Taxing Tactics

If you're walking around with a half-cocked credit card, do you know what it's costing you? A $2,500 balance on your credit card at 17 percent costs $425 a year. That's in after-tax-dollars since you've already paid income tax on that money. In real money (before-tax dollars), at a marginal tax rate of 40 percent, you're paying about $600 a year. On the flip side, the return you earn on your investments is usually calculated in before-tax-dollars. $2,500 earning 4 percent will earn $100 in interest. So, before taxes, it's costing you $500 a year to have your debt and keep your investment too.




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