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. Getting a tax refund is good news if you have a plan for your money. It can be like a little bonus at the end of the year, or rather the beginning of the year!
Put 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. State refunds were close to that on average as well.2 This means that you could see a sudden influx of over $5,000 in your wallet. What would you do with $5,000? If you’re being wise you will choose to make a plan and use it to get out of debt or build up your savings. If you’re out of debt and have already started building wealth you might even give it away!
Tax Refund to Get out of Debt
Statistics show that 70% of Americans are living paycheck to paycheck.3 If you’re household is living 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. Your tax refund could give you that boost you need to get the ball rolling.
If you are like so many of Americans you likely have a substantial amount of debt. You probably have student loans, car loans, a mortgage, and even credit card debt. It is also likely that you have some smaller debts thrown into the mix that a tax refund could really help eliminate. 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. Doing this would allow you to start paying extra on your next smallest debt.
The beauty of the debt snowball is experiencing wins in your finances along the way. This is especially true 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. Doing this allows you to pay off your next smallest debt even faster. Before you know it your debt snowball will be rolling faster increasing the momentum behind your debt payoff.
When is the last time that you sat down and looked at your finances? If you haven’t done it recently I highly encourage you to do so IMMEDIATELY! Your level of awareness in regards to your finances has a huge impact on your decision making process. Going into debt happens, but often times it’s a result of many small choices. When we chose to buy stuff we don’t need with money we don’t have we walk down a path that is full of traps. It’s easy to go into debt, but it takes hard work and focus to get out of debt.
Experiencing financial freedom starts with awareness and changing your behavior. When you start looking at your finances purposefully you will see a change. When you start dreaming about your future with a plan you have a reason to change your behavior. Things will NOT change just because you start making more money. Most people don’t actually start paying off debt when they get a raise. It’s too easy to start spending that extra money and never seeing a positive change. Before you know it that raise has only resulted in more stuff while the debt continues to pileu up.
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 making a plan. It’s followed up by changing your behavior. Are you ready to do the hard work to get out of debt? Will you be wise with your tax refund or is it already spent on stuff you probably don’t need?
Finances and getting out of debt is actually a simple process, unfortunately it can be really hard. The process is not complex, it’s changing behavior that’s difficult. When you’re ready to experience a change please contact me. I want you 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’ve been doing or to say enough is enough and to make a change. What will you do?