Maximize Your Tax Refund

Maximizing Your Tax Refund – Step 3

How should you maximize your tax refund?

STEP 1  Before You Spend It, Plan It
Planned money accomplishes far more than unplanned money! BEFORE you ever receive the money, you should have a plan.

STEP 2  Build the Wall
When you receive your tax refund, there are three different ways you can spend the money: save it, spend it (reduce debt), or invest it.

STEP 3  Fulfill Some of Your Dreams!
Since the word FUN is in the middle of refund, make sure to have a little fun and fulfill some of your dreams!

Your tax refund could allow you to be generous and bless others, have a fun day with your family, or contribute to funding a dream.

What dreams do you have? What will it take to accomplish them?

Here are some good questions to ask yourself to fire up your dreams again:

  1. What opportunities do you want to provide to my children?
  2. What trips do I want to take?
  3. Who do I want to bless? What do I want to bless them with?
  4. What type of house do I want to live in?
  5. Where do I want to live?
  6. What career(s) do I want to pursue?
  7. When do I want to retire?


Maximizing Your Tax Refund – Step 2

How should you maximize your tax refund?

STEP 1  Before You Spend It, Plan It
It is exceedingly important to have a plan for the refund money BEFORE you ever receive the money!

STEP 2  Build the Wall
Next, you need to build a wall of protection! 
When maximizing your tax refund, there are three categories that can help you build this wall:

(1) Save it, (2) Reduce Debt, (3) Invest it

FIRST: Save it
One of the biggest reasons people fall off of the “I’m Going to Achieve Debt-Freedom” wagon is because they do not have any savings. Life is going to happen and it will cost money! If you do not have any savings you will remain broke. Do you currently have money saved for emergencies or Known, Upcoming Non-Monthly Expenses (Christmas, vacation, property taxes, annual memberships, homeowner’s association fees)? Before attacking debt or investing, you need to save money! Start with saving at least one months of expenses. How would it feel to have one month’s of expenses JUST SITTING THERE in your bank account? I remember the day that this happened – and I did not have to mail it out to a creditor!!
If you do not have savings, use your tax refund to fill it up!

SECOND: Reduce Debt
Don’t skip ahead to this step! Make sure you have savings first! Too many people race past the previous option and use their $3,000 tax refund to pay off $3,000 of a $5,000 credit card. They have no Emergency Fund, they haven’t saved for Known, Upcoming Non-Monthly Expenses, and now they have just spent all of that money on a credit card. Even if the $3,000 paid off the credit card, it is still not worth it if one does not any savings! Think about it this way. If the $3,000 credit card had a monthly payment of $100, how long will it take to get that $3,000 back into the bank? THIRTY MONTHS! Not worth it.
BUT, if you have taken care of the Emergency Fund and have saved for your Known, Upcoming Non-Monthly Expenses, it is time to attack the debt! Pull up the Debt Freedom Date Calculator (Excel) and calculate your own Debt Freedom Date! Make some debts leave your life!!

THIRD: Invest
If you have already saved money and reduced or eliminated your debt, your next step is to invest. Investments are the KEY to funding your big time plans, hopes and dreams! Investing is simply using your money and possessions to create more money and possessions. The goal for any investments is to gain more in return.

Stay tuned for Step 3!

Maximizing Your Tax Refund – Step 1

Since we’re right in the middle of tax season, I wanted discuss how to maximize your tax refund.

Last year, about 75% of Americans received a tax refund. Were you one of them? Will you receive one this year? If so, it can be a tremendous tool to start your journey toward living your fully funded life!

STEP 1  Before You Spend It, Plan It
I used to have my tax refund spent sixteen different ways by the time it actually arrived. It was assigned to pay for Christmas, vacation, clothes, credit card bills, student loan payments, car payments, a new appliance, a new electronic device, etc.

In addition to having spent the refund sixteen different ways, I had already made all of the purchases via credit cards or other forms of loans.

When the refund actually arrived, it was woefully inadequate to cover all of my crazy spending.

Talk about feeling miserable! Is anyone reading this feeling my pain, or am I the only one who has done this?

When I decided once and for all to take control of my finances, I realized the root cause of my problem.

What was the root cause and the reason for all of my crazy spending?

I did not have a PLAN! 

Before you spend your tax refund, plan out the spending! I highly recommend that you use the Mini-Budget Form (Excel) to plan your spending. Enter the amount of the tax refund at the top, and spend it to exactly zero. Remember: INCOME – OUTGO = EXACTLY ZERO.

Start planning now – BUT don’t start spending just yet. We are still in the planning stages.

Next, we’ll cover where the money should go!