Like Most Americans, My #1 Expense Is Federal Income Taxes (#4 Is State Income Tax)

Every so often I make a point of analysing my overall expenses to see where I am leaching money unnecessarily.

After my most recent analysis, I find once again that my Federal Government’s taxation ranks #1, with my state’s income tax also in the top five coming in at #4.  Note that I have not yet even attempted to quantify my local taxes (property & vehicle) or especially state/local sales tax!

#1 Federal Income & SS/Medicare Tax (nearly double #2 – my mortgage!)
#2 Mortgage
#3 Health Insurance
#4 North Carolina State Income Tax
#5 GMC Yukon (Paid off in a few months anyway)

This is why my college Personal Finance professor always said tax avoidance should be a primary part of your financial planning. He said to maximize your 401k/IRA retirement contributions, consider tax-free investments as part of your portfolio, make your hobby into a business and ALWAYS max out charitable contributions. A very VERY smart man he was.

I would also add that, as many internet e-tailers have far better pricing even when figuring shipping against sales tax, make big purchases out of state as well to avoid state income taxes i.e. buying that expensive camera, audio/video system and/or huge plasma/LCD television from one of those super-discounted NYC electronics stores if you are out of NY State.

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