“Your taxes are ready to file, Mr. Jones, you are going to get $3,000 back this year!” Those are words we love to hear! A tax refund!
The question is, “What should I do with my refund this year?”
Four things to remember any time you get some extra money are: Give, Save, Pay Debt, Have a little fun.
Consider giving part of what you receive to your church or other non-profit ministry.
The first step we counsel people to do is save up a $1000 emergency fund. This is a separate fund to be used only for emergencies while getting out of debt. This is for unexpected and unplanned financial events that are not in your normal, monthly budget that might normally cause you to turn to credit. Most people have to save for a couple of months to get this $1000. Chances are if you are getting a refund, it is more than $1000. Voila! Instant emergency fund! Put it in savings and don’t touch it except for an emergency!
Now, what about the rest? What should we do with that? Begin paying off your debt by listing all of your debts and start knocking out the smallest first. Once you pay that one off, move all that money to the next one on the list. Then move to the next. We call that the Debt Snowball.
This is a perfect time to begin to get your financial situation headed in the right direction. Don’t waste this opportunity! Get started on that Budget. Set up an Emergency Fund! Start the Debt Snowball rolling! If you do you will be amazed how different your finances will be this time next year. If you need help with the process, contact us.