Tax day has come and gone… thumbs up to you if you filed your return on time! Bonus points if you already have a plan for your refund.
Roughly 75% of tax filers get a refund of some sort, averaging around $2700 for the past few years. Sure, it would be nice to have had that money throughout the year as part of your regular budget, but there are advantages to getting a bigger check once a year.
It may be very tempting to treat yourself to a vacation or put a down payment on a new car… but could you do MORE with your tax refund this year?
Well – YES you can. But it will take a little dose of moderation and discipline. If those two words make you cringe, you probably should read this article twice. (Or check out one of these: 4 Smart Ways to Use Your Tax Refund, How To Declutter Your Credit Report, Understanding Credit (FICO) Scores)
No one LIKES having to tell themselves “no”, but it is a necessary evil if you want to get ahead financially. If you really want to jumpstart a brighter financial future, your tax refund may be just the kicker you need.
Don’t worry if you are not getting a refund this year (or if you filed early and your refund is already gone!). You’re not out of the game. The strategies we teach are applicable to everyone, no matter where you are starting out.
Step 1: Spend your money on paper BEFORE you get it
Know where each dollar is going before you have it to spend. If you are getting a refund this year, plan to spend 10% on yourself. Treat yourself to a special dinner, a weekend away, a new pair of designer sneakers… whatever you want. But, all you get is that 10%. We’re going to put the rest to work!
Now take 50% and put it in a savings account. Say hello to your “emergency fund”! You know all those little (or not so little) annoyances that hit you out of left field? Things like broken water heaters, medical mishaps, and unexpected car repairs can wreck your budget and throw your finances way off track. Your new emergency fund will allow you to cover these emergency expenses without affecting your day to day income or creating new debt. Success tip: add money to your emergency fund out of each paycheck until you have enough saved to cover 6 months of living expenses.
Devote the remaining 40% to debt reduction. Deciding which debts to pay off first is different for everyone, but a good practice is to pay down the debt with the highest interest rate first. Moving forward, focus your efforts on this one debt until it is paid off. Don’t fall behind on your other debts, but put every extra dollar you can afford toward paying this one down. When it’s gone… don’t let it pile back up! Start attacking the debt with the next highest interest rate.
I’m ready to restore my credit! Schedule my free consultation today.
Step 2: Create a REALISTIC budget
The problem most people have with living on a budget is that they get over-the-top strict. Think about it in terms of a financial diet. If you decide to eat only celery sticks and grapefruit, sure… you’ll last a few days and may even drop a few pounds. But that chocolate cake will sneak up on you and you’ll give in.
Same thing with a budget. If you cut it too close, you’ll never last. To successfully navigate living on a budget you really only need 2 rules: Pay YOURSELF first and Live BELOW your means.
Pay YOURSELF first: Treat the money you put into your emergency fund or towards debt reduction as a bill. Ensuring your future success is your number one priority.
Live BELOW your means: The heck with the “Joneses”! Don’t live up to someone else’s definition of what the “good life” is. Make your own decisions. Set expectations based on what is important to YOU. To get your expenses lower than your income may mean making tough decisions. You may have to cancel cable, drop your home wifi and use the library for a while, or delay a vacation you were planning. Alternatively, you could get a part time job on the side to increase your income.
Either way, just do the math! If your expenses are greater than your income – something HAS to change or you will never get ahead. With a little effort, you can save more money in nearly every part of your life.
- • Don’t go out to the movies – rent one for $2.99 from a kiosk.
- • Instead of going out to eat, cook something special at home for half the price.
- • Opt for a stay-cation and explore nearby towns like you were a tourist.
- • Before any big purchase do your homework to make sure you are getting the best deal possible.
Step 3: Restore your credit
In a few clicks, you can get a free copy of your credit report from www.annualcreditreport.com. If you choose Experian now (April), you can order your TransUnion report in August and Equifax in December. Spreading your free reports out like this lets you keep close tabs on your credit year round.
Look your credit report over carefully. If there are errors in your personal information, accounts you don’t recognize, negative items that are more than 7 years old, collection accounts, or court judgments, you may benefit greatly from professional credit restoration.
Our services are backed by a satisfaction guarantee and we’re recognized by the IRS as one of the few reputable, non-profit organizations in the US specializing in credit restoration and education. We don’t charge monthly like some companies, who draw out the process for months on end. You pay us a one-time fee of only $349 and start seeing real results in as little as 2 weeks. Contact us today for more information.
4 Ways to Boost Your Credit Score Fast
Free eBook Download
If you have any questions, please give us a call at 770-952-5168 or contact us online.
“Like” us on Facebook to have great tips and breaking credit news delivered right to your phone or computer.
Other articles that may interest you:
3 Instant Credit Score Fixes
Keeping the Wolves at Bay – Safely Communicating With Debt Collectors
Six Places to NEVER Use Your Debit Card
This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.