Taxes Revisited

Well, we filed our taxes over the weekend. And it’s better (or worse depending on your thoughts on a tax refund) than I expected.

In my last post about our taxes I said it looked like we would be getting nearly $4000 back. Turns out it was more. We are getting over $4600 back. (Above and beyond out federal tax credit for getting solar.) This is our biggest tax refund ever. And it was beyond unexpected.

After the tax cuts of 2018, our paychecks increased to the tune of $200 per month. Right off the bat we were getting to keep more of our money. So when it was time to file taxes, I was sure we wouldn’t get much of a refund. But I was wrong.

Our refund is $4634. I still can’t believe it. It’s our largest refund to date. The Husband and I don’t try to receive a huge refund. In fact, our goal is to break even and we thought we would be pretty close to even this year. Actually, I think The Husband was afraid we might owe the IRS of the state and that’s why I think he was a little apprehensive to start our taxes. I’m pretty sure he was as shocked as I was.

Our plan for the money remains the same: The Girl’s airline ticket to Japan, renewing our theater tickets, and our summer travel plans, whatever they may be.

Although I don’t like giving the government an interest free loan for a year, I will enjoy all the benefits that loan will afford us. It will be nice to have the money to pay for these things as opposed to literally taking the money from our savings accounts.

Although we have debt (a lot of it) we also have savings. We are not living paycheck-to-paycheck per se. And although I put a lot of stock in Dave Ramsey and his financial teachings, we have a lot of liabilities that we need to be able to meet so, for us, money in savings is a must. What I am really appreciating about this refund right now is that it will allow us to keep the money in our savings while paying for things we need to pay for that we otherwise wouldn’t have enough money for.

Our tax refund is an unexpected, but appreciated, windfall.

Yo-Yo Debting

Our debt has continued to go down for 7 consecutive months. It doesn’t decrease each month by leaps and bounds but has been on a downward trajectory the whole time.

I’m afraid to jinx it, but I think we may have finally put our ways of yo-yo debting behind us.

You know, yo-yo debting; when your debt goes down one month, only to increase the next month, but then you have a good month for payoff and you repeat the cycle… again, and again, and again.

For the last 20 years of my life, that has been our cycle: up and down and never ending.

But, I think we have finally stepped out of the viscous cycle. We have decreased out debt, every month for eight months, with hard work and diligence. Our debt isn’t gone (oh, how I wish!), but our debt totals have shrank every month.

The last time we got out of debt, we used The Husband’s pension when he switched jobs. There was no hard work involved. That lasted for about five minutes before we tumbled ourselves back into debt.

This time has been different. There haven’t been any quick fixes; but there have been triumphs and setbacks. We’ve had months where we have made great strides and are paying off debt in leaps and bounds and we have had months where we’ve had to transfer money out of our savings to make sure out debt actually decreased. The difference between this time and last time is this time we are doing the work. Admittedly, some months are better than others, but through them all we’ve made progress.

Our total debt has not increased once since we got serious about paying off our debt in September, 2018.

The worst thing about our yo-yo debting was it was all caused by lack of self-control. We didn’t need most of the things we were buying, we just didn’t say no.  We chose to live outside of our means and spend money we didn’t have. Now, we are paying the price for that. But maybe, that will be the price that keeps us out of debt for good. Maybe, having to put in the work will make us realize we don’t want to have to work so hard again. It’s been difficult trying to live our life and pay off debt. I can’t wait until this debt is gone and we can live our life and plan for our future!

Yo-yo debting is a painful cycle and one you have to consciously choose to quit.  It took us over 20 years to decide it was a cycle we didn’t want to be in anymore. And it’s going to take us another 2+ years to actually get out of the cycle. But we’re here. We are scratching and clawing our way out of debt. We have decided yo-yo debting isn’t for us. We are getting out.

Getting out is hard. Especially when you’ve spent 20 years living above your means. Making an effort to live within your means and to budget and to plan takes self-control and I think we are finely there. The stress of debt just isn’t worth it. The stress of hoping we can make all our minimum payments and pay for The Kids activities and maybe have some fun along the way has become too much.

It’s past time for us to take control. To pay off debt and to yo-yo debt no more!

Debt Update March

Our last debt update was pretty darn good, and I don’t see how we are possibly going to beat that month any time soon! We made great progress and paid off almost $1500 in actual dollars and a whopping 6.1% of our total debt! Plus, this was the update where we finally fell under $18,000 of credit card debt! It was a great month and I only hope that we can keep the progress going! The Husband had a lot of overtime during the month that contributed to our progress and he had more overtime in the first period of this debt cycle so we’ll have to see where we fall!

The debt we owe our children has continued to (ever so slowly) decrease. We borrowed almost $1500 from each child and have paid back all of it, which means we are done! I’m so happy that we don’t owe them any more money! Although now that we have fully paid them back, we will continue to deposit $50 into their bank accounts, I’m so happy that I can no longer consider them a debt! Our car loan has continued to decrease as well. We have a 0% loan so it’s nice to see the payment actually affect the bottom line; to that end, I don’t really focus on paying extra towards our car payment because it’s at 0% interest. I know that goes against what Dave Ramsey teaches, but I can’t see paying more interest on my credit card balance just to get an interest free loan paid off quicker.

Although we are not paying off our debt as fast as I would like, I am happy to say that for the seventh month in a row, our overall debt decreased! (I am so happy to get to be writing that instead of having to say that our debt went up!) Usually we are not making giant leaps and bounds in our debt repayment, but believe that slow and steady wins the race, but last month was awesome and this month we are hoping to see some real progress!  

Here are our current debt totals:

            $16,686.85      Credit Card at 16.24% interest

            $0                    The Girl

            $0                    The Boy

            $4085.00         Car Loan at 0% interest    

      

Our total debt stands at: $20,771.85 YIKES! I can hardly wrap my head around that number. I absolutely HATED seeing a 2 as the first number on our credit card and I hate seeing a 2 as the first number of our total consumer debt! I’m so happy that our credit card debt is back under $20,000 and at least our credit card debt only has a 1 in the front and I can’t wait until I can say the same thing for my total debt!!! We are inching closer and closer to falling under the $20,000 mark! I can’t wait!

This is our best month of debt payoff, ever! I know most months won’t be like this, but I’ll take them when I can get them!!!! After this month, our debts decreased from 4 debts to pay down to 2. We got rid of 2 debts this month!  I just need to remember that slow and steady wins the race. We are getting there. We are making progress and we will get out of debt. Next month won’t be as good, but we will decrease our debt.

Plus side: our debt decreased! We paid off almost $2000 of debt in actual dollars, which amounted to about 8.8% of our total debt. It was another good month! Mostly unexpectedly (and excitedly) skipping the $21Ks altogether and falling into the 20K-something range! I never even saw that happening! I saw how close we were and I decided to pay off our debt to The Kids! This has been our best month so far for debt payoff since we started to seriously prioritize getting out of debt! We continue to make progress on our car loan. I’m so excited we finished paying off our loan from The Kids! And the fact that we haven’t borrowed any more money from The Kids is a plus. All the hours of overtime really contributed to debt payoff and the fact that we could send all his overtime to debt. Overall, a great month!

Down side: No matter how much debt we pay off, it’s never enough. L Also, we did still charge on our credit card; not a lot, but enough. Of course I also hate that several hundreds of dollars went towards interest on our credit instead of towards the principal. Because I didn’t realize how close we were, we couldn’t pay off $2000 total. Even paying our kids back in full, we were $5 short of paying off $2000. But, again, I’ll take it. I think it’s a win to even get close to $2000.

Looking forward to: getting our credit card debt below $16,000 Making continued progress on our car loan and actually dropping another thousand on our loan (through no effort of our own, just normal payments). Definitely looking forward to decreasing our overall debt from 20K-something to 19K-something and finally getting our total debt under $20000. We should be able to do that next month! I’m really hoping!!!! I’m also looking forward to fully funding our envelopes and continuing our use of a cash only mainly budget! I see a tiny glimmer of hope of reaching a total “debt worth” of less than $20,000. I know I’m still a little bit away, but I can see us creeping up on it. I’m hoping my debt update next month can shout the news of having less than $20000 in debt!

I posted my 2019 financial goals. They are all doable if I work at them. And if I am successful with each one, I will definitely improve my financial situation by the end of the year. Getting out of debt is such a gigantic goal of mine! Debt affects almost all of my decisions: food, vacation, transportation… it’s crazy how much our past mistakes are affecting our future choices.

Clearly, I’m not in an ideal situation. But if I have to get out of debt one baby step at a time, I can do that.

WOW! Another long post!  If you stayed around until the end, thank you! If you got bored and moved on, I totally understand.

Projected Tax Refund

Well… it looks like we are going to get a tax refund. Quite unexpectedly, I might add.

We have enjoyed getting more money in our paychecks every two weeks and have used that money pretty diligently. With each paycheck we were able to increase our debt payments, but because of that, we weren’t expecting a tax refund this year. (*Aside from the 30% federal rebate we were going to get on our solar, which, as part of our contract, will be paid directly to the solar company.)

After our initial run through of our taxes, it looks like we will be getting nearly $4000 back all told between federal and state. That is on top of the $10,100 that we are getting as a rebate on the solar. I’m still shocked at the projected amount of our refund. Although it’s slightly less than last year’s refund, last year there weren’t tax cuts that put an extra $2500 in our pockets over the course of the year. Somehow, I feel like we won the tax lottery! We got more money in our paychecks each month and we are getting a pretty sizable refund!

That is so much more than I was expecting. I was expecting somewhere in the $1000 range, maybe! Now, having said that, we haven’t actually filed our taxes yet as The Husband wants to run through them again to make sure that all the numbers were inputted correctly and that there are no errors. I will do an update when everything is actually filed and on the up and up.

Now for the plan we have for our tax refund. Don’t judge me, but we aren’t planning on sending any of it towards our debt. First of all, yes, I realize that would be the smartest thing for us to do with our money. Secondly, I’m okay with not doing the smartest thing. And lastly, we do have a plan and are not just going to fritter it all away!

We have a lot of expenses coming up in the next few months. All of these are “extras” and things we don’t need, (but are going to do anyway). And the entirety of our refund, and then some, will go towards paying for these things. The Girl is going to Japan in June and we will need to pay for airfare, some new clothes, and gifts for her to take over with her. Our season tickets to the theater will come up for renewal in June-ish and we will use our refund to pay for that. Lastly, we will use the remainder of our tax refund to take a vacation over the summer. (We don’t know where we are going or what we are doing, but our tax refund is how we are going to pay for it and we do know we are going somewhere.)

I know none of these are necessary expenses. I know that almost $4000 could go a long way towards getting us out of credit card debt. But I also know, and have said over and over again, that although getting out of debt is a huge priority for us, it’s not the only priority. We still want to live our life and give our kids experiences while we dig ourselves out of the mess we made. That may not be your debt philosophy, but it is ours.

Once we actually receive our tax refund, it will be shuffled straight into savings and then used as it’s needed. The Girl’s airline ticket will need to be paid in the next four weeks or so. As I said earlier we will renew our theater tickets around June and then we will take a family vacation in July. This will completely tap out our refund but to get to do all these things will be money well spent! During this time, we will also continue to contribute to our savings account at our usual rate.

Taxes, Tax Cuts, and Tax Refunds

I will warn you right now, this is likely to be a rant; an up-on-my-soapbox-quit-your-stupid-whining kind of rant.

I also want to add a caveat: we have not yet done our taxes, so my rant has nothing to do with my refund OR lack thereof!

At the beginning of 2018, most people were so happy with the extra money they were receiving every paycheck because of President Trump’s tax breaks, myself included. But fast forward 12 months, to 2019, as people start filing their taxes and they are wondering why their refund is so much smaller than last year, or why they aren’t getting a refund, or why they owe a little bit. Figure it out, people. You can’t have it both ways! You don’t get more money in your paycheck every month AND a big refund at the end of the year! It doesn’t work that way.

I saw something on one of the major TV networks and I wish I remember exactly where I saw it because the news anchor broke it down like this:

She said, people that usually get a $1000 refund are mad because now they are not getting anything! But that they earned $90+ more every paycheck (after the tax cuts) which amounts to $2400 over the course of the year. Even subtracting their “usual” refund of $1000, they are still coming out on top with $1400 more dollars then they had gotten the year prior.

You can’t have tax cuts and tax breaks and a huge refund. The math doesn’t work that way.

Let me be the first to say I am no financial analyst, I am not a CPA, and I don’t know tax law. But I do understand logic, reasoning, and basic math. +$1400 overall still means more money in my pocket and the tax cuts we were promised.

I truly don’t understand how people expected bigger paychecks and bigger refunds.

I did not hear all these people complaining in March, April, or May when they were taking home bigger paychecks. They are only whining now that they aren’t getting a “big” refund. Really, what did they expect?

Last year, we received the largest refund we have ever received. We were shocked. We obviously don’t expect the same this year. In fact, as nice as a refund is, we hope it’s not too big. We hope we didn’t give our money to the government and waste time being able to build interest on it.

Refunds are nice, yes. But they are also not guaranteed and anybody who planned on getting a certain amount from the government in the form of a refund is crazy. People need to be realistic and understand that they did get the refund they were promised. They just got it in the form of small increments, every paycheck, over the course of the year. What they did with that money is their problem, not anybody else’s. If they frittered it away, that’s on them. If they weren’t responsible with the extra money they got in their paycheck every month due to the tax cuts, then they have nobody to blame but themselves!

I can tell you exactly where all out extra money went: it went to paying down debt. It wasn’t much, but every little bit helps. Whatever our paychecks increased by, so did our debt payments. If you did something else with your money, or don’t even know where your money went, why is that the IRS’ fault?

Sorry, rant over. I think.

But seriously, before you whine and complain, do the math. How much more was your paycheck every week? How much do you usually receive in a refund? Now, do the math and figure out where you really ended up? Did you come out on top? Like I said, we haven’t completed our taxes yet, but I think I will.