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Deciding What To Do With The Money
By Mommie | February 24, 2008
My undergrad was in Accounting, so I’ve been schooled on taxes. I even worked for a CPA firm a little after graduation during tax season (which by the way is what made me never want to be a tax accountant). One of the most important things that came out of my undergrad tax classes was the school of thought that a persons goal should be to get no refund. It’s the idea of not letting the government have an interest free loan from an individual and letting that individual use their money real time. It’s tax avoidance at it’s finest.
So why would a Mommie, or any household manager care about this? Because a large number of people get money back every year. It’s what you do with the money that counts!
We received our tax refund fairly quickly this year and we did get a chunk back. I always feel terrible when that happens because it mean we were lending the government money, interest free, for the whole year when we could use it in our family. So what did Mommie and Mr. Mommie spend the refund on?
1) Pay down credit cards - Even though a trip to Florida would have been nice, we paid off one credit card that has a somewhat higher rate and cut our other credit card balance in half. While this may not seem glorious, there are substantial benefits to doing this!
a) By paying off a card, we have 1 less monthly payment to make. This increases our disposable income from the month we pay it off forward.
b) By cutting the balance of another card in half, we’ve also cut our monthly payment in half (if we were to pay just the minimum). Again, this increases our monthly disposable income.
2) Paid some one time expenses - These included karate gear for our kindergartener (hopefully this fad lasts longer than the dance lessons we paid hundreds for and she went to only once)
3) Pad our Christmas Club account - We put some into here so we don’t get killed next Christmas. Also, this account earns a higher interest rate than our normal savings, so it’s a double bonus!
4) Luxuries - Sorry to say, but yes, we have some luxuries we bought. They consist 100% of eating out. Since I quit working to be Mommie, I cook about 95% of the time. So we took some of the money and ate out a few times. It’s always nice to not have to do dishes or clean up the kitchen.
My only line of advice on this is pay off debt first. If I was single, I probably would have just put it all toward debt and left that at that, but I’m not. Therefore we opted to use the money in other ways than to use it all for debt. But I support this on all fronts, as there is something to be said for the other little things in life.
Let me know what you’re doing with your refund! Let me live through you:-)
Topics: Uncategorized |
February 25th, 2008 at 12:50 pm
Well, we haven’t done taxes yet…my hubby does them, and he’s elbow deep in an 18 page paper he has to write for a doctoral-level class. This class will be done in 2 weeks…so our taxes will be done shortly after. Because we are military, we end up getting a good chunk back (because, like you, we cringe about giving the government a free loan, yet hubby “forgets” every year to stop claiming “0″). The majority of our refund will go right into savings, to be spent in approximately 2 chunks (when we pay for the next class…and the one after that). The “rebate” we get will be to spend…on a new mattress set for US. Both of our kids got new beds when they “aged up” out of the crib. But this mattress we have, my hubby bought 3 years before he met me (we didn’t keep MY bed, he hated the futon, lol). So a new mattress it is…and quite frankly, I would like to spend more than $500 on it, though he’s too cheap to spend much more)
February 25th, 2008 at 6:01 pm
If we weren’t moving then the money would go straight into our savings account but it’s funny how expensive a move can get.
February 26th, 2008 at 4:06 pm
This year we bought a nice used car, bunk beds for our older boys, toddler bed for our 2 yr old, bedding for said beds, clothes for the children, new outfits for family pictures and the said family pictures! Also paid off several bills too. I am looking into either a camcorder or a new washer. Prolly go with the new washer!
February 27th, 2008 at 8:10 am
I purchased an external flash kit, 5 backdrops and a backdrop stand with some of our return. This is all going to a good cause to help start up my business :).
~Jess~
Eric (5)
Isaac (2)
Baby # 3 EDD 10.9.08!
m/c 6/04 @ 5w, 6/07 @ 5w and 11/07 @ 10w
My blog: http://jessthemama.blogspot.com
February 28th, 2008 at 12:40 pm
We got ourselves a 10 cu. foot chest freezer, and we’re planning to pay down some of our debt. We haven’t divied up the funds just yet, though.