Welcome to Part 4 – the final installment of the latest series on www.JosephSangl.com – "Best Utilize Your Tax Refund"
Here is a review of the previous steps.
If you receive your tax refund money and you do not have a written game plan, there is a high probability that your refund will disappear! You KNOW that is the truth!
Your options include Giving, Saving, and Spending. First, one needs an Emergency Buffer Fund. Second, save for Known, Upcoming Non-Monthly Expenses. Third, eliminate debt!
When you have steps 1 and 2 taken care of, it is time to accomplish some of your dreams! This is the FUN part!
Step 4 Should You Even Receive A Refund?
This one will be argued until the sun fizzles out, but here are my thoughts.
If you have proven to yourself that you can abide by your written budget every single month for several months, then you could consider increasing your W-4 exemptions so that you come close to breaking even at tax time. Because you have demonstrated the ability to stick to your written plan, you will be able to take full advantage of your money instead of giving the government an interest-free loan all year long.
BUT, if you have NOT proven to yourself that you can follow a written budget, I would highly consider leaving your exemptions as is. Focus on getting your money management under control by planning your spending using a BUDGET FORM from the "TOOLS" page.
You should keep it the way it is until you have sufficiently proven to yourself that you are a good manager of money. Think about how horrible it would be to blow all of that extra money in each paycheck and then not even receive a tax refund check! Awful!
I used to spend my tax refund seventeen different ways BEFORE I ever received it! What a miserable feeling it is to receive that great tax refund check and turn around and mail it out to creditors. Anyone identify with that feeling?!
I also know what it is like to receive a great tax refund check and be able to KEEP IT ALL! In fact, that is how it has been the last four years. What a great feeling! It is a reward for sound money management.
Why not make this year be THE YEAR that you take control of your finances?