After getting the last 1099, finding an important document, and finally getting just a bit of time to review it, we’re finished with our taxes. I’m so relieved to get that done and now I can get caught up with some other financial paperwork.
Tackling 2 Goals with the Our Tax Refund
It looks like we’re getting a modest refund (thank baby girl!) and like we’ve done before, we have a plan for the money. Last year it went towards the paying down the mortgage. The year before that, we also sent the money to our mortgage company. I’m happy we did as we’ve not only shorten the mortgage, but we’ve also cut down on interest payments.
This year, though, we’re doing something different. When we sat down in December to come up with family goals for 2012, 2 things we wanted to do were:
- get a family vehicle
- pay down the student loan
Whenever we receive the refund, we’re going to divide the federal money as 70% towards the car replacement fund and 30% for paying down the student loan. We haven’t decide what we’ll do with the state refund (didn’t expect that), but I’m hoping to use that little bit of cash for the student loan.
We already have a small start with the student loan project so the refund can be a big boost and help us reach our 2012 goals. We’re hoping to get the loan paid off sooner so we can lower our monthly expenses a bit more in the long run.
How Others are Using Their Refunds
Last year, Betterment ran a survey to see how people planned on spending their tax refunds. The choices were:
- Spend it
- Save for a big purchase (new car, new home, etc)
- Invest in stocks & bonds
- Save with no specific purchase in mind
- Save for retirement
- Pay off debt
The majority of them decided that paying down their debts is a priority. I agree that getting rid of debt can be a great financial move. It can also be empowering as you have pressures on your monthly cash flow.
Thoughts on Tax Refunds
I’d love to hear from you about your plans. H0w many of you have received or are expecting a refund this year? What are your plans for it?