I know that financial experts say that no one should be getting a tax return because you are basically giving the government an interest-free loan on all that money through-out the year, but most people I know rely on that little boost (us included) to help them get a little ahead at the first of every year. My thoughts on the subject are that if you’re not very good with money, you are going to blow it if you’re getting that same amount of money spaced out with a little bit per paycheck. However, if you get it in one lump sum it’s a little bit harder to justify blowing it all on the little stuff. In this case, a tax return can be a good thing as long you’re smart with it and use it to better your situation.
My husband and I have been working hard for years and years and years (It’s only taking so long because we are still recouping from the housing market crash. Sticking it out has sucked!!!! 😉 to improve our finances to the point that we can be some of those financially savvy people that get to collect interest on that money all year (& not blow it), instead of the government. I think this is finally our last year of relying on a tax return to get a little boost at the first of the year, so we’ve got to make it count. I’m sharing with you what I believe to be the smartest way to use your tax return to get ahead for the rest of the year. Because frankly, it’s been my experience that most of the times we have been in a hard financial situation is because of our own bad decisions earlier on. After nearly ten years of marriage and the bulk of them spent learning to be financially better off, I know what I’m talking about. I’m hoping to impart a little wisdom on some of you that want to work towards your own financial goals, because no one is going to do it for you!
I know it’s tempting to just blow it all, but your financial situation is never going to improve unless both your thinking AND your habits change. It’s especially important to make good decisions if you’ve got a family to support. No one can afford to be frivolous with their money when they’ve got several mouths to feed. Plus, if you’re like us and don’t have relatives that could bail you out of a financial jam whether it be by giving/loaning you money, watching your kids for free so you can work, or letting you live with them so your expenses are less… it’s REALLY tough doing it alone so you have to be even better with what money you do come by.
- Pay off Debt- Paying off your debt frees up monthly payments. Those monthly payments can now be either more wiggle room or can be used to snowball into the next thing you want to pay off. Debt is lame! Be less lame and pay off your debt!
- Build Up A Food Storage/ Start Buying In Bulk- Buying in bulk, for the things you use all the time, saves you a ton of money. If you haven’t read my very very old and VERY primitive post about “Buying In Bulk, Why You Can’t Afford Not To”, you need to. Also, having a little extra food, to get you by in case of a job loss, is super smart. When gas prices go back up, so will food prices so buying extra right now is just a good idea…whether you are getting a tax return or not.
- Get Your Cars Tuned- This will not only improve gas mileage, but it will make your car last longer and any good mechanic will let you know if it looks like something else is about to go out in your car…which will allow you to start planning and saving for those repairs instead of being blind-sided by them. Cars that are maintained properly last much longer so it will save lots of money over time if you do this yearly or as often as you can.
- Get Your Air Conditioning and Heating Units Tuned- Not only do most companies give you a discount for doing both units at same time, but getting them serviced improves their performance so your utility bills will be less throughout the year than they would have been otherwise. This repair man can also tell you if it looks like you are going to need to replace anything any time soon. Which is yet another thing you can prepare for. I’d say that if your heater and a/c are older than 5 years they should be tuned annually.
- Build Up Your Emergency Savings- Yep, I put this one at the bottom of the 5. That is because if you do all of the other things, there will be less emergencies throughout the year. Financial experts say that it’s smart to have at least $1,000 in an emergency savings account. So anything left over from your tax return should go here. Keep building this savings until you have 6 months to a full years worth of expenses saved up… this one’s going to take quite a while, but less time now that the other four things are taken care of. *Also, if one spouse is a spender, it’s a good idea to make sure that they don’t even have access to this money. It needs to be there for what it was intended for. We no longer have this problem, but there for a few years, it was a pretty big sticking point in our marriage.