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Frugalistas Frugalistas

Tax returns and frugality

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It’s tax season. Your response to that phrase is either going to be “GASP” or “WOO HOO!”
So…Getting $50 back from Uncle Sam? $500? $5000?

This can be a dicey proposition for some of us: a little extra money can easily go toward something frivolous, or something you don’t need. That can be okay sometimes – but if you’re getting a large amount (or even a small one), sometimes you’re going to get a lot more value out of thinking long-term. And frugally.

Without further adieu, here are some ideas for how to spend your tax refund.

Whether small or big or huge, some wise thinking now can pay off big later. Here goes:

If you’re getting $50 back…
Don’t spend it all in one place.

Actually, $50 is a good amount to use to open up an account at your local credit union. Why? Credit Unions are great places to have membership – you’re not a number, you’re a “member,” and, with the focus on the “1%” and everyone in banking making zillions of dollars, note that all credit unions are not-for-profits. And insured as well. Learn more at this website: A Smarter Choice.

If you’re getting $250 back…
Is it time to start investing? $250 might be a good number to start an account with something like Sharebuilder – where trades are $4 each.

OR, if you already have mutual funds, see if you can invest some more – look for a “no-load” fund.

Funny enough, your insurance company might have mutual funds, too. (Frugal Freida just found out State Farm has mutual funds. Who knew???)

If you’re getting $500 back…
How about paying down a nasty credit card?

By nasty, we mean the one with the highest interest rate. BUT, some experts will recommend that, instead, you start paying down the one that is closest to zero. The mental effect of having a credit card with a zero balance can be a real plus for your psyche.

If you’re getting $1000 back…
Have you started your holiday shopping yet? Even if you’re not picking up stuff for Christmas now, think about those things like birthdays and anniversaries – and consider taking care of the ones you can take care of now.

OR, but things off-season…For instance, if you live somewhere cold and snowy, since it’s now April, see if you can find some discounted snowblowers or stock up on winter coats from the sale rack.

If you’re getting $5000 back…
Consider maxing out on your retirement plans – if you have an IRA, use that 5 grand windfall to add to it. Or, if you don’t have one, check with your tax professional and find out if it makes sense to open one.

Or, start a 529 plan for your kids – that’s a tax-free way to save for their college education.

Is this the definitive guide for what to do with your tax refund? No…

But we hope you can at least start thinking about how to spend that extra money.

http://newfrugality.com/how-to-spend-your-tax-refund/
Posted on the NEW CafeMom Mobile
by on Feb. 15, 2013 at 9:15 PM
Replies (21-30):
pattya925
by on Feb. 18, 2013 at 12:59 PM

This is what I am working towards.  Hoping to be as close to $0 as possible next year!

Quoting Marz31:

I haven't finished ours, but it looks like we're going to owe about $100. not bad for breaking even. I can TOTALLY handle that :) that's my goal! If we did happen to get a refund, it would go to bills. 


pattya925
by on Feb. 18, 2013 at 1:03 PM
2 moms liked this

I can so relate! Oh I don't miss those days for sure! Digging in the couch for change for bread and milk..working 3 jobs (1 FT, 2 PT..thank god, little man could come with me to 2 of them).  Put myself back through school.  Busted my butt to get to where I am but the hard work was so worth it and now in a much more secure place.

Quoting mybratsmom:

Oh my gosh, this is just plain sad.

You have to make your mind up about how you're going to live your life! With this kind of mentality, you're stuck no matter what kind of luck falls on you.

It's not hard to start a savings. Grab a spaghetti sauce jar and put a penny in it. Take the kids for a walk and grab some recycling as you go...every penny counts. Call your billers and find out if there is any hardship reductions you can get for being laid off. Since you are laid off, can you temp or look for alternative work? Babysit? Shovel snow or pick up yard debris?

I know - probably thinking I don't get it, never been in your shoes. Absolutely right. I've never considered my financial condition my personal status. If I have to grow my own potatoes and eat ramen noodles so my kids get some milk and a little meat, I've found a way to change our lives. No special fairy dust hit us, just honest sacrifice and some hard work with a positive mindset. My parents are day laborers. We grew up picking in the fields and sweeping construction sites, my mom was a waitress at a Big Boys and cleaned other peoples homes. We were constantly "camping" because they couldn't afford rent. That way of living - I know how to make it if I need to but I'll be damned before I tell myself "this is it for us". My kids deserve the world and yes, if I have to scrub other people's clothes, pick up dog poop, and scrape gum off the bottom of a McDonald's booth to make sure they get it, I will.

I hope you have a better day today than when you posted this. I hope you get some good people around you to lift you up. I wish you luck.





Quoting Saphira1207:




gilbertgrl627
by Member on Feb. 18, 2013 at 1:18 PM

Some pretty good ideas. We used most of our return to pay off our medical bills, put new brakes and tires on DH's truck (they were badly, badly needed). Some will be used to invest in our house by putting grass in the backyard (the previous owners let it go to crap and now it's just dirt, weeds and rocks). The rest will be going into savings. We want to build it back up (since it was depleted after my DS2 was in the NICU).

aubsmom09
by on Feb. 18, 2013 at 1:48 PM

tfs!  We aimed to get a small refund because we like the money throughout the year.  The money we get back we are putting toward our daughter's preschool tuition for this summer and next year.  We already invest and save throughout the year.  We also have a 529 in place and pay into it each month.

erienne06
by on Feb. 18, 2013 at 2:02 PM
Ours is going to vacation, paying off all medical bills, and the rest in savings.
Posted on CafeMom Mobile
jessesbride
by on Feb. 18, 2013 at 2:40 PM

We always have to pay in.... Thanks to Obama & his crazy team... we'll have to pay in even more.. 

BazingaMama
by on Feb. 18, 2013 at 4:25 PM
1 mom liked this

We're paying off bills, paying off my daugher's doctor bills, putting some into savings, getting my kids new beds, getting some repairs on our house and van done, and we will possibly be living off of the rest if my husband can't find a new job before his current one closes down on March 31st.  If he does find a job before then, then the rest will probably go into savings too.  I would like to go on vacation this year, but I don't think that will happen.

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WandaSue
by on Feb. 18, 2013 at 4:34 PM

 thanks for sharing!!!

Aamy
by Member on Feb. 18, 2013 at 4:40 PM
Depending on how much we get back, we may buy a fridge we need and put the rest in a savings for christmas.
Posted on the NEW CafeMom Mobile
mamabearlehman
by Silver Member on Feb. 18, 2013 at 4:41 PM
2 moms liked this

 I bought a used car,new brakes & oil change for car, paid 3 months of car insurance, shoes and clothes for my kids, work clothes and shoes for DH, a nice family dinner out, and finally opened a savings account with $500 and I've set up direct deposit so 50% of my paycheck goes to savings! I'm soooo excited to finally have a savings account. Our only car broke down in january and we went a whole month without a car. It was horrible! I couldn't work and DH rode our only bike 10 miles to and from work everyday. Now that we have started savings, I know nothing like that will ever happen again. Such relief. We don't have any credit cards so no debt. I'm working very hard to live within our means and it's finally all starting to come together. So thankful for everything.

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