Guest Post Budgeting Tax Return Money: A Success Story
It's tax time!
For some, this means an awesome tax return, for others not so much.
And if you're anything like me, once you see that number on the screen for your return, you already have it spent! A few hundred dollars for homeschooling materials, a few thousand for a vacation to the beach or a long awaited cruise. Maybe you need a new major appliance or home improvement project that you've been waiting to tackle, (my list goes on for miles).
We've all been there and have probably all have done it.
There is nothing wrong with having some extra money and spending it on some wants and necessities. That is, unless we have debt.
Three years ago, my husband and I had a crazy awesome tax return headed our way. Late one Saturday night we filed and once we saw how much we were going to receive we sat on the couch and made our list. Full of excitement, with pen in hand we set aside money for school needs, clothing money for the kids and of course a vacation to the beach. We allotted some money for the garden we had been planning to plant for months.
Then I looked behind me and saw a book that we had just finished reading. Dave Ramsey's Total Money Makeover. At the time we had a few thousand dollars left on our vehicle loan AND I had over $15,000 left to pay off on my student loans from back in college.
Some times it's easy to forget about the debt when you only have to pay a portion of it off a month. I guess you get used to the payments and figure, it's not that bad, it's only a few hundred a month. It honestly didn't even cross my mind at first to use our tax money to get out of debt!
I guess it was a pride issue. Maybe I felt like I needed the new clothes and deserved the vacation and this was the only way we could afford those things without going further into debt.
After some serious soul searching and prayer, we decided to pay off some of our debt with the tax money. And when the next year came around we were able to pay off ALL of my student loan. And now this year the money went into savings, as Dave Ramsey suggests.
He suggests that the best way to get out of debt is:
- Save up at least $2000 that you can easily access for emergencies
- Pay off your smallest debts first
- Once all debts (except home mortgage) is paid off save enough money in your savings that you could have enough to survive on for 6 months.
- Tackle your mortgage
I honestly can't wait until we get to the part where we can pay off our mortgage and have no debt at all!!! Don't get me wrong, I'm not trying to tell you how to spend your money! I just wanted to encourage you with my story and the fact that three years ago I was close to $20,000 in debt and am now in the process of SAVING money. Sometimes debt can be so overwhelming and give you a sinking feeling, but there is a way out, be encouraged!!!
