9 Ways To Cut $100 From Your Monthly Budget

Need to spend less money? Budget cutting is the answer, but budget cuts can be painful. Luckily, I've compiled 9 easy budgeting tips to cut $100 a month from your budget on MoneyManifesto.com. These money saving tips could get your budget back in the black and help you live on less!Let’s face it. Sometimes we realize we’re spending more money than we should be.

At other times we’re forced to cut our budget due to factors outside of our control.

Rather than not cutting back and racking up credit card debt, I thought I’d share these 9 ways you can cut $100 from your monthly budget should you ever have to make that decision.

Quit Saving For Vacation

If you’re like me, you put aside a set amount of money out of every paycheck to pay for your next vacation.

Unfortunately, when money is tight, this is often one of the first things to get cut from our budget.

After all, if I can’t afford my bills, what business do I have taking a vacation?!

Cut Back on Dining Out

Cutting back on dining out is an easy way to save money in the short term.

Cooking food at home can be much, much cheaper than paying someone else to cook food for you, serve it to you and clean up after you. If you need to find $100 a month quickly, reduce your dining out budget to save some money fast.

Use Up Your Pantry

I don’t know about you, but I have a lot of food sitting in my pantry that has been in there for a while, but is still good. Take all of that food that you never eat and make a meal plan out of it. By doing this, you can reduce your grocery spending that month while you use up all of the groceries you already have but forgot about.

Downgrade Groceries For A Month

If you don’t have a fully stocked pantry to raid, you can still save money on your grocery bill. Simply downgrade from some of the more luxurious items you normally buy and get staples like rice and beans instead.

You might be surprised at how much money you can save by eating a more simple diet for a month. Of course, you need to make sure you still buy healthy food and not junk food or else you’ll hurt your health which will cost you more in the long run.

Cut the Cable Cord

While this would be one of the last things to get cut from our budget, cutting the cable cord is a fast and effective way to save up to $100 a month when the budget is tight. Just make sure you won’t be spending more money paying to entertain yourself in other ways because the cable is no longer an entertainment option.

Of course, a lot of the cable TV content can be seen online these days and a cheap Netflix subscription should be able to hold you over until you can activate your cable again.

Switch Your Cell Phone Provider

Switching cell phone providers is one of the most effective ways to consistently save $100 a month. If you have more than one cell phone line in your household, consider switching to a company like Republic Wireless that gives you unlimited calls, texts and data for just $25 a month. Alternatively, you could switch to Ting that only charges you for the minutes, text and data you actually use.

Keep Your Car Longer

After you pay off your car loan, you can easily save well over $100 a month by continuing to drive your car rather than going out and buying a new car as soon as you pay off your loan. In fact, check out this post that describes exactly how you can use this tip to never have a car payment again.

Earn More Money

While cutting money from your budget is one option, earning more money will provide the same effect. Just remember when you earn more money you actually need to earn more than $100 to account for the taxes you will have to pay on the additional earnings.

Picking up an extra shift or a part time job could easily earn you the money you would need to add $100 a month to your budget.

Sell Things

Selling things around your house that you no longer need or use is another great way to make a quick $100. A couple of big items or many small items could easily add up to $100. Better yet, have a garage sale and clear out a ton of space and earn money at the same time.

Hopefully you found at least one or two things on this list that will help you cut $100 from your budget when you need a quick fix. However, I’m always curious to hear what you would do to cut $100 from your budget. Let me know in the comments below!

Photo by: 401(k) 2013 Text added by: Lance Cothern

How To Save Money While Living Paycheck to Paycheck

Are you living paycheck to paycheck? Do you want to stop the awful paycheck to paycheck budget? Learn exactly what to do on MoneyManifesto.com. Hint: There are other ways than skipping lattes.Living paycheck to paycheck is flat out stressful.

Stretching your last $20 bill until your next paycheck hits your bank account on Friday is an enormous challenge when you need gas, groceries and your kid needs money for a field trip on Thursday.

While it may seem impossible, you can save money while living paycheck to paycheck.

In fact, saving money is exactly what will get you out of the paycheck to paycheck lifestyle. So, what can you do to save?

Here are four ways how to save money while living paycheck to paycheck and a guide covering what to do with the money you save.

Pay Yourself First

The easiest way to save money when you’re living paycheck to paycheck is to pay yourself first.

You can accomplish this a few different ways, but I find it is most effective to have your workplace split your direct deposit into two parts.

The first and largest part will go to your checking account, as always, while a second smaller portion will go directly into a savings account you vow to never touch. I personally like using an online savings account, like Capital One 360 (read our review here), so it makes it harder to get the money for splurges.

If you don’t have direct deposit at your work, you can manually do this when you deposit your check at your bank or set up an automatic transfer to take money from your checking account to your savings account a couple days after you normally deposit your paycheck.

If you don’t have a bank account at all and keep all of your money in cash, I highly suggest you get a bank account that charges no fees at your local credit union. However, if that is not an option, take set amount of cash out of your paycheck after you cash it and put it in a safe place that you promise you will never touch.

Sell Things Around Your House

Once you start paying yourself first, you can accelerate your savings or supplement your income by selling things from around your house. Start out by going through your home and making a list identifying anything that you might be able to sell for a decent amount of money.

Next, look at the list of items you compiled and see what is unnecessary. The best way to do this is think about how often you use the item versus how much cash you could get by selling the item. Which is worth more to you?

Then, list the items for sale on websites like eBay or Amazon or have an old fashioned yard sale to free up some cash from your unused or underused items.

Take this cash and add it to your savings and you’ll be well on your way to escaping the paycheck to paycheck lifestyle.

Grow Your Income

While selling items from around your house is an awesome way to raise cash, it is only a temporary measure. In order to continue to have more money available to save every paycheck, you need to grow your income.

Many people assume you can only make more money by getting a raise at work, which is just simply not true. Instead, you can start a side hustle to grow income on the side.

Of course, you can try to get a raise, work more hours, earn overtime or find a new, better paying job. Since most of your income likely comes from your day job, it makes sense to try to maximize it as much as possible.

However, don’t discount the idea of a side hustle. Many side hustles end up growing into full fledged businesses that end up earning their owners more than they make at their day job.

Related: Get Job Loss Insurance By Starting A Side Hustle

Cut Back On Certain Expenses

Growing your income is awesome but the extra money may not start rolling in immediately. That’s why it is important to begin cutting back on expenses that are excessive. Begin by tracking your spending.

The easiest way to do track your spending is to gather all of your bank account statements and credit card statements and categorize the transactions for the past month.

Once you have a list of your spending, look and see what looks unreasonable. Does it really make sense to spend more money eating out at restaurants than you spend on groceries? Does it make sense that you spend more on your car than you do for you rent every month?

Find areas where your spending does not align with your values and cut those expenses. Then, take that money you don’t spend and put it in savings. If you don’t, you’ll accidentally end up spending it somewhere else.

Related: 123 Money Saving Tips 

What To Do With Your Savings

Saving money is great, but what’s the point? Once your savings reach the following goals, you can take the following actions with your savings.

Get One Paycheck Ahead

Getting to the point where you have one paycheck in the bank is awesome because you’re essentially one paycheck ahead of the game. When you reach this milestone, you can budget for your next pay period using money from your savings and put your current paycheck straight into your savings account.

This will allow you to know for certain how much money you can spend in the next two weeks without worrying about changes in your paycheck.

Note: Don’t spend all of the money just because you have it. Your goal is to continue to add to your savings.

Get A Month Ahead

The next milestone is to get a month ahead. Once you reach this goal, you can set a budget for the whole next month with money you already have. How awesome is that?

Of course, you’ll want to continue saving so you can reach the next goal, too.

Build An Emergency Fund

Never want to live the paycheck to paycheck lifestyle again? You need an emergency fund. Once you’re a month ahead, try to save anywhere from three to twelve months of living expenses in a savings account. This money will help you weather any unexpected circumstances like a job loss.

If you have a reliable job and no dependents, three months of expenses may be sufficient. However, if you are self employed and have an extremely variable income, you may need twelve months of expenses to feel comfortable.

Related: Everything You Need To Know About Emergency Funds

Digging your way out of the paycheck to paycheck lifestyle can be extremely difficult. Using the four tips in the post, along with the action plan of what to do with your savings, escaping the cycle will hopefully be at least a little bit easier.

Make sure to use the related resources above to supercharge your journey whenever you need a little extra help.

What’s your favorite tip to help people learn how to save money while living paycheck to paycheck? Share your thoughts in the comments below to help others along their journey.

Image by: Images_of_Money Text added by: Lance Cothern

Our Top 10 Spending Categories of 2014 Revealed

Ever wonder how other people spend their money? Whether you use the envelope budget or like budgeting another way, it's always fun to spy on others. We list our spending in our top 10 budget categories for 2014. Our #1 category was a huge goal of ours this year. Find out what it is on MoneyManifesto.com.One of the benefits of using awesome finance tracking software like Quicken, Personal Capital, Mint or your very own spreadsheet is the detailed information you’ll have should you want to analyze any of your spending behavior.

Toward the beginning of 2015, my wife and I sat down with Quicken and took a look at our spending for 2014 and if it was in line with what we expected.

Here’s what we found and our top 10 spending categories of 2014. This is based on cash flow, not the strict definition of expense, so a mortgage is considered part of our spending even though part of it went to pay down our principal.

Category 1: Student Loan Payments (29.5%)

This shouldn’t shock anyone. At the beginning of the year we were still waging a war on my wife’s student loan debt. Luckily, we were able to pay these loans off for good in the first half of the year.

Next year, we’ll spend $0 and 0% of our spending on my wife’s student loans and that is pretty awesome if you ask me, since 29.5% is a HUGE part of our spending this year.

Category 2: Our Primary Residence Mortgage (18.7%)

Our next biggest spending category in 2014 was our primary residence mortgage payments. We’re thankful that we didn’t take out a huge mortgage that is in line with the traditional thinking of spending 25-33% of your take home pay on housing.

Instead, our mortgage only came in at 18.7% of our total spending and we didn’t spend anywhere near all of the income we made in 2014.

On a percentage basis, this mortgage will take up more of our spending next year since we won’t have to pay the student loans anymore, but we’re really happy with our house and plan to live in it for quite a while.

The only downside is it isn’t on the beach! Of course, our mortgage would probably be about 10 times higher if it was.

Category 3: Our Rental Mortgage (8.3%)

Our third largest spending category in 2014 was our rental townhouse mortgage. We’ve had a good year with our rental home and didn’t have to spend hardly anything above the mortgage payments in upkeep this year. On top of that, our tenants pay us more than the mortgage in rent, so our rental is cash flow positive. I don’t see us getting rid of this anytime soon.

Category 4: Groceries & Household Items (7.9%)

Groceries and household items came in at number four on our list. We do have to eat to survive, but we probably spend more on groceries than we should.

I don’t see this coming down anytime soon, though, as we are trying to eat healthier and healthy food is often more expensive than junk food. This does not include dining out, which you will see further down in this list.

One way that we will be trying to improve our grocery spending is reducing our food waste. We’ve found ourselves throwing out food a bit more than I’d like, so hopefully we can get that under control a bit more in 2015.

Category 5: Utilities (6.8%)

Utilities is a huge category as it includes many services that we use on a very regular basis. These services include cable TV, internet, a home phone line (which we discontinued in December 2014), two cell phones (one with Republic Wireless and the other with AT&T until my contract runs out), electricity, water, sewer and trash.

In 2014, our cable, internet and phone prices were rising and we finally had to switch to Comcast in December 2014. We’ve locked in a 2 year rate and the service seems decent so far so I think this will have been a good move, even though we lost our home phone line.

My wife switched her phone to Republic Wireless when her contract ran out and it has been a great move so far. While the phone itself isn’t what she was used to, you can’t beat the price and service since her phone bill is now only $31.05 a month (taxes included) for unlimited calls, text and data.

Our electric bills went up in 2014 as our electric company instituted a price increase. We’ve also decided to pay a little more in electricity to keep the house at a bit more comfortable temperature (77 degrees) in the summer rather than the 78 degrees we have kept it at in the past. It was worth it. What good is money if you don’t use it?

Category 6: Automobiles (5.2%)

Our automobile expense includes insurance, fuel, registration, service for things like oil changes, new tires on my car, windshield wiper blades and other miscellaneous items. Since both of our cars are paid off, this represents a pretty small part of our spending.

We’ll be keeping our paid off cars for at least another few years, so this expense should continue to remain low. It may increase a little bit as the cars age and need some more expensive repairs, but it will still be vastly cheaper than buying new or new to us cars.

Category 7: Medical Expenses (3.3%)

Medical expenses are never fun, but they are necessary. These do not include health insurance, this is just spending our of our take home pay. Since our health insurance comes out pretax, we didn’t track it. This represented a typical year for us, so we’ll need to keep medical expenses in mind going forward.

Category 8: Vacations (3.2%)

Vacation is a fun category! We went on two cruises in 2014, an 8 day southern Caribbean cruise and a 5 day western Caribbean cruise, and the fact that we were able to take both for only 3.2% of our spending is amazing. Of course, we did use credit card rewards to help us pay for $900 of our first cruise which is not included in the 3.2%.

These expenses include everything including gas, hotels, dining out, cruise fares, spending money in ports and anything else you can think of. This also includes a week long trip to visit the in-laws which included a free hotel stay from rewards points and a ton of driving.

I’d say we did pretty awesome keeping this cost down in 2014 and hopefully we can do the same in 2015.

Category 9: House Upgrades/Repairs and HOA Fees (2.5%)

House upgrades/repairs and HOA fees only accounted for 2.5% of our budget, but that will be increasing in 2015 as we finally begin to make our home our own.

This included our quarterly homeowners association dues, painting our living room and kitchen, replacing all of our hinges and doorknobs with brushed nickle finishes instead of brass, a new clothes washer and two new fans for our master bedroom and my office.

It’s pretty amazing to think we got all of that done with only 2.5% of our 2014 spending, so we were very happy with this.

Category 10: Dining Out (2.5%)

The last category rounding out our top 10 is dining out. Even in absolute dollar terms, this was less than I thought it would be. Yes, we could have spent the money elsewhere, but we enjoy dining out at this point in our lives.

We used coupons whenever possible which helped us keep our costs down and we rarely eat takeout for lunches while we are working. Some may think even 2.5% of our spending on dining out is crazy, but we’re happy with it. Hopefully it will stay this low going into the future.

Well, that’s it, our top 10 spending categories of 2014. There were still 12.1% of other spending, but they’re so small and all over the place that I didn’t want to bother listing them. I imagine most of these will stay pretty close to the same in 2015 with the exceptions noted above such as no more student loan payments (YAY!).

What do you think about our spending categories? Do you think we’re out of line anywhere? I’d love to hear your opinions. I’d also love to hear what your top spending catgories were for 2014. I think it’d be interesting to hear what everyone prioritizes.

You Don’t Need A Budget – Instead Do These 7 Things

Do you hate budgeting? Sick of hearing budgeting tips? You're in luck. No more budget printables for you! Well... only if you do these 7 things instead. Find the list on MoneyManifesto.com.You might be shocked by this admission. As a personal finance blogger, I don’t follow a strict budget.

Sorry to disappoint you, but strict budgeting just isn’t something we do in our household.

Before you freak out, there are ways to control your money without budgeting.

In fact, because we don’t budget we must pay extra close attention to our finances and do other things to make up for the fact that we don’t budget.

If you can follow the guidelines below, you might not need a budget either.

1) Have Crazy Amounts Of Self Control

Living without a budget requires crazy amounts of self control. You can’t just buy everything in sight just because you don’t have a budget.

Instead, you need to control your spending to ensure that you’re not spending more than you earn while still reaching your other goals.

The only difference between having a budget and not having a budget is the fact that you don’t have a set dollar amount you can spend in each category.

The money can be spent wherever you want in any given month, but once the money is gone, it’s still gone, budget or no budget.

You’ll have to pay extra close attention to what is a need versus what is a want. You must buy needs first and only buy wants when you have money leftover. Otherwise you’ll be in a nasty situation quickly. Self control is so vital to living without a budget.

2) Commit To Never Incurring Consumer Debt

It’s easy to swipe the credit card one too many times when you’re living without a budget. To live without a budget successfully, you must have a huge commitment to never incurring consumer debt. That means always knowing how much money you have in the bank to pay off your credit card at the end of the month.

Don’t ever allow yourself to spend money before you have it. Even spending a day before your next paycheck will lead you down a slippery slope if you don’t have a budget. It can be done, but it isn’t easy.

3) Track Your Spending Religiously

Even though you don’t have a budget, you’ll still need to track your spending religiously. I personally use Quicken and download my account activity a couple of times a week to make sure I know how my finances are doing.

If you don’t use Quicken, you can use other services like Mint or track all of your spending in Excel or on a sheet of paper. It doesn’t matter how you track your finances, but if you’re living without a budget you must track your expenses extremely accurately and often to be able to survive and thrive financially.

4) Analyze Your Spending Frequently

You can’t just stop at tracking your spending! You must frequently analyze your spending when you’re living without a budget. Look at your expenses and determine what is normal versus what might be getting a bit out of control. Don’t just compile your spending reports, actually analyze them.

It might be normal to have a couple of months of higher spending around the holidays, but only if you can afford it. Likewise, you might have a high spending month when you have to replace your tires on your car. Just make sure that you can afford these purchases by cutting expenses in other months or living well below your means.

5) Take Action When Spending Gets Out Of Control

Take action and correct expense categories that are getting out of hand as soon as you see a pattern of unwanted increased spending. When you don’t have a budget, it is very important to spot trends early and take action to correct them.

6) Create And Execute A Short And Long Term Goal Plan

Just because you don’t budget doesn’t mean you can avoid creating a short and long term goal plan for your money. Come up with a list of money goals you have in the next year and a list of goals that could be many years away. Try to put a dollar amount with each of these goals and plan on how you expect to reach them.

Whether you want a 70″ flat screen TV in 6 months and need to save $300 a month to get it, or you want to put 20% down on a $400,000 home in 5 years, you must have a plan to reach your future money goals.

It doesn’t just stop at creating a plan either. If you actually want to make these purchases, you’ll have to start putting money away today. By creating an executing a short and long term goal plan for your money, you just might be able to avoid having a traditional budget.

7) Systematize Saving And Investing

The problem with not having a budget is most people spend every penny that hits your bank account. You can’t do this if you want to live without a budget. Instead, you must systematize your saving and investing. In fact, you need to do it in a way that pays yourself first, too.

Automate your investing through paycheck contributions to your 401(k) or other retirement plan at work. Then, automate your investments to your Roth IRA or regular IRA through your brokerage account.

Automate your savings through a direct deposit from your paycheck into a savings account. Alternatively, you can set up automatic transfers from your checking account to your savings account on payday or the day after with banks like Capital One 360 which I have used for years.

You can even automate your savings for some of your short and long term goals by setting up targeted accounts named after your goal. This is another feature of Capital One 360 that I love.

Does All Of This Sound Like Too Much Work?

If the seven guidelines listed above sound like a lot of work, that’s because they are. In fact, it might just be easier to create and follow a budget rather than spend all of the time required to keep up with these necessary guidelines. Who would have thought it’d just be easier to follow a simple budget?

What’re your thoughts? Do you think everyone must have a budget? Or do these seven guidelines above allow you to skip making a budget? Would you add any other guidelines? I’d love to hear your thoughts in the comments below.

Photo by: Alan Cleaver Text added by: Lance Cothern

Mortgage Interest Tax Deductions Are Only For Rich People

Want to save money on your taxes? Think owning a house helps you get a large tax refund because of the interest you pay on your mortgage? Paying interest to save on taxes is a bad tax return tip. While some people save a small amount of money with the mortgage interest tax deduction, it mainly benefits the rich. Maybe paying off your mortgage isn't a bad idea? Find out my thoughts!Sadly many people think they’re saving a ton of money on their taxes when they buy a home.

Why? They think they’re going to get a huge tax break with the mortgage interest tax deduction.

Those people are in for a shock when they complete their first tax return after being a homeowner.

The mortgage interest tax deduction may have originally been for the average family, but it has always provided more benefit the rich more.

Why? The mortgage interest tax deduction allows you to deduct the interest paid on a mortgage on your primary and/or second home based on mortgage debt of up to $1,000,000. You can also deduct the interest on up to $100,000 of home equity debt.

The normal American cannot afford anywhere near these limits stated in the mortgage interest tax deduction rules. Even if an average married person can afford a $300,000 home, the tax deduction won’t even help you one bit unless you have other itemized deductions you can claim.

How can this be? The following example may shock you.

A $300,000 Home And No Mortgage Interest Deduction For Some

Let’s say you buy a $300,000 home. You put 20% down, so you’ll have to take out a mortgage for $240,000. Today you could easily get a 30 year fixed rate mortgage with a 4.5% interest rate if you have good credit. In the first full year of paying off your mortgage, you’ll only pay $10,720.29 in interest payments.

Unfortunately, that won’t help many people one bit. Why?

Itemizing Deductions Replaces Your Standard Deduction

When you itemize your deductions, you give up the standard deduction. In 2014, the standard deduction is $12,400 for married couples filing jointly and $6,200 for those filing single. 

If you’re married and have no other itemized deductions, which is admittedly unlikely, you won’t even itemize because the standard deduction would give you a bigger tax benefit. Your mortgage interest tax deduction is essentially useless in this case.

If you’re single and have no other itemized deductions, you’ll actually get to itemize your deductions. However, don’t think for a second you get $10,720.29 in deductions as your benefit. Instead, the only tax deduction benefit you’ll gain is the amount by which your itemized deductions exceed your standard deduction.

So, as a single person, you’d get $4,520.29 in additional deductions due to the mortgage interest deduction. If you’re in the 25% tax bracket, this would save you $1,130 in federal income tax. As a married person, you’d get no benefit at all. Not one penny saved in federal income tax. Sad! [Related: How Tax Rates Work In America]

Keep in mind, you pay the most interest in the first year of your mortgage. Every year after the first year, your mortgage interest tax deduction will shrink because you’re paying less interest each year.

On top of that, the standard deduction generally increases with inflation. That means your benefit will shrink even more as inflation increases the standard deduction.

How The Mortgage Interest Tax Deduction Favors The Rich

Let’s pretend I’m rich and am swimming in money. I’ve decided to take out the maximum mortgage amounts allowable under law to maximize my mortgage interest tax deduction. I have $1,000,000 in mortgage debt at 4.5% and a $100,000 home equity loan, also at 4.5% both on a 30 year amortization schedule for simplicity’s sake.

With this maximum level of mortgage debt, I’d pay $49,136.97 in interest that would qualify for the deduction. I’d assume because I can afford such a large mortgage, I’m probably in a higher tax bracket. I’d likely have a 28% or 33% marginal tax rate depending how much of my income is derived from wages vs investment income.

As a single person, I’d get an additional $42,936.97 in deductions. At the 28% tax bracket I’d save $12,022.35 in federal income tax and at the 33% tax bracket I’d save $14,169.20 in federal income tax.

As a married person, that would result in an additional $36,736.97 in deductions. At the 28% tax bracket I’d save $10,286.35 in federal income tax and at the 33% tax bracket I’d save $12,123.20 in federal income tax.

The rich person who can afford $1,100,000 in mortgages gets to save anywhere from $12,000 to $13,000 more in federal taxes paid than the normal person with a $240,000 mortgage! That’s messed up! Why are we subsidizing homes for the rich? Why not help the normal Americans looking to buy a home more?

Granted, they are paying more in interest to the bank, but why subsidize it?

Normal Americans Used To Benefit From The Deduction

Normal Americans used to be able to benefit more from the mortgage interest deduction. Unfortunately, that’s because they were paying a lot more in interest.

Mortgage rates are currently at one of the lowest points in history. If you had the same size mortgage now vs 20 years ago, you’d be paying less in interest today.

Paying less in interest is a much better deal than getting a bigger tax deduction. Tax deductions only reduce your taxable income, not the tax you pay, you only save a fraction of each dollar you pay in interest on your tax bill. However, let’s run the numbers real quick.

In 1994, mortgage rates were as high as 9% on a 30 year fixed rate mortgage, essentially double today’s rates. On a $240,000 mortgage, you’d pay $21,533.46 in interest in the first year.

For a single person in the 25% tax bracket that would result in a $3,833.37 reduction in their federal income tax due and for a married couple filing jointly, also in the 25% tax bracket, it would result in a $2,283.65 reduction in their federal income tax due.

But The Rich Have Always Had A Larger Benefit

While normal Americans used to benefit more from the mortgage interest tax deduction, the rich have always received a larger benefit. Using the same 9% interest rate, a rich person with $1,100,000 in qualified mortgage debt would see a larger reduction in their tax bill. They would pay $98,695.02 in interest in their first full year of their mortgage.

For a single person in the 28% tax bracket, their federal taxes would be reduced by $25,898.61 and for a single person in the 33% tax bracket, their federal taxes would be reduced by $30,523.36.

A married person in the 28% tax bracket would see their federal taxes reduced by $24,162.61 and in the 33% tax bracket they’d see their taxes reduced by $28,477.36. 

Keep in mind, there are many other calculations that go into tax calculations and the rich do have their itemized deductions phased out at a certain point. Normal Americans will likely have other deductions they can itemize, too. [Related: Be Wary Of Year End Charitable Contribution Phone Calls]

No matter what, the home mortgage interest tax deduction is no longer as useful as it once was for the ordinary American. It has always benefited the rich more.

That said, why is the limit on mortgage debt $1,000,000 or $1,100,000 with home equity debt? Wouldn’t something like a $500,000 still help the average American while not subsidizing housing for the rich? I’d love to hear your thoughts! Let me know what you think in the comments below.

Photo by: LipBomb Text added by: Lance Cothern