impatiently wait until we can get our taxes done and then super crazy impatiently wait for the tax return to be deposited in our bank account I thought it may be interesting to go back and review how we have spent our tax returns.
Tax Year 2014 Rebate:
I remember being scared to file this tax return. Our tax guy is in Wisconsin and when your wife is 9 months pregnant you get a little nervous driving anywhere more than 30 minutes away from home. I was also eager to file this tax return because it would include our 30% rebate from our solar panels. Normally you don’t want a large return but this time around we wanted it fat!
We got back:
We took $5,088 which was part of the solar panel rebate and threw that directly against our HELOC (home equity line of credit) loan we opened to buy them. After that, we took $1,500 and paid down the car loan, took $1,000 and chipped at the mortgage, with the rest rolling into savings.
In hindsight, I think we were spreading out a little too much. We should have taken all of that money and thrown it on the worst debt (the HELOC). The car loan and especially the house could have waited for later. I wish I would have written down why the $1,700 went into savings and didn’t get used on debt.
Tax year 2015 Rebate:
Oh 2016, we were busy getting Mini Donut’s first birthday party ready. Trips to party city and the grocery store. So much to do but taxes got to get done too. My parents were able to babysit while we found out we were getting:
Property Tax Refund: 860
Boy did I not expect to get so much back. Apart was due to the new deduction that was born the year before but I’m not sure why it was so much. We took our $1,000 and threw that straight at the house (it has become a tradition of sorts). The rest went to the HELOC. We were still in debt and weren’t able to do anything fun with the return.
Tax Year 2016 Rebate:
Time flies when you are reflecting on the past (that’s a saying right?). We thought we would make Mini Donut’s birthday planning easier with Qdoba catering. Actually not as helpful as you’d think. Anyways we got:
We updated our W-4s so we didn’t have Uncle Sam pulling so much money out. Right off the bat, we threw $1,000 at the mortgage. Everly little bit helps. Wouldn’t you know that right when we get this influx of cash our furnace goes out? Cold nights in Minnesota requires a working furnace so that was replaced with some of our return. What little we had left went into the savings. Thankfully, we were finally debt free.
Tax Year 2017 Rebate:
Property Tax Refund: ?
Thanks to Acorns and Oppenheimer we aren’t getting our tax return until way late. Our tax guy was booked a month out when we finally got all of our documents. (I’m not bitter) …(ok I’m really bitter). At least Mini Donut is excited to have a dump-truck cake this year.
There are lots of things you can use your tax return for… shoes, golf clubs, TVs… not if you are here. You want to know what are the better ways you can use your return.
Pay off debt
Start or continue your path to being debt free. Take some or all of your return and throw it at your worst debt. Credit card, payday loan, car loan, HELOC or mortgage. Even if it isn’t a lot it will help you get out that much faster.
Depending on where you are in your journey you may need to get your $1,000 emergency fund going. Maybe you are further along on your journey and can use your tax rebate to build your emergency fund up to 3-6 months. This is also would be a good time to see if your 3-6 months is still enough to get you through that long of an emergency.
You can open a Roth IRA at your favorite discount brokerage and make your way to being financially independent! Already have one? Did you max it out last year? You have until tax day to contribute for the previous year! We were able to do that the year we opened Ms. Blue Ribbon’s Roth.
Another great investing account you can use is a standard brokerage account. If you’ve maxed your Roth or want something less tax-advantaged open one of these!
Check your goals
Always check your goals to see what other awesome things you could do with the money. Saving for a future car? Planning to remodel a bathroom? (*cough* *cough* we are) Maybe the best place to throw this money is into savings to help with those expenses.
I’m not exactly sure what we are doing with our return this year. We never decide until we know how much we are getting. The car ride home is always a great time for brainstorming for us.
Do you know what you are doing with your refund? Are you getting one this year?