Comments on: Tax Refund: Will You Save It, Pay Off Debt, Invest It, Or Waste It?

By: Jenn

Jenn — Sun, 09 May 2010 22:12:27 +0000

Our refund is largely the result of contributions made to our tax sheltered retirement account during the year. Contributions done through work are tax adjusted at source, but contributions done on our own are not. Sometimes we even make one last giant contribution the day or two before the deadline (Feb 28)as long as we are ready to file our taxes the same day. This year we put $5k on our LOC for 3 weeks while we waited for our refund. Part of the refund repaid the “loan” in full and the rest was used as the first contribution for 2010. Other years we’ve used the refund to pay down the mortgage.

I can’t remember when we’ve used the refund for anything other than retirement savings or a mortgage paydown. All other “fun” money is part of our normal budget and this is retirement contributions that cause a refund that then becomes more retirement savings, and so on…. The ultimate in recycling!

By: Use Your Tax Return To Pay Off Debt and Still Get an iPad!!

Use Your Tax Return To Pay Off Debt and Still Get an iPad!! — Thu, 15 Apr 2010 19:21:44 +0000

[...] you usually don’t wait until April to file. Speaking of paying off debt, are you going to be paying off debt with your return? If you’ve already received your return I hope you used it wisely—instead of waste it [...]

By: the_enemyofdebt

the_enemyofdebt — Fri, 26 Feb 2010 04:03:13 +0000

You are doing the right thing, and have an awesome attitude about ridding yourself of that debt! Keep up the great work! Eliminating that much debt at one time is going to give you a wonderful motivational boost---take advantage of it. You are headed in the right direction! Something that will help you stay motivated: Debt Snowball -Staying Motivated While Paying Off Your Larger Debts

By: Vitaeus

Vitaeus — Fri, 26 Feb 2010 03:20:58 +0000

my family is ending up getting an $11,000 return this year due to the home-buyer and energy credits, plus having 2 kids. This sounds great until you hear the rest, , it will pay off the used car and pay about 25% of our credit card debt. This to us is the best value for the money. It is tempting to spend about $2000 on stuff to make us more self-sufficient, but getting the debt monkey off our backs is sooo much more useful, since the unemployment runs out in september.

By: Angie

Angie — Thu, 04 Feb 2010 20:54:03 +0000

We just had our taxes done yesterday and we are getting a refund this year. A pretty hefty refund at that! (We never know from one year to the next if we are going to have stock option issues that trigger the AMT, so we withhold extra just in case.) We are debt free except for our mortgages and have 3 months in savings, but want 6 months. We will be donating a portion to our church, taking about 15% for a family outing, and the rest will be used to put a new engine in DH’s car and fill our “freedom account” This account holds the money we will need for our annual & irregular expenses. We try to fund this at the beginning of the year, so that we can focus the rest of the year on our emergency fund. I know it sounds like we’re splitting our focus, but in reality we are “snowballing” our priorities – this refund allows us to finish all of them except the emergency fund.

By: Week in Review: Winter Storms Edition :Buck$ome Boomer's Journey to Retirement

Week in Review: Winter Storms Edition :Buck$ome Boomer's Journey to Retirement — Sun, 24 Jan 2010 13:08:47 +0000

[...] Tax Refund: Will You Save It, Pay Off Debt, Invest It, Or Waste It? Brad (aka Enemy of Debt) continues to challenge us to think outside the box regarding money. [...]

By: Friday Roundup Olympic Edition

Friday Roundup Olympic Edition — Fri, 22 Jan 2010 10:02:43 +0000

[...] What are you doing with your Tax Refund? Brad asks the same question: Tax Refund: Will You Save It, Pay Off Debt, Invest It, Or Waste It?. [...]

By: Kevin@OutOfYourRut

Kevin@OutOfYourRut — Wed, 20 Jan 2010 17:01:19 +0000

I know that in the PF world the pat advice is usually pay off debt, but I tend to lean toward saving a tax refund–or any other windfall–if only because by saving it you’re mostly preserving your options for a later date.

It would be kind of lousy to use it to pay off debt, then find you need it the following month. By saving it you can keep it until another windfall comes in, then choose to use some of the total to pay off some debt while keeping the rest.

Liquity is so much more important than we realize!

By: Wookie

Wookie — Tue, 19 Jan 2010 20:44:21 +0000

Well, since we’re just starting our debt elimination plan we’ve had the very fortunate experience of knowing exactly what to do with any tax refund. January 2010 was to be the beginning month – everything “up to date”, baby emergency fund, etc. as per Dave Ramsey. Then the wife got a much larger bonus than expected in December, and we received an unexpected cash gift from my father for Christmas. In the past, we’d spend the windfall on things we didn’t need – and regretted it when we couldn’t figure out where the money went. Now, having educated ourselves, the extra money went to debt right away – paid off TWO debts before the end of 2009! The original goal was to be debt free in 2 1/2 years from Jan. 2010, but with the accelerated starting point, we’re looking at a much quicker time frame. Include my bonus which will come through in the next month or two, a tax refund, and we may be able to get rid of debt in less than 2 years.

Paying off debt is much more fun than any “treat” we could have gotten. The treat has come in peace of mind knowing that we are on the right track and that we’ll get to our goals much quicker.

By: Paul @ FiscalGeek

Paul @ FiscalGeek — Tue, 19 Jan 2010 17:40:31 +0000

Stop picking on Brian! Hehe, just kidding, good healthy conversation going on here. As a member of both camps, first the large refund, treat myself crowd and later the angry government money lender I much prefer the later. I now trust myself enough to build my own savings account thank you very much and it makes it a lot easier to not think of it as “free” money. Last year that whole sucker went to my debt. This time around, my return should be pretty small so any extra is going right to the emergency fund. My fun is already planned with my actual budgeted money. I like to have a plan in place for any windfall be it tax return, bonus, inheritance. That way my wife and I already don’t need to discuss we merely are able to accelerate that plan. Most people aren’t that dorky I know but it’s what’s help us dig ourselves out. Great post Yo!

By: Financial Samurai

Financial Samurai — Tue, 19 Jan 2010 03:38:08 +0000

Only 20% for fun? That is honorable. I’m thinking the bigger the refund the more I need to figure out how NOT to get a refund.

In the past, I’ve used at least 50% of any refund to pay down mortgage debt, and the rest in savings. I recognize that the refund isn’t free money, it’s my money!

By: Anna

Anna — Tue, 19 Jan 2010 03:27:05 +0000

Great article. This year, assuming there will be a refund, we will be paying off our debt.

By: Brad Chaffee

Brad Chaffee — Tue, 19 Jan 2010 02:14:32 +0000

Good for you Tracy! It’s always good to get those crooks off your books.

By: Tracy

Tracy — Tue, 19 Jan 2010 02:10:16 +0000

I will be using mine to pay off last years tax debt. Sigh…but at least that’s another thing off the books!

By: uberVU - social comments

uberVU - social comments — Mon, 18 Jan 2010 23:13:32 +0000

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