, the agreement includes more than just a Social Security cut - it would also provide things like continued unemployment insurance benefits and tax breaks for college students. But the majority of people are most interested in how tax cuts will affect cash flow, or the balance of money coming in vs. going out. And while cuts will certainly help tip the balance in your favor, they may not be enough depending on the size of your debt burden. If you're looking for permanent financial relief, not just a temporary handout, bankruptcy might be your best bet. Learn how filing for bankruptcy can free you from debt and stop foreclosure when you try a free one-on-one debt analysis with a Chicago bankruptcy attorney.

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