A New Perspective on Our Tax Return

by Julie Wilson on March 14, 2013

in Saving Money,Taxes

We recently got our tax return and it was a different experience than in the past.  We just recently have been trying to get a handle on our finances, so we approached this with a lot more care than in the past.  I am going to share what we would have done in the past with the money we got back, and then I will share what we changed this year.

I feel very good about how we did things this year, and it is still something I am learning.  I assume next year we will make even better decisions.

Past Behavior

Tax time was always exciting for my husband and I. We were so irresponsible with the money we got back, and it is embarrassing to admit this.  We basically saw our tax return as pure spending money.

We would go on huge shopping sprees and buy everything we wanted to buy all year long, but couldn’t afford.  We would use the money to pay our bills for the month, and maybe pay for six months of insurance to give us a head start for the following year.

We didn’t have a savings account of any kind; which is ridiculous!

How We Spent Our Tax Return

Planning

This year since I have become more wise about spending and following a budget, we had to make a plan with the money we got back. A plan?  This is something we haven’t done in years past, and it made a huge difference in how we have been using the money.

Planning is key is most things in life. It is something I have to do a lot of when it comes to my weight loss journey. I plan food, workouts, and all sorts of things along the way. This is no different here. If we go in without a plan, then we would forget things and spend in a irresponsible matter.

Money Falling From The Sky

Our Plan and Execution

My husband and I sat down when we found out the amount we were getting back and we wrote down our priorities.

We were getting back around $11,500.00. Here is how we split it up:

  • $2,500.00 in savings account (emergency fund, some will be for laminate flooring, and towards a vacation)
  • $2,700.00 paid off our car
  • $2,100.00 paid off one of my 2 student loans
  • $1,000.00 paid off medical bills
  • $1,000.00 bought a laptop and a desktop
  • $100.00 bought new running shoes from a running store
  • $250.00 bought a night at a cabin for my husband and I
  • $200.00 set aside to buy family pictures

Smaller purchases: We bought some new frying pans, some comic books for my husband, gave some money to the church, some clothes from Walmart,  and I got my nails done.

The Difference

We made huge differences in how we chose to use our tax return, and I feel so good about how we did this.  We paid off some things that will save us about $350.00 a month. We plan to take the money we are saving from paying off the car, medical bills, and the one student loan, and put it toward paying off the other student loan ($4,500.00).

We don’t have any credit cards or any other debt. Here is a brief explanation of how we came up with the above distribution:

Our Computers

The computers were our biggest luxury expense.  I wanted to take some time to explain why we needed two computers.  We have a laptop already, but it is old and outdated. It is basically dying a slow death. With me writing now for income, it is important that I have a reliable computer.

I also can’t tell you how many times Todd needed to look something up, I had writing to do, and the boys had homework that had to be done on the computer at the same time. Our boys now have the old computer that I cleaned up to use for homework and fun.

My husband has stuff to look at for teaching Sunday school and other things on the desktop in the new office space we created in our room.  I will be using the laptop during the day when my little girls are up and around.  At night, if I want to go into the quiet office, then I can.

Running Shoes

Running is such an important hobby and weight loss tool for me. I have been running for 5 months and wanted to wait to buy good shoes, so that I knew it was something I would stick with.  I went to a running store and got fitted for the shoes, and what a difference it made in my run.

I planned to spend around $150.00, but my shoes were $97.00, so I left a happy girl!

Cabin

Every year on our anniversary, my husband and I go to a small cabin about 45 mins away and stay for one night of romance, kid free. This is very important to us, and we feel it is worth every penny.  I was pregnant the past 2 years, so we haven’t been able to go, but this year we are going.  I can’t tell you how much I am looking forward to this.

Family Pictures

Family pictures need to be done. We don’t have any professional pictures of Taelynn and she is 9 months old. Joys of being a 4th child, eh? More importantly, we have none, not one single picture of the 6 of us together. :-(

I want to replace our 2 year old picture on the wall with a new one. We just haven’t had the extra money to do this.

My Final Thoughts

We still were able to enjoy spending on some things we normally wouldn’t buy, but it was in moderation. We are making progress just in the first two months of the year and this feels amazing. It is really great especially because of how we handled things in the past.

My next goal is to really build up the emergency fund and get my student loan paid off, so we can start paying off the van.

I am so glad things have changed for me!

What About You?

  1. If you received a tax refund this year, how did you spend it? How does that compare to previous years?
  2. Do you have times where you have spent large amounts of money, even though you didn’t have savings? If so, do you regret it or see those times as being wasteful?

 

 

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{ 6 comments… read them below or add one }

1 Max

I used my tax refund toward my first quarter estimated tax payments for 2013, so not really that exciting, but a little relief in my overall budget.

Wow, you folks got a huge tax return. Do you mind me asking if that’s because you overpaid on your taxes throughout the year or how did you manage to get such a huge return? Just curious.

Looks like you did some good with the money either way.

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2 Jules@Faithful With a Few

I am learning so much. Everyone around us..not finance gurus make it their goal to get as much as possible back. Just how we have always done it. My husband claims single and none so they withhold the most on each paycheck. We also have 4 children and get to claim 3 of them so that helps too. We are probably going to change somethings so we get more throughout the year this upcoming year:)

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3 krantcents

Congratulations on the refund, but it is a lot of money! Do you really want the government to hold on to that much of your money for a year? I try to keep my refund down to a few hundred dollars. I want my money working for me all year.

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4 Jules@Faithful With a Few

This is something we have never really considered. We don’t know all about finances(obviously). I am learning a lot and will more than likely be changing some with holdings this year. Thanks:)

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5 JoeTaxpayer

Wow, that’s a huge refund. I’m just suggesting, if you would increase your allowances (i.e. decrease withholdings) you’d have the money each month to budget. Since you list paying off debt as taking up nearly half the refund, you could have budgeted to put that money toward the debt during the year and toward the other items.
For most people who budget well, the ideal tax refund is zero, better that you should have that money in your own hands during the year. The motivation of seeing that debt fall away month to month should really be far greater than looking forward to a refund.

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6 Jules@Faithful With a Few

Thank you:) As you can see, I still have a whole LOT to learn.

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