Washington, DC - As Congress continues to debate extending the payroll tax cut, they may want to review the results of the National Foundation for Credit Counseling (NFCC) January online poll to determine if the objective of the tax cut is being realized. The overwhelming majority of close to 1,800 respondents, 66 percent, were unaware that their paychecks were larger last year.
"Even if the dollar increase is small, consumers should be aware of it," said Gail Cunningham, spokesperson for the NFCC. "Not recognizing that the paycheck was larger begs the question of how the additional money was spent. Knowing how much you make and consciously determining how to spend it are basic building blocks of financial stability. This poll provides another example of the need for increased financial education."
As an example, the two percent Social Security payroll tax cut puts $1,000 back into the pockets of a family earning $50,000 annually, a significant amount of money that could mean the difference between financial stability and financial distress each month.
Those aware of the increase appeared to have allocated the money responsibly, with the largest number of respondents indicating they used it to pay off debt (18 percent), while the second highest number (eight percent) caught up on past-due bills.
Smaller percentages either increased their retirement contributions (four percent), or saved the money (three percent). Only one percent indicated that they spent the money on something for themselves.
"Consumers should become familiar with the format of their paychecks, and upon receipt promptly confirm that all entries are correct, taking any questions to their payroll supervisor," continued Cunningham. "This way, whether it's a raise, bonus or payroll tax cut, they will be able to make conscious decisions regarding how the increase should be spent to best benefit their financial situation."
For professional assistance determining the best use of your hard-earned money, consider an appointment with a Certified Consumer Credit Counselor at an NFCC Member Agency. To be automatically connected to the Agency closest to you, dial (800) 388-2227, or to locate a counselor online go to www.DebtAdvice.org <http://www.DebtAdvice.org>. For assistance in Spanish, dial (800) 682-9832.
The actual results of the English poll were as follows: