Making the most of Tax Refunds

5 Mar

Making the most of Tax Refunds

Making the most of Tax Refunds

“Nearly eight out of 10 U.S. tax filers get a federal tax refund”.1 Most people do not actually enjoy doing their taxes, but the reality is that most people actually do end up getting a refund which is good news if you have a plan for your money. A tax refund can be like a little bonus at the end of the year, but instead of coming at the end of the year it comes at the beginning.

Putting your Tax Refund to Work!

If you are one of 80% of Americans who receive a tax refund it could mean quite a bit of extra cash in your wallet. In 2017 the average federal refund was $2,895 and the state refunds were close to that on average as well2 which means that you could see a sudden influx of over $5,000 in your wallet, so what will you do with it?

Statistics show that 70% of Americans are living paycheck to paycheck.3 If you are one of those households that live paycheck to paycheck I feel your pain. Living life like this sucks…but there is a better way. There is a path to financial freedom out there for you and your tax refund could give you the boost that you need to get your ball rolling.

If you are like so many of Americans you likely have a substantial amount of debt. Some of that debt is likely student loans, car loans, and even a mortgage, but you probably also have some credit card debt thrown in the mix that is really reducing your cash flow each month. What would happen if you put off that next purchase and instead worked on reducing your debt? How much better would you feel at the end of each month?

The Debt Snowball

If you listed your debts out from largest to smallest and paid minimum payments on all but the lowest debt how quickly could you start seeing an increase in monthly cash flow? With $5,000 or even just $1,000 you will likely be able to free up at least one credit card which would allow you to start paying extra on your next smallest debt.

The beauty of the debt snowball is that you get to experience wins in your finances along the way, especially if you have a bunch of smaller debts. Every time you pay off your smallest debt you are able to take the payment from that and add it to your next debt to pay it off even faster and before you know it the ball is rolling faster and faster and you have energy behind your debt payoff.

Purposeful Living

If you have not sat down and looked at your finances lately to really see where you are at right now then I highly encourage you to do so IMMEDIATELY! Your level of awareness in regards to your finances will greatly impact your decision making process. Going into debt happens in life and sometimes is a result of life, but often times it’s more a matter of the choices that we make. When we chose to buy something that we do not actually need and do not have the money for we start down a path that is easy to wander into, but it takes intentional focus to get out of.

Experiencing financial freedom starts with awareness and a change in behaviors. When you start looking at your finances purposefully and start dreaming about your future you will likely begin to see that something has to change in order for you to achieve your goals in life. Things will NOT change just because you start making more money. In fact the majority of people who say that they will start paying off debt when they start making more money never actually do it. Instead we have things that we want right now so we start to spend a little more money, with all intentionality to work on paying off our debts, but before we know it we have become accustomed to the increase in pay and our lifestyle has increased with it and so has our pile of debt.

Experience Financial Freedom

When you are ready for a change you will do it. When you are sick and tired of being broke you will change your actions. It is only after you change your actions that you will start to see progress. Experiencing financial freedom starts by becoming fully aware of your current situation and understanding that nothing in the future is going to change unless you change what you are doing right now. It is in that moment that you have a decision to make as to whether you are going to do the hard work of getting out of debt and changing your habits or if you will keep doing what you have been doing.

Finances and getting out of debt is actually simple, unfortunately it can be really hard. The process is not complex, but changing behavior is difficult. When you are ready to experience a change please contact me. I want you to be able to experience more in life. I want you to be able to live a life without being strangled by your debt, but you have to be ready to put in the work. When you are ready to do this I will be here to help. It’s your decision to keep doing what you have been doing or to say enough is enough and to make a change. What will you do?

ByHigher Power Living Financial Coaching

Helping you take control of your finances so you can experience financial freedom, build wealth, and live life filled with generosity and gratitude.

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