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Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
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Summary

Step 1. Calculate Your Real Earnings

Calculate the amount you actually earn per hour by including all the time you spend in work related activities as well as extra expenses you incur because of your work. An easy way to do this is to use our Real Earnings Calculator.

Step 2. Look At Increasing Your Paycheck Increasing Your Income Or Decreasing Your Expenses

After you've completed the Step 1 calculation:

  • What can you do to increase your income? Would transferring to another job for the same employer give you greater income? Speak with your Advisor. He or she may have some useful ideas.
  • Consider the expenses that went into the calculation. Can you decrease the expenses?
  • While you're at it, now that you see how much time really goes into your work, can you decrease the time -- while not decreasing your efficiency. Perhaps you can even work more efficiently.

Step 3: If You Have A Cafeteria Plan, Consider Changing Your Elections

If you have a section 125 Cafeteria Plan, there must be an option that gives you cash you do not spend for benefits. Review your benefits and see if there are any you could do without. If so, opt for the cash instead.

Step 4. If You Have Retirement Savings, Consider Reducing The Amount You Put Into The Plan

It's OK to save less for retirement if you are having trouble meeting your bills. Just try to get back on track as soon as you can -- especially since you'll be able to access your retirement funds should you go on disability, in addition to being able to access them at retirement age. Don't forget that money in a retirement account is safe from creditors, including Uncle Sam. To learn more, see Retirement Savings.

Step 5. Think About Changing Your Tax Withholding

Your employer is required to withhold income taxes from your salary based on the number of personal allowances you claim on your W-4 form. The more personal allowances you claim, the less your employer will withhold and the higher your take-home pay will be. Keep in mind that the number of dependents you claim is only one factor that affects the number of personal allowances you can legitimately claim.

You can legitimately increase your withholding (thereby avoiding a potential $500 fee for filing a false W-4) if you:

  • Received a large tax refund last year, and your income, deductions and credits are about the same this year.
  • Expect your income to decrease, or expect to go on disability later in the year, and receive a much lower income when you do now, thus lowering your tax bracket.
  • Expect to receive the same amount of income as last year, but your adjustments, deductions (such as estimated medical expenses), or credits are anticipated to increase.

To help calculate the minimum amount that can legally be withheld:

  • Estimate the increases in your adjustments, particularly medical expenses.
  • Estimate the potential decreases in your income, such as if you anticipate going on disability during the year.
  • If your estimates are off, you can revise the W-4 form at any time during the year as often as needed. To see the effect of a change, see the Deductions and Adjustments Worksheet on page 2 of the W-4. You can obtain a copy of a W-4 at: http://www.irs.gov/pub/irs-pdf/fw4.pdf offsite link

To change your withholding, complete a new Form W-4. After making a copy for your records, give the W-4 to whoever handles payroll at your job. If you have an accountant or tax preparer, ask for advice first. It may also be helpful to read IRS Publication No. 919: "How Do I Adjust My Tax Withholding," available at www.irs.gov/publications/p919/index.html offsite link

Keep in mind that while decreasing the amount you have withheld from your paycheck will increase your take-home pay, if enough money is not withheld during the year you could owe taxes and, perhaps, an underpayment penalty, next year.

To Learn More

More Information

Taxes

Step 6. Ask For A Raise

If it's been more than a year since your last raise and your performance has at least been satisfactory, you're probably due for a raise. You could also argue for a raise based on new skills, knowledge, or credentials you've obtained, greater responsibility you've assumed, or longer hours you've worked.

For help figuring out what to ask for, the following web sites provide compensation data by job and geographical area:

Before asking for a raise, be sure to first read our article on disclosing your condition. Also speak with your Advisor. He or she may have ideas for you.

With your Real Earnings in mind, look at the current economic climate where you live (or could live) to see if a job change might make sense for you. A job with less work-related expenses might help you take home more -- even if it's at a lower salary. Even a job with less stress may help increase your true net pay because work-related expenses can also include ways you spend money because you are too tired or stressed out by your current job. It's even possible that you'll be better off on disability.

It is likely that you are protected if you want to change jobs (see Americans With Disabilities Act) and that when you join a new employer's health insurance plan you cannot be subjected to a new pre-existing condition exclusion because of your health. To learn more, see HIPAA.

Step 7. If You're Up To It, Consider Obtaining A Second Job

Just make sure you balance the income from a second job with additional expenses you incur because you have less time or energy. For example, if you work a night job, you may not have the time or energy to cook and you'll spend more money by eating out. Of course, also consider the balance you want for your personal life -- both in deciding whether you want a second job and in evaluating your current one.

Step 8. Consider Changing Jobs, Self-Employment Or Freelancing

This may be the time to consider changing jobs. It's not unusual for other employers to offer higher salaries for your skills than an employer you've been with for a while. The Americans With Disabilities Act prohibits new employers from asking about your health. HIPAA helps prevent job lock with respect to your health insurance. To learn more, see: Seeking A New Job.

If you've been thinking about self-employment, is now the time? See Self-Employment.