4 Tactics to Offset the End of the Payroll Tax Cut in 2012

On Tuesday, Congress rejected a temporary measure that would extend a 2% payroll tax cut to over 160 million workers in the U.S. The payroll tax covers the amount collected for federal Social Security and is applied to the first $106,800 you earn. With no plan in place, the tax will increase to 6.4% on January 1 and will cost the average family $1,000 over the course of the year.

While a reduction in pay is not a good thing for anyone, is there another way to fill in that missing $1,000 in your budget? Try these four strategies for extra earnings or savings in 2012:

1. Brew your own: If you're not already brewing your own coffee, now's the time to consider it. With 1-2 adults per household sharing a Starbucks habit, a $5/day expense quickly tops $1,000 over a year's time. You'll also save gas (and time) by not making that daily trek.


2. Eat out 1-2 less times per month: According to the U.S. Bureau of Labor Statistics, an average family (they call it a "consumer unit") spent $218/month eating out in 2010. Spend half of that and you'll recoup your $1,000 for the year. You're more likely to eat healthier by choosing to eat at home, as well, an added benefit.


3. Sell some clutter: Do a whole-house de-cluttering and resolve to sell your unneeded items through eBay, Craigslist or on consignment locally. I've made hundreds in a weekend just by clearing out baby gear, small furniture, and used video games. You'll enjoy more space in your home as well as a cash infusion.


4. Plan for purchases: Instead of buying on impulse, get in the habit of doing your research first and shopping online using coupons and codes. It's easy to find codes for free shipping and other discounts.

While we're waiting to hear more news on Congress's actions, there's no harm in tightening up the budget for 2012. February will bring the payroll tax discussion back to the forefront with a year-long tax cut extension unlikely. Be prepared!