Our taxes are DONE!!! We were expecting about $2000 back on our taxes before actually running any numbers. Well, come to find out we are getting back over $4000.
Seems quite crazy to me that our taxes were that different from last year! But live and learn and do not worry we adjusted our tax withholding back in November and we readjusted them again this week, so hopefully in 2015 we will pay a lot closer to the appropriate amount.
How to Spend Your Tax Refund Wisely
There was a discussion on The $1,000,000 Challenge Facebook group page earlier this week about what one should do with his/her tax refund. Whether it should be saved or used to pay down debt or split up with different purposes. A challenger recommended using the 50/40/10 rule (50% to debts, 40% to savings, 10% spend). I thought this was an interesting and fun yet responsible way to spend your tax refund.
Of course what is “best” for you will be different for me, which will be different for the next person.
How We Will Spend Our Tax Refund
It is funny, not once did my husband and I specifically discuss how we would spend the tax refund. However, we both knew 100% of the return was going towards our mortgage.
Have a Plan for Extra Money
We never had the specific discussion about our tax refund because we always have a plan if we happen to come across extra money. Yes, most of the time it is day dreaming about winning the lottery (without even playing LOL). But with every discussion of coming into some extra money our first step has always been to pay off the mortgage.
Do you have a plan for “extra” money? Whether it is a $100 bill you find in your old coat pocket, a $500 bonus, a $1000 tax refund, a $10,000 inheritance, or a $1,000,000 lottery win. You need to have a plan for this extra money. If you have a plan for it before it even gets to your hands, you will not be tempted to blow it unnecessarily.
If We did NOT have a Plan
I did wonder “how would I want to spend $4000 if we did not already have a plan?” I asked the same of my husband. Neither of us could think of anything we “wanted.” Has our financial goals and extreme focus “killed” our fun and enjoyment or has it made us content?
I often think we push ourselves to the extreme to pay-off our mortgage at an unbelievable rate. We no longer spend money on things we once did. There are often months neither of us take “blow money” or we do not spend a single penny of our restaurant or entertainment budgets. I wonder, are we sacrificing a “fun” and “enjoyable” life to meet our financial goals?
However, pondering the question of how we would spend $4000 with my husband was a big eye opener and reassurance we are doing what is “right” for us. When neither of us could think of anything we “wanted” for $4000. We are completely content with the life we lead. We both know we are beyond blessed and we have all our needs met. What a true blessing.
How do you plan on spending your tax refund? Or if you had to pay more taxes, how did it impact your budget?
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