Money Talks, LLC Newsletter
December 2011
Personal Financial Sustainability
The holiday season provides opportunity to test financial sustainability skills.  Here are some great things to consider and share in conversations with family and friends:
  • Is the holiday season too stressful? 
  • What are the stressors? 
  • What celebrations provide meaningful experience? 
  • Will unplanned spending increase debt or disrupt financial plans starting the new year?  
  • Is there pressure to uphold traditions that no longer meet the intended need and purpose? 

Personal Financial Sustainability focuses on funding a Valuable Daily Life, even in the midst of holiday celebration.  If holidays compromise a joyful end of 2011 or beginning for new year 2012 consider adjusting plans, it's not too late.   


Self Employment: 

Net After Tax Income and Take Home Pay


According to recent labor statistics approximately 10% of American workers are self employed (unincorporated small businesses) and the number is growing.  As more  Americans consider self employment (small business ownership and contract work) it is important to focus on net after tax income for planning and budgeting. 


Comparing self employment and employee income requires adjustments.  Most small business owners 'earn' every dollar of revenue income. However, net personal income (take home pay) is significantly lower. Employees have calculable mandatory payroll tax withholding resulting in net after tax income (take home pay), which simplifies household budgeting. Self employment requires financial discipline and frugality.


In the example below you will see that net after tax income (take home pay) for the self employed individual is 33% of gross income/revenue. Sixty seven percent (67%) of every dollar must be reserved for business expenses and taxes.   


**Table: Comparison of Self Employment and Employed Income Calculations

Self Employed
Gross Income$ 150,000 $ 75,000
Less Cost Of Doing Business
$    75,000
$ -
Adjusted Gross Income
$   75,000
$ 75,000
Less Federal Taxes$      9,354 $    9,354
Less State Taxes$      5,250 $    5,250
*Less SS and Medicare Taxes$     11,475 $    5,738
After Tax Income (Take Home Pay)$     48,921 $  54,659



Contract employment is self employment. Recently a client was very excited to be offered contract employment with income 25% higher than her current salary. However, after full analysis it was clear the increase was actually a significant pay cut!


Whether self employed or employee the calculations above are an excellent starting point for creating a plan for Personal Financial Sustainability.  Although we may have options for lowering our federal and state taxes, the most important number for planning is after tax income AKA take home pay.


Self employment tax is not an additional tax, it is Social Security and Medicare taxes. Self employed workers pay both the employer and employee half of the taxes (15.3% compared to 7.65% for employees, which has not been adjusted for current 2% reduction).


**This table is for illustrative purposes only. 

Assumptions are based on married filing jointly with two exemptions. It does not include other income, income adjustments, tax deductions, or credits. 


In the next newsletter: Employee Benefits and Financial Safety Nets.


Basic tools that say: "No, Thank You!" 
Do not mail, Do not call, and free credit reports

You can put a stop to third class (junk) mail, credit card solicitations, receive a copy of your credit report for free and check your credit score by visiting these websites and following the easy instructions.

Stop junk mail:

Stop credit card offers:

you will still receive credit card offers from your own bank/credit card company but all the other ones will stop. Not only will your mail volume decrease but your risk of identity theft will also decrease - credit card solicitations are a prime source of identity theft.

Obtain a copy of your credit report:

The three credit bureaus (Experian, Transunion and Equifax) are each required to provide you with a free copy every 12 months. If you rotate your requests, you can get a free copy of your credit report every four months or so. Credit report and score overview attached.

Check your credit score:
You can purchase your FICO credit score at for $19.95 (don't sign up for the "free" version - it's not free). You can review and monitor other non-FICO credit scores at several websites for free. I have personally used a site run by the credit bureau Transunion - it uses a credit score called the Transrisk score. It is not the FICO score but is constructed in a similar fashion and is useful in keeping an eye on your credit score at no cost.

Provided by:
Kim Miller, CFP
Sweetwater Investments


In This Issue
Self Employment: Net After Tax Income and Take Home Pay
Do Not Mail, Do Not Call, and Free Credit Reports
Join Our Mailing List
Building The Economy: 
one household at a time
Personal Financial Sustainability is the foundation 
for Neighborhood Sustainability,
which is the foundation for Community Sustainability,
which is the foundation for City Sustainability,
which is the foundation for County Sustainability,
which is the foundation for State Sustainability,
which is the foundation of Federal Sustainability,
which is the foundation for Global Sustainability.
The foundation is very personal. Make it personal.

Susan Hammitt
Money Talks, LLC

Money Talks, LLC 
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Susan Hammitt,
511 SW 10th Ave.,
Suite 805
Portland, Oregon 97205

Call: 503-233-8142
At Your Service 

Planning for Personal Financial Sustainability


Divorce Financial Planning and Mediation


Financial Companionship Groups for Individuals


Financial Counseling and Planning Workshops for Couples 





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