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| Photo credit: LeoSynapse |
So a few nights ago Chip did our taxes.
The results? A
refund.
A huge refund.
To the tune of $4880 (I think that’s the exact amount).
I am thrilled.
The crazy thing is, after last year’s big refund, I changed
my with-holdings at work. Not so much
that I expected we would break even but that we would receive a much smaller
refund.
And yet somehow – our refund is larger this year. I totally don’t
understand tax law.
So what will we do with this lump sum?
We have two options.
I originally had one thing in mind because it would make the most sense
mathematically and it would give me the best feeling emotionally. Sounds like the way to go, right? This option would be to send the entire
(almost) $5K to my credit card – you know, the one that I despise so much and
am ready to kill the account as soon as it is paid off. That would give me the most emotional payback
and it would decrease the debt on the larger interest loan. This seemed like the way to go at first.
But the other option is almost as good and gives a sense of
completion and gives us one less thing to worry about. This would be to send almost $3900 to a “loan”
that we had from the Army from when Chip was prepaid to finish OCS and came
home early. So we owe the Army that money back.
They aren’t charging us interest, so it seems like it would be good to
pay this one off more slowly than the one with interest. Two things about that
though – if we did this, we could completely cross this debt off our list and
shorten the list; and the Army is deducting repayments at their own rate out of
his paychecks. It’s been going fine so
far to do that, but when he goes for his long-term training in a few months (or
whenever he goes – they haven’t told us yet), I won’t know how much of his
check we’ll be receiving until it arrives and that makes planning difficult.
And for this control freak, that’s just one more uncertainty I would like to
avoid.
All in all, it will pay off debt. All of it.
But how? That is yet to be
determined.
What about you? Are you
getting or anticipating a refund? If so,
what do you plan to do with it?
We'll definitely be getting a refund. Most of it will go into savings earmarked toward things like the new roof we'll need soon, eventually replacing our cars, boosting the maintenence fund on the current cars, and setting aside money for pre-school for Little Boy Beagle. We will put a portion aside for our anniversary trip that we want to take since it'll be five years for us this fall.
ReplyDeleteGreat planning, Beagle! Can't wait until we're at the point that we can put it towards things we want and need rather than things we've already bought and are STILL paying for!
ReplyDeleteAwesome refund! Although the second option sounds nice, I'd probably still put it towards the credit card. At a high interest rate (while the other loan is no-interest), it just makes sense to pay it off first. Of course, sometimes emotions really play a big part so if paying off the army loan will help inspire you to work harder on the CC loan, then maybe that makes sense for you. Either way, yay for tax refunds!
ReplyDeleteI'll be getting one around 8-10K (and adjusting my with-holdings after that, whoops). I'm planning on putting it all towards my wedding fund - I want it to be sitting around 15K so this will almost finish it off, and then I can start saving for my dream house.
@Kyle - I think my big thing with the Army loan is just the unknown with the upcoming paychecks that my hubs will be getting in the upcoming months while they are taking out an unknown amount (I wouldn't know until his paycheck was deposited). I'm just a control freak and like to plan. =)
ReplyDeleteHooray for your refund as well! Great job finishing up that wedding fund! =) Sounds like you're on top of things!