What We Plan To Do With Our Tax Refund

I have been working on our taxes and it looks like we will be getting back a small refund – think hundreds, not thousands.

My wife and I usually over-estimate withholding, just a bit, due to the fact that I have self-employment income, which tends to vary from year to year.  We prefer to send in a bit more, just to be on the safe side.

We will use our modest tax return for three things -

Vacation – We are going to take a week-long vacation to the beach this summer (for which we have budgeted) – and about 25% of our refund will go towards extras, like bike rentals or a trip to putt-putt.  We have three kids, so there’s always room for “one more thing” to do while on vacation.

Mortgage Reduction – We will use about 50% of our refund to reduce the principal on our mortgage.  We are working to pay off our mortgage in less than 10 years – and every extra penny helps.  (I ran the numbers: A one-time principal-reduction of $300 will reduce total interest (for the life of the mortgage) by about $150.)

Landscaping – We have a couple of flower beds that need some work – and the extra funds will go towards the purchasing of some new shrubs and some fruit trees.  This will increase the curb-appeal of the property (and hopefully, the value of the property).

Have a blessed day.

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4 Responses to What We Plan To Do With Our Tax Refund

  1. Great post! I haven’t really thought about what to do with our return. I like the idea of a small trip and home improvements. Many people would say that the entire return should go toward the mortgage, but life is a balance. It sounds like you have discovered that as well.

  2. I glad you specified that you over-estimated your withholding to be safe as a result of being self-employed. I know WAY too many people who are employees at companies who think getting back a three thousand dollar tax refund is a good thing.

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  4. My husband and I have done a variety of different things with our tax refund. We’ve used it for a vacation, bought good quality bicycles, and sometimes we’ve done the financially responsible thing and either saved it or put it towards our mortgage.