Trim the Fat Tuesday: The Excise Tax
I didn't have to work too hard for this one — it came in the mail:
Is it a bill? Yes. But it's significantly smaller than last year, so I've saved almost a hundred bucks — without lifting a finger! You just have to
Earmark tax savings each year so they don't disappear into thin air.
Allow me to explain. Here in Massachusetts, we pay an excise tax on our cars. It's an annual tax based on the value of the vehicle.
The key thing about it for our purposes here is that, as your vehicle's value goes down every year, so does the amount of the tax, until it bottoms out at $30 when your car is an old jalopy.
Since we've mostly driven old, used cars since we've lived here, we never really noticed fluctuations in our excise tax — it was always just $60 for both crappy cars.
But then I got a nice, new car — and got whacked with a big, fat excise tax bill. Still, it's going down, and the thing is to scoop up those savings and put them toward paying off that car instead of ignoring them and letting them get spent on Slim Jims and Twinkies or something. This is exactly the kind of money that would be easy to forget about, but that would mean that extra cash just gets absorbed into the checking account and "lost" to us. It's much better for morale (and for our savings goal) to purposefully set it aside as part of our monthly savings that gets earmarked for paying off a loan or for investing in the future.
The nitty-gritty: Last year's excise tax total for our two cars was $313.75. This year it's only $220, so that's a savings of $93.75 for the year, or $7.81 each month (which, as always, I will round up).
Savings per month: $8
Total savings for March: $396.50 (this month's new savings plus the savings already in place from previous months!)
Total savings in 2014: $753.50
Earmark tax savings each year so they don't disappear into thin air.
Allow me to explain. Here in Massachusetts, we pay an excise tax on our cars. It's an annual tax based on the value of the vehicle.
The key thing about it for our purposes here is that, as your vehicle's value goes down every year, so does the amount of the tax, until it bottoms out at $30 when your car is an old jalopy.
Since we've mostly driven old, used cars since we've lived here, we never really noticed fluctuations in our excise tax — it was always just $60 for both crappy cars.
But then I got a nice, new car — and got whacked with a big, fat excise tax bill. Still, it's going down, and the thing is to scoop up those savings and put them toward paying off that car instead of ignoring them and letting them get spent on Slim Jims and Twinkies or something. This is exactly the kind of money that would be easy to forget about, but that would mean that extra cash just gets absorbed into the checking account and "lost" to us. It's much better for morale (and for our savings goal) to purposefully set it aside as part of our monthly savings that gets earmarked for paying off a loan or for investing in the future.
The nitty-gritty: Last year's excise tax total for our two cars was $313.75. This year it's only $220, so that's a savings of $93.75 for the year, or $7.81 each month (which, as always, I will round up).
Savings per month: $8
Total savings for March: $396.50 (this month's new savings plus the savings already in place from previous months!)
Total savings in 2014: $753.50
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